Most Americans believe that Medicare covers long-term care. Daily help regimens are something that many seniors ultimately need.
it’s not.
That basic misconception concerns retirement experts. It suggests that millions of Americans may not have plans to cover the high costs of aging.
Long-term care is a variety of services for people who need to support their daily activities, such as bathing, dressing, and eating. A recent survey from the Boston College Retirement Research Center shows that over 80% of us need that help.
Americans are a point-driven home in many research and research, which has been grossly misleading about the fundamentals of long-term care. One of the latest releases nationwide in June found that 58% of US adults falsely believe Medicare covers long-term care.
“70% of people who reach 65 need long-term care,” said Holly Snyder, president of Nationwide Life Insurance. “And when you get there, people seem to think there’s a public safety net to take care of you.”
The long-term care costs are amazing
Many older people need years of care for them. The cost is incredible. According to T. Rowe Price, the average aid facility charges $5,350 a month. A typical nursing home charges $9,733.
These prices should be wary of older Americans. According to Snyder and others, the problem is that many people assume Medicare covers them.
“People don’t distinguish between long-term care and health care,” says Galwetstein, a senior research economist at Boston College.
Some confusion is natural. Medicare, a federal health insurance program for the elderly, covers short stays in nursing homes.
However, Medicare generally does not cover long stays. Reason: Most long-term care is not considered medical.
“There are people who eat her food, take her medication, and even if she wakes up, she doesn’t leave the door. That’s storage care,” said Patrick Simasco, an elder law lawyer in Michigan.
And here things really get confused. Medicare doesn’t cover most long-term care, but Medicaid does.
Medicaid, a government health insurance program for Americans with limited means, generally covers long-term care for older people who use their assets. In fact, Medicaid is the country’s largest payer for long-term care.
Many Americans “disturbate Medicare and Medicaid,” Simasco said.
Why do Americans not enroll in long-term care insurance?
The prevalent belief that Medicare covers long-term care may help explain why fewer Americans own long-term care insurance.
Long-term care insurance only provides what the name implies. It covers the cost of long-term care. However, one industry estimates that only about 4% of older Americans hold policy.
Why do so few Americans buy long-term care insurance?
“Because a lot of people think Medicare is covering that,” Wetstein said. “They don’t want to buy products they think they already have.”
The concept that Medicare covers long-term care is one of several common misconceptions about the cost of aging.
A nationwide survey found that 41% of respondents suspect they will live long enough to use long-term care insurance. In fact, most seniors will ultimately need it. A national survey showed that it reached 1,324 adults over the age of 29, with household income of at least $75,000.
Another study partnered by the Employee Welfare Institute (EBRI) in 2024 found that only four in 10 believe long-term care is needed.
The study found that employees significantly underestimate the cost of long-term care, and in most cases the tabs do not exceed $50,000.
“There’s a lot of focus on retirement, savings for accumulation, but there’s not much talk about dealing with the risks associated with aging,” says Bridget Bearden, research and development strategist at EBRI.
Americans underestimate long-term care as a retirement risk
Many older Americans underestimate long-term care as a retirement risk. A 2024 survey of wealthy older Americans found that Boston College researchers rank fifth among financial worries about retirement after stock market upsets, social security cuts and other concerns.
Many Americans don’t know what it means to tap Medicaid to cover long-term care, Wetstein said. As a general rule, you must spend all your money to qualify for profit.
“This is an insurance product that has a deductible ‘everything you own’,” Wetstein said. “You have to use everything you own to use it.”
According to Wettstein and others, Medicaid requirements result in the long-term care industry and not having one. Only wealthy Americans can afford long-term care costs easily from their pocket. And only poor Americans get it for free.
“When you’re older, you’d better have a lot of money, or you’d be better off breaking,” Simasco said. “The people in between are the ones who struggle.”
If this report is concerned about long-term care, there are some expert tips.
Consider long-term care insurance
Many Americans think long-term care insurance is prohibitively expensive, Snyder said.
In fact, there are many types of long-term care policies. Costs increase dramatically depending on the amount of profit, the length of care covered, and other variables.
A typical policy offering a profit of $165,000 for one in 55 adults could cost $950 a year for men and $1,500 for women, reported the National Council on Aging.
Major drawbacks to many traditional long-term care policies: you won’t raise money unless you pay attention.
But the industry is evolving. Under various “hybrid” policies, if you don’t run out of long-term care benefits, you’ll go to the beneficiary when you die.
Shop for long-term care
Long-term care costs vary greatly depending on where you live. According to the National Council on Aging, Albany, New York averages $8,093, a month in Albany, New York.
If you live in a high-cost city, look at the prices in the suburbs or next county. See Care Cost Calculator. You can buy yourself more care.
“Find the best place at the best prices,” Simasko said.
Meet a retirement planner
Financial planners are trained to help people help budgets for all potential costs of retirement, including long-term care. Retirement planners can help you unravel the complexities of long-term care and create plans to pay for it.
“It’s really about talking to your financial expert,” Snyder said.
