Study Finds Wide Variation in Projected Need for Long-Term Care

How likely is it that you will need long-term care, and how much will you have to put aside to pay for it? An analysis of the projected long-term care needs of those currently turning age 65 predicts that about half will not have to pay anything for long-term care. But more than a third of retirees will spend some time in a nursing home, and 1 percent will need to have at least $250,000 set aside and invested at age 65 to pay for their care.

"Long-Term Care Over an Uncertain Future: What Can Current Retirees Expect?," published in the winter issue of the health care journal Inquiry, predicts that those turning 65 will need long-term care for an average of three years before they die. One in twenty retirees will spend more than five years in a nursing home. Meanwhile, 65 percent will need some form of long-term care at home, and 11 percent will receive home care for more than five years.

While the study finds that on average people would have to invest $21,000 at age 65 to pay their future long-term care bills, individuals will experience very different futures: half of 65-year-olds will incur no out-of-pocket costs, yet an investment of $100,000 at age 65 will not be enough to cover all out-of-pocket long-term care (LTC) costs for 6 percent of retirees. One percent will need more than $250,000.

"It is the wide variation in the projected need for LTC that poses a challenge for both individuals and policymakers," the authors write.

Government programs, primarily Medicaid, will cover 53 percent of these expenses, but private long-term care insurance is projected to cover only 2 percent. This means that 45 percent of long-term care bills will be paid by retirees and relatives out of their pockets.

"Policy debate typically focuses only on income security and acute care - and the corresponding Social Security and Medicare programs," said Peter Kemper of Pennsylvania State University, lead author of the study.

"Policymakers should not ignore the third risk that retirees face -- that of needing LTC. Long-term care risk is substantial, and under current Medicare and Medicaid policy, much of it is the uninsured private responsibility of individuals who pay for care and of families who care for their relatives."

For an abstract of the Inquiry article, which is available only to subscribers, click here.

Parts of this article are from an article in Senior Journal.