As the average population in the United States ages, more Americans are reaching retirement age in a precarious financial position due to rising costs of personal care. Long-term care for older adults includes assistance with everyday tasks such as eating, bathing, and mobility, as well as medical support like physical and speech therapy. The Department of Health and Human Services projects that more than 56% of those turning 65 will need some form of long-term care service.
Medicare, the federal health insurance program for Americans aged 65 and older, only covers shorter-term services, while Medicaid provides assistance to qualifying individuals. Those who are not eligible for government services often rely on spouses or children to pay for long-term care services out of pocket. However, these costs can be substantial and place a significant burden on families.
Long-term care insurance is an option for those who can afford it, but it is not widely adopted. According to the American Association for Long-Term Care Insurance, only 7.5 million people had an active long-term care insurance plan in 2020, and uptake has been decreasing over the years. In a country with almost 58 million adults aged 65 or older, and that number expected to increase, this leaves a large portion of the aging population without financial protection for long-term care expenses.
One of the reasons for the low adoption of long-term care insurance is the high cost of premiums. According to the association, the typical annual premium for a 65-year-old ranges from $1,700 to $7,225. This is a significant expense considering that the median income for older adults in 2019 was just over $27,000. The rising cost of long-term care insurance claims, driven by inflation and staffing shortages, is also a concern, as it could lead to even higher premiums in the future.
Furthermore, individuals from low-income communities are particularly vulnerable to poor health outcomes as they age. Higher stress levels, unstable living conditions, and a lack of access to healthy foods and healthcare contribute to an increased risk of chronic illness and nutritional deficiencies. These individuals may not qualify for government services like Medicaid but will still face higher premium costs if they try to purchase long-term care insurance.
The Department of Health and Human Services estimates that the average American turning 65 will incur $120,900 in future long-term care costs, with nearly 40% of the cost needing to be paid out-of-pocket by families. Low-income older adults are also more likely to need long-term support, with 63% of those making the lowest incomes projected to require some form of care.
Recognizing the need for affordable long-term care services, some states have implemented their own programs. Washington state, for example, introduced a mandatory tax in 2019 to create a public care fund. This fund insured over 155,000 people in 2021 and will provide residents with up to $36,500 in lifetime benefits, adjusted for inflation, starting in 2026. Other states, including Pennsylvania, California, and New York, have considered similar programs.
Addressing the long-term care needs of older Americans requires a multi-sectoral approach that includes both government and private sector involvement. It is crucial to educate individuals about the necessity of preparing for long-term care and to develop policies that ensure affordable and accessible options for all. Aging well should be a right, not a privilege based on factors beyond one’s control.