Rising Cost of Long-Term Care

The cost of long-term care varies depending on the type and location of services. As of 2023, the national median

annual costs were:

Assisted Living Facilities: $64,200

Private Room in a Nursing Home: $116,800

Home Health Aide Services: $75,500

These figures indicate that even basic assisted living can amount to over $64,000 annually, a significant expense for many retirees.¹

Projected Increases

The financial burden of long-term care is expected to grow. For instance, assisted living facility costs increased by 5% from 2022 to 2023. This upward trend underscores the importance of proactive financial planning for future care needs.²

Prevalence of Long-Term Care Needs

The likelihood of requiring long-term care is higher than many anticipate. Approximately 70% of individuals over 65 will need some form of long-term care during their lifetime.³

Insurance and Coverage Gaps

Despite the high probability of needing long-term care, a significant coverage gap exists. In 2023, long-term care insurance policies paid out over $14 billion in claims to approximately 353,000 policyholders.⁴

However, premiums for such policies can be prohibitively expensive, averaging around $1,200 annually for a 60-year-old man seeking $165,000 in coverage.⁵

This cost deters many from obtaining coverage, leaving a large portion of the population uninsured for long-term care needs.

Medicaid's Role and Limitations

Medicaid serves as a critical safety net for long-term care, covering about 62% of U.S. nursing home residents.⁶

However, qualifying for Medicaid often requires individuals to deplete their assets due to stringent income and asset thresholds. This spend-down process can leave retirees financially vulnerable, with limited resources for other needs.

Impact on Families

The financial strain of long-term care extends beyond individuals to their families. Unpaid family caregivers often bear significant burdens, both emotionally and financially. In 2021, caregivers in Washington state provided an estimated $16.8 billion worth of unpaid care, averaging $7,242 annually in out-of-pocket expenses per caregiver.⁶

This scenario reflects a broader national trend where families shoulder substantial costs associated with caregiving.