Nearly 70% of People Who Reach 65 May Need Long-Term Care: What Most Americans Can Plan For

Quick Read

• About 70% of adults who reach age 65 will face severe long-term care needs, but only 48% ever get any paid care, with families covering much of the rest without pay.

• Medicare does not pay for an extended nursing home stay; it only covers short-term rehabilitation after a qualifying three-day hospital admission. That leaves Medicaid as the fallback once assets are depleted.

• Families can prepare for long-term care in five main ways: dedicated savings, traditional long-term care insurance, hybrid life insurance policies, home equity, or Medicaid planning with an elder law attorney.

Long-term care can be as basic as help with bathing, dressing, eating, or moving around safely. For many retirees, the real question is whether they will need that assistance and, if so, for how long. The federal government estimates that 70% of adults who live to age 65 will develop severe long-term care needs before they die.

That estimate comes from a federal brief that used Health and Retirement Study data spanning nearly two decades. Many people still expect it will not affect them, in part because the reality often looks very different from the nursing home image they picture.

Most Care Is Shorter and Closer to Home Than People Expect

The same federal study found a wide gap between needing care and paying for it. Only 48% of people reaching age 65 receive any paid care over their lifetime. The researchers point to heavy dependence on unpaid help. Many older adults with serious needs rely entirely on family members or other unpaid caregivers, so a spouse or adult child often ends up doing the work with no formal bill attached.

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Paid care is often limited in duration as well: only 24% of older adults receive more than two years of paid care, and only 15% spend more than two years in a nursing home. The burden is not evenly distributed. The brief says long periods of need and paid care are far more common among people with fewer financial resources than among wealthier families.

Medicare Covers Rehab, While Medicaid Picks Up What Remains After Savings Are Gone

Medicare says plainly that it generally does not pay for ongoing nursing home care. What it does cover is skilled nursing facility care, meaning rehabilitation or nursing services that require professional care, and only for a limited period after a qualifying inpatient hospital stay of at least three consecutive days. Even then, patients still owe money. Under current rules, patients generally pay $0 per day for the first 20 days of covered skilled nursing care and $217 per day for days 21 through 100.

Because of that, Medicare says most people entering a nursing home begin by paying the costs themselves. Medicaid can cover long-term nursing home care for people who meet their state’s eligibility rules. Those rules vary by state, and residents may have to spend down their savings before qualifying, but CMS guidance says Medicaid pays for nursing home care only when no other source is available. Our earlier coverage explains state Medicaid rules in greater detail.

Retirement Income Must Also Stretch to Cover Care Costs

For most families, planning starts with monthly income. The average retired worker’s Social Security check is $2,071 after the cost-of-living adjustment, and the next adjustment is set at 3.6%. The standard Medicare Part B premium of $202.90 a month usually comes out of that benefit first. Advisor Wes Moss summed up the overlap on a podcast episode: “Your income in retirement planning doubles as your long-term care planning as well.”

Five Practical Ways Typical Households Can Prepare

Each option is based on a different assumption about how much care will be needed and who will provide it.

Taxes can also soften the insurance cost. IRS Publication 969 says long-term care insurance premiums can count as qualified medical expenses for an HSA, up to limits that depend on age and change each year. Our article on paying premiums from an HSA explains those limits, and another piece examines how large a dividend portfolio would need to be to cover a nursing home bill.

One Family Conversation Worth Having Sooner Rather Than Later

The federal data show that family is the most common source of care, so the planning conversation usually comes back to relatives. It often includes who could realistically help at home, where care would happen if home care no longer works, and which combination of income, savings, insurance, or home equity would pay for it. It is much easier to have that discussion while everyone is healthy, because the options narrow quickly after a diagnosis or a hospital discharge.

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