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8 in 10 Americans Underestimate the Staggering Cost of Long-Term Care
By Adam Hardy MONEY RESEARCH COLLECTIVE
Most Americans expect to pay far too little for elder care.
Most Americans seriously underestimate the cost of caregiving for themselves or a loved one when they can no longer cook, clean, bathe or do other basic daily tasks on their own.
Of U.S. workers who said they expect to provide long-term care in the future, 8 in 10 estimate the cost at under $100,000 a year, according to a new study from the nonprofit Employee Benefit Research Institute, or EBRI.
About 60% of all respondents estimated annual costs below $50,000, and the most common estimate (24%) was $11,000 to $24,999.
The actual cost? Approximately $121,000 for just under a year of care, according to research from the U.S. Department of Health and Human Services, or HHS, which calculated the cost of paid long-term care services for the typical American 65 or older.
Some 56% of older Americans will need long-term care in some form for an average of 3.1 years, HHS research shows. For most of that time, the care is unpaid and provided by family or friends. Typical costs are incurred during a nearly 10-month period, on average, when paid services are required.
EBRI’s survey, which gauged long-term care readiness and knowledge, sheds new light on how little prepared U.S. workers are for that possibility. Responses from nearly 2,500 U.S. workers ages 20 to 74 were collected in late 2024.
“These future caregivers are uncertain about the duration, cost and funding sources for care,” Bridget Bearden, research and development strategist at EBRI, said in an emailed statement, “with many mistakenly believing Medicare will cover a large share of long-term care expenses.”
Who pays for long-term care?
Americans not only struggle with estimating the cost of long-term care, they’re also not sure who actually pays for it.
When EBRI posed the question to respondents, the most common answer (43%) was Medicare. An additional 15% said they aren’t sure.
Medicare, the federal health insurance program that covers about 61 million Americans aged 65 and up, does not pay for typical long-term care services.
The responses to EBRI’s survey highlight a long-running misconception of who ultimately foots the bill.
For instance, a 2023 survey from the health research nonprofit Kaiser Family Foundation (KFF) found much the same, with 41% of respondents saying they thought Medicare primarily covers long-term care costs.
Instead, it’s Medicaid, the state-federal health care partnership program for low-income families, that pays the lion’s share of average long-term care expenses. Unlike Medicare, which is available to most Americans once they turn 65 or have a qualifying disability, Medicaid is a means-tested program with strict qualifications that are determined by each state.
For most states, the maximum annual income as an individual from all sources — including Social Security benefits and retirement account distributions — is roughly $35,000, although several states have much lower limits. Assets are also a factor in Medicaid eligibility, with the cap most commonly set at $2,000. A primary home and car are typically excluded, but bank accounts, 401(k)s and other property are fair game in most cases. These qualifications exclude most retirees.
Still, Medicaid spends an outsized portion of long-term care costs, covering 43% of the average $120,900 expenditure, according to the HHS report. However, only 18% of those who had long-term care expenses actually qualified and received aid from the program.
“Average long-term care costs can be out of reach for many Americans,” the authors of the HHS report wrote.
Even with private insurance and government benefits for those who qualify, the HHS estimated average out-of-pocket costs for long-term care still run $44,800 per person.
“Older adults face significant risk,” the report authors added, “potentially incurring large out-of-pocket costs and requiring unpaid help from family members.”
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Adam Hardy is Money's lead data journalist. He writes news and feature stories aimed at helping everyday people manage their finances. He joined Money full-time in 2021 but has covered personal finance and economic topics since 2018. Previously, he worked for Forbes Advisor, The Penny Hoarder and Creative Loafing. In addition to those outlets, Adam’s work has been featured in a variety of local, national and international publications, including the Asia Times, Business Insider, Las Vegas Review-Journal, Yahoo! Finance, Nasdaq and several others. Adam graduated with a bachelor’s degree from the University of South Florida, where he studied magazine journalism and sociology. As a first-generation college graduate from a low-income, single-parent household, Adam understands firsthand the financial barriers that plague low-income Americans. His reporting aims to illuminate these issues. Since joining Money, Adam has already written over 300 articles, including a cover story on financial surveillance, a profile of Director Rohit Chopra of the Consumer Financial Protection Bureau and an investigation into flexible spending accounts, which found that workers forfeit billions of dollars annually through the workplace plans. He has also led data analysis on some of Money’s marquee rankings, including Best Places to Live, Best Places to Travel and Best Hospitals. He regularly contributes data reporting for Best Colleges, Best Banks and other lists as well. Adam also holds a multimedia storytelling certificate from Poynter’s News University and a data journalism certificate from the Investigative Reporters and Editors (IRE) at the University of Missouri. In 2017, he received an English teaching certification from the University of Cambridge, which he utilized during his time in Seoul, South Korea. There, he taught students of all ages, from 5 to 65, and worked with North Korean refugees who were resettling in the area. Now, Adam lives in Saint Petersburg, Florida, with his pup Bambi. He is a card-carrying shuffleboard club member.