Crunching the Numbers for Long-Term Care – Most Americans are Underprepared

Photo: long-term care
Photo courtesy of Rosie O’Beirne, Flickr Creative Commons.

The results of a 2013 survey about long-term care for the elderly make two things clear. Americans drastically underestimate their own chances of needing future care, and they also misjudge how much that care will cost.

As the U.S. population ages, these misperceptions are likely to be very expensive – for families and U.S. taxpayers alike.

Last spring, The Associated Press-NORC Center for Public Affairs Research conducted a survey of more than 1,000 adults aged 40 or older. Twenty-four percent said it was “extremely likely” or “very likely” that they would need long-term care in the future.

That’s a big underestimation, according to the U.S. Department of Health and Human Services. Their numbers say 70 percent of Americans will need long-term care at some point after the age of 65.

The likelihood is even higher for women, as their life expectancy is about five years greater than men’s. In fact, according to the California Association of Health Facilities, a professional association for long-term care providers, two-thirds of residents in the state’s care facilities are women.

The AP survey also found that 60 percent of adults underestimate the cost of living in a nursing facility, and 37 percent wrongly expect Medicare will pay for it.

In reality, Medicare mostly pays for short-term care. It’s actually Medicaid – the medical program for the poor (called Medi-Cal in California) – that foots the lion’s share of nursing home bills, and seniors must deplete their own savings before they’re eligible.

There’s another type of residential care for seniors – assisted living communities. Those typically provide meals, housekeeping and medication delivery, and help residents with daily tasks like bathing, dressing and eating, but they do not offer medical care. Neither Medicare nor Medicaid pay for assisted living facilities, so those expenses come mostly out of pocket.

The numbers below, provided by the California Association of Health Facilities, paint a sobering picture of how much the two types of long-term care cost, and who is likely to pay the bill.

Nursing Homes

Sometimes called skilled nursing facilities, these residences provide nursing care or rehab for chronically ill residents. They also provide meals and assist residents with daily tasks.

  • $6,780 – the average monthly cost of living in a nursing facility in California.
  • 2/3 – of nursing home residents in California rely on Medi-Cal to pay for their care. Medicare pays for only about 12 percent nursing home days. It’s important to note that patients must deplete their own savings before they are eligible for financial assistance from Medi-Cal.
  • Less than 3 months – the length of stay in a nursing facility for 80 percent of residents. Less than 7 percent stay for more than a year.

Assisted Living Communities

These communities, also called residential care facilities,offer meals, housekeeping and medication delivery, and help seniors with tasks like eating, bathing and dressing. They do not provide medical care.

  • $2,000-$4,000 – the monthly cost of living in a residential care facility in California.
  • 90% – of assisted living costs are paid for with private funds because Medicare and Medi-Cal do not cover assisted living facilities.
  • 3.3 years – the average stay in a California assisted living community.

What can you do to prepare for possible long-term care?

  • Talk to your family early – The AP poll found that most people plan to rely on family for at least some of their future care, but 60 percent have never discussed the subject with their families. Starting this conversation now will help your make sure everyone has thought through the possibilities, especially if family members live far away or have jobs that aren’t flexible.
  • Fill out a health care power of attorney document – In addition to talking with spouses, children or grandchildren, it’s important to think about who you would like to make your healthcare decisions if you’re incapacitated and can’t make them yourself. This person is often a family member or close friend, and the legal term is a healthcare agent. Each state has a form, called a healthcare power of attorney document, that legally designates your healthcare agent. (California’s is available here.) You and the person you designate should discuss the end-of-life care measures you do – and don’t – want if you can’t make decisions for yourself. You can also put these instructions in writing in a document called a living will.
  • Talk to a financial planner about the best way to save – It’s important to factor potential long-term care into your retirement savings plan, and a financial planner can help you determine the best way to do that. Long-term care insurance is an option, but it isn’t always affordable or accessible and may not be the right choice for everyone.
  • Keep an eye on federal policy – Last year, Congress named a special committee to recommend policies that will help the country handle the costs of long-term care the U.S. population ages. Stay informed about legislation and voice your concerns or support to your elected officials.

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About Kathryn Roethel

Kathryn Roethel is a freelance journalist living in Palo Alto, Calif. She graduated from the Stanford Graduate Program in Journalism where she co-founded the Peninsula Press, the local news site where Stanford journalism students publish their class work in conjunction with local media partners including the San Francisco Chronicle’s website and the Bay Area NPR affiliate, KQED. After graduation, the Stanford journalism program hired Kathryn as the Peninsula Press’s first managing editor.

Kathryn writes weekly articles for the San Francisco Chronicle’s health section and Sunday Style section, and her work has also appeared in U.S. News and World Report, the Bay Citizen and New America Media.