About half (52%) of Americans turning 65 today will develop a disability serious enough to require long-term care services and supports (LTSS), although most will need assistance for less than two years, according to a new report by the U.S Office of the Assistant Secretary for Planning and Evaluation (ASPE).
However, about one in seven adults will have a disability for more than five years.
On average, an American turning 65 today will incur $138,000 in future LTSS costs, which could be financed by setting aside $70,000 today, according to ASPE. Families will pay about half of the costs themselves out-of-pocket, with the rest covered by public programs and private insurance.
Out-of-pocket costs average $72,000, data show. Among those who have out-of-pocket costs, these costs average $140,000. About three-fifths of individuals face no out-of-pocket costs.
“Community care,” which includes both in-home care and residential care that is not in a nursing facility, is projected to cost members of this demographic group $49,600 out-of-pocket, on average, during this four-year time period.
Looking at community and institutional expenses together, two predominant payers are Medicaid, comprising 34% and out-of-pocket payments, comprising 52% of the sum of total LTSS expenditures, respectively.
Payer predominance varies by setting, ASPE notes.
“For example, Medicaid pays for 51% of the total for institutional settings,” ASPE says in the report. “For community expenses, in contrast, out-of-pocket payments by families comprise the majority, about 68%.”
About one in six (17%) will spend at least $100,000 out-of-pocket for future LTSS, data show.
“Many Americans prefer not to think about this need for assistance or who will provide it,” ASPE says. “They underestimate how likely it is they will need it and how much it will cost. Even if they correctly consider the chances of becoming disabled and needing daily help, many Americans mistakenly assume their health insurance covers these costs. However, health insurance does not cover LTSS costs, and Medicare, the major public insurance program for older Americans, does not cover most LTSS expenses.”
Written by Cassandra Dowell