A growing number of Americans believe that Medicare will cover the costs of long-term care in old age — but experts warn that belief is dangerously mistaken. According to recent studies, this widespread misconception could leave millions of seniors financially unprepared for the rising costs of aging.
Long-term care refers to assistance with daily living activities such as bathing, eating, and dressing — needs that more than 80% of people will face as they age, according to research from the Center for Retirement Research at Boston College. Yet Medicare, the federal health insurance program for those over 65, does not typically cover these services.
Despite this, a 2024 survey by Nationwide found that 58% of Americans incorrectly believe Medicare pays for long-term care.
“Seventy percent of the people who reach 65 are going to need long-term care,” said Holly Snyder, president of Nationwide Life Insurance. “Many think public safety nets will automatically support them — but that’s just not true.”
Understanding the Real Costs of Long-Term Care
Long-term care is often needed for years, and the associated costs are substantial. According to T. Rowe Price:
- Assisted living costs average $5,350 per month
- Nursing home care can reach $9,733 per month
These figures shock many older adults — especially those assuming Medicare will cover the expenses. But Medicare is designed to cover medical services, not custodial ones like helping someone eat, bathe, or remember their medications.
“People don’t distinguish between long-term care and health care,” said Gal Wettstein, a senior economist at Boston College. “And that leads to poor financial planning.”
There’s some nuance: Medicare may pay for short-term stays in skilled nursing facilities following a hospital stay. But for the long-term, non-medical support most seniors need, it offers little help.
Medicaid Covers Long-Term Care — But Only After You Spend Down
While Medicare doesn’t offer broad long-term care coverage, Medicaid does — but with strict eligibility rules. Medicaid, the public insurance program for low-income individuals, is currently the largest payer of long-term care in the U.S.
However, to qualify, seniors must first spend down nearly all their assets.
“It’s an insurance plan with a deductible equal to everything you own,” Wettstein said.
This creates a financial chasm: affluent individuals can afford care; those with no assets may qualify for help. But middle-class Americans — who neither qualify for Medicaid nor can comfortably pay out of pocket — often fall through the cracks.
“When you get old, you’d better be rich or be broke,” said Patrick Simasko, an elder law attorney. “It’s the people in the middle who struggle the most.”
Why Long-Term Care Insurance Remains Uncommon
Given the need, why do so few Americans buy long-term care insurance?
Part of the answer lies in the Medicare myth. If people believe the government will cover them, they see no need to purchase a separate policy.
In fact, only about 4% of older adults currently hold long-term care insurance.
The 2024 Nationwide survey revealed other misconceptions, too:
- 41% of respondents doubted they’d live long enough to need long-term care.
- Many thought the total cost of care would not exceed $50,000 — far below real figures.
Bridget Bearden of the Employee Benefit Research Institute said much of retirement planning still focuses on saving money, not managing risk. But for many retirees, the cost of care is the most significant late-life expense they will face.
Tips to Prepare for Long-Term Care Costs
If these findings are concerning, experts offer several practical steps to help prepare for the possibility of needing long-term care.
1. Consider Long-Term Care Insurance
These policies are specifically designed to cover the costs of care not included under Medicare. While some believe they’re too expensive, prices vary depending on coverage levels and other factors.
For example, a typical policy offering $165,000 in benefits might cost:
- $950/year for a 55-year-old man
- $1,500/year for a 55-year-old woman
(Source: National Council on Aging)
One drawback of traditional plans: If you don’t need care, you get no payout. But “hybrid” policies are evolving. These blend long-term care coverage with life insurance — unused care benefits can pass to your heirs.
2. Shop Around for the Best Value
Long-term care costs vary greatly by location. For instance:
- Albany, NY: $8,093/month
- Boulder, CO: $4,600/month
If you live in an expensive city, consider options in nearby counties or suburbs. Use a cost-of-care calculator to explore pricing in your area and stretch your retirement budget further.
“Find the best place for the best price,” Simasko advised.
3. Meet With a Retirement Planner
A qualified financial planner can help you estimate long-term care expenses and integrate them into your retirement strategy.
“It’s about talking to your financial professional,” Snyder said. “P
lanning ahead can make all the difference.”
Conclusion
Long-term care is one of the most misunderstood — yet critical — aspects of retirement. With the majority of Americans likely to need daily support at some point, understanding what Medicare does (and doesn’t) cover is essential.
The reality is stark: Without proactive planning, older adults risk being caught in a costly gap — too wealthy for Medicaid, but unprepared for care expenses. By learning the facts, considering insurance, and seeking expert guidance, individuals can better safeguard their independence, dignity, and savings in later life.
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