8 in 10 Americans Underestimate the Staggering Cost of Long-Term Care
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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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