New York, New York — Most Americans know they’ll probably need long-term care someday. Far fewer have done anything about it.
A New York Times analysis published Friday laid out a stark financial reality: a private room in a nursing home now runs around $130,000 a year. Assisted living averages just over $74,000 annually. Even non-medical care at home — a home health aide a few hours a day — runs roughly $80,000 per year.
And nearly none of it is covered by Medicare.
The Coverage Gap Most Families Don’t See Coming
Medicare pays for short-term skilled nursing care after a qualifying hospital stay. It doesn’t pay for what most people actually picture when they imagine needing a nursing home — custodial care, daily assistance, long stays. That falls to Medicaid, which only kicks in once a person has spent down most of their assets.
Long-term care insurance exists to fill that gap, but only about 7.5 million Americans currently have a policy. That’s a fraction of the people who will eventually need it.
Part of the problem is cost. Premiums for long-term care policies have risen sharply over the years, and insurers have exited the market or raised rates dramatically on existing policyholders. Part of the problem is timing — most people don’t think about it until their 70s, when premiums are highest and coverage may be unavailable due to health conditions.
The Stakes Are Real — and Growing
About 70% of adults over 65 will need some form of long-term care in their lifetime. For those who need nursing home care, the average stay runs more than two years. Do the math: two years in a private room comes out to roughly $260,000 out of pocket, unless insurance or Medicaid covers it.
Hybrid products — life insurance or annuities that include long-term care benefits — have gained traction as traditional standalone policies became harder to find and afford. Employers have also started offering group long-term care coverage as a benefit, though uptake has been slow.
Some states have moved toward public long-term care insurance programs. Washington state launched a payroll-tax-funded benefit in 2023, and several others are watching how it plays out. But at the federal level, there’s no comprehensive solution on the table.
This gap has real consequences for nursing home operators. Facilities that rely heavily on Medicaid residents face reimbursement rates that often fall short of actual care costs — a dynamic that has contributed to the financial pressures pushing nursing home costs higher while operators struggle to stay solvent.
What Families Should Know
Financial planners generally recommend exploring long-term care coverage in one’s late 40s or early 50s, when premiums are more affordable and health conditions are less likely to disqualify coverage. Waiting until retirement age often means paying more — or finding out it’s too late to qualify at all.
For families already navigating nursing home placement, the options narrow quickly. Medicaid planning with an elder law attorney can help protect assets while qualifying for coverage, but it requires years of lead time. The Medicaid “spend down” — deliberately reducing assets to qualify — is legal but carries significant pitfalls if not done correctly.
The bottom line: the gap between what Americans think will cover long-term care and what actually does remains enormous. And the cost of waiting to close it keeps growing.
