Despite depleted retirement savings, a recent study has found that the majority of Americans will need nursing home care at some point in their lives. The study results are a stark contrast to the 35% estimate used by the U.S. Department of Health and Human Services.
The lifetime use of a nursing home is much larger than previously thought, mostly due to an increase of shorter stays of less than three weeks. Regardless of time spent in a nursing home, the big questions remain: who will pay for it? And how?
While out-of-pocket spending is not seen as being overly large on average, but the risk of long stays and large out-of-pocket expenses is. According to the report, five percent of patients will spend more than 1,500 days living in a nursing home, while another five percent will spend more than $50,000.
For married couples, the financial risks are even larger. And as more and more baby boomers start to need more nursing home care, costs will soar.
An aging population, coupled with earlier discharges from hospitals to nursing homes for rehabilitation and rising incidences of dementia, mean the risk of staying in a nursing home is increasingly likely.
With the costs of long-term care and services growing, most individuals and families will find themselves relying on Medicare and Medicaid.
Researchers found that the majority of Americans will be able to cover brief nursing home care expenses of about $7,300. Roughly one-third of adults between the ages of 57 and 61 will spend money on nursing home care, while 43% will have their care covered by private or public insurance.
According to the study, the average nursing home stay was 272 nights, but for 10% of the population, the stay was more than 1,000 nights. For five percent of older Americans who needed long stays, out-of-pocket costs were $47,000 or more.
Nursing home stays of three weeks or less increased to 34% in 2010 from 28% in 1998. The increase in shorter stays may be due in part to efforts to control Medicare and Medicaid costs.
Is it worth buying insurance to cover long-term care? That’s open for debate. Only 12% of Americans in their early 60s use long-term care insurance. Questions about what that insurance will pay for can make the buying of long-term insurance questionable for some.
Medicaid might be the only option for many Americans. When it comes to retirement savings, most families have set aside little or nothing.
“Distribution of lifetime nursing home use and of out‐of‐pocket spending,” Proceedings of the National Academy of Sciences of the United States of America, August 29, 2017.