Don't Rely on Medicare or Medicaid for Your Long-Term Care

By: Lee Pruitt

Key Insights

• Many Americans overestimate the coverage provided by Medicare and Medicaid for long-term care, leading to potential financial shortfalls.
• The perceived high cost of long-term care insurance often deters individuals from purchasing it, despite its potential affordability.
• Effective long-term care planning involves considering private insurance, home modifications, and professional advice to ensure future needs are met.

As life expectancy increases, so does the demand for long-term care. The U.S. Census Bureau projects that the number of Americans aged 100 and older will quadruple by 2054, reaching approximately 422,000. This demographic shift underscores the importance of planning for extended care needs.

Long-term care services, often associated with nursing homes, also enable seniors to remain in their homes longer, which is a preferred option for many. These services include assistance with daily activities and medical tasks, as well as household chores, helping to delay or prevent the need for institutional care.

Understanding Long-Term Care Services

Long-term care (LTC) encompasses a range of services that support daily living activities and medical needs. These services are crucial for older adults wishing to maintain independence and avoid nursing home placement. While some rely on unpaid family support, others require paid assistance for extended periods, often averaging three years or more.

Misconceptions About Medicare and Medicaid

The 2025 Nationwide Retirement Institute survey highlights a common misconception: 58% of Americans mistakenly believe Medicare covers long-term care costs. In reality, Medicare only covers limited, short-term care, leaving many unprepared for the financial burden of extended care needs.

Similarly, reliance on Medicaid is fraught with challenges. Many anticipate using Medicaid for long-term care without fully understanding the eligibility requirements or the potential impact of proposed funding cuts, which threaten to reduce access to necessary services.

The Role of Long-Term Care Insurance

Despite the benefits of long-term care insurance (LTCI), ownership remains low, with only 3-4% of Americans over 50 having coverage. Misconceptions about cost deter many from purchasing LTCI, even though premiums are often more affordable than perceived.

Aging in Place: Challenges and Solutions

While 77% of Americans prefer to age in place, many homes lack the necessary safety features. Home modifications can be costly, and the current real estate market poses additional challenges for those considering relocation to more suitable housing.

Planning for Long-Term Care

Proactive planning is essential for managing long-term care needs. Strategies include understanding Medicare limitations, considering early LTCI purchase, exploring hybrid insurance products, and consulting financial and legal professionals. Additionally, leveraging home equity and making early home modifications can provide financial flexibility and safety.

Conclusion: Act Now

Given the likelihood of needing long-term care, early planning is crucial. Relying solely on Medicare or Medicaid is insufficient. For further information, explore these resources:

• Turning Age 65? What to Know About the 4 Parts of Medicare
• Medicare Coverage Basics: What You Need to Know
• Understanding Medicaid: What Does the Medicaid Program Cover?
• Cuts to Medicaid Benefits May Harm Millions of Older Adults
• What You Should Know About Long-Term Care