Is Long-Term Care Too Expensive?

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When people refer to “dying broke,” they typically are envisioning spending their retirement nest egg on creating experiences and memories for themselves, family, and friends. They usually aren’t talking about outliving their financial resources because of long-term health care costs.

Unfortunately, the second version of “dying broke” is the more likely reality, according to a series of articles in The New York Times in November 2023. The articles, a joint project of The Times and KFF Health News, explored the intricate, expensive, and often confusing web of the long-term care industry.

According to A Home For Mom, of more than 55.8 million adults in the U.S. aged 65 or older, 1.3 million live in nursing homes, representing 2.3% of the elderly population. An additional 818,800 reside in assisted living facilities. Assisted living centers serve those who do not need skilled nursing care but require assistance with daily tasks like dressing, bathing, and managing medications.

Assisted living facilities turn out to be quite profitable. A recent industry survey revealed that half of the operators in this business see returns of 20% or more than operating costs. That's much more profitable than most other health sectors.

Most assisted living facilities charge a base fee from around $4,500 a month for an individual to over $10,000 a month for a couple, then add charges for many services. It’s common to group additional services, like therapies and medication disbursement, into different payment tiers. Other facilities consider themselves all-inclusive, but still may have add-on fees that can increase a resident’s monthly bill by several hundred or even thousands of dollars.