Key Themes and Important Ideas/Facts:

Rising Demand and Declining Supply: The United States is facing a growing need for long-term care services primarily due to an aging population. The number of people aged 85 and older is projected to nearly double by 2035 and triple by 2060. This increasing demand is occurring simultaneously with a shrinking supply of care.

• Quote: "Demand is rising at the same point that supply is decreasing, and both are happening at a very rapid pace." - Samir Shah, Chief Executive of CareScout.

• Fact: The U.S. Census Bureau forecasts that the number of people 85 and older will nearly double by 2035 (to 11.8 million people) and nearly triple by 2060 (to 19 million).

Labor Shortage and Rising Costs: A significant driver of the supply issue is a labor shortage in the direct care workforce. This shortage is attributed to low wages, which are often lower than other entry-level jobs. Concerns exist that immigration policy changes could further exacerbate this shortage. The resulting imbalance between supply and demand is contributing to escalating costs for long-term care services, with some services seeing cost increases as high as 10% in 2024.

• Fact: The median hourly wage for all direct care workers was $16.72 in 2023 — lower than the wage for all other jobs with similar or low entry-level requirements.

• Fact: Immigrants make up 28 percent of the long-term care work force.

• Fact: The price of some long-term care services in 2024 rose as much as 10 percent.

• Quote: "Long-term care providers would be in a really challenging place, as would long-term care recipients, without them [immigrant workers]." - David Grabowski, Professor of Health Care Policy at Harvard Medical School.

Public Misunderstanding of Funding and the Role of Medicare and Medicaid: There is widespread confusion among the public regarding how long-term care is paid for. A significant portion of the population, particularly older adults, incorrectly believes that Medicare covers long-term care.

• Fact: 23 percent of all adults — and 45 percent of those age 65 or older — incorrectly believe that Medicare will cover their time in a nursing home if they have a long-term illness or disability.

• Quote: "Most people have this misconception that Medicare covers long-term care when we know that it is Medicaid that is the primary payer." - Priya Chidambaram, Senior Policy Manager for KFF’s Program on Medicaid and the Uninsured.

Medicaid as the Primary Payer, but with Limitations: Medicaid is the largest single payer for long-term care in the U.S., covering 61% of all long-term care according to KFF. However, eligibility is restricted to individuals with limited income and assets. While Medicaid primarily covers care in nursing homes, its coverage for home-based services can be more limited. Medicare, on the other hand, generally covers only short-term skilled nursing care (up to 100 days after a hospitalization) and some home health services for eligible individuals. PACE (Program of All-Inclusive Care for the Elderly) is presented as a Medicare/Medicaid program designed to help individuals meet health care needs in the community instead of a nursing home, covering a range of services for eligible individuals.

• Fact: Medicaid covers 61 percent of all long-term care.

• Fact: Medicare and most health insurance, including Medicare Supplement Insurance (Medigap), don’t pay for long-term care (also called “custodial care” or “long-term services and support”).

• Fact: To find out if you qualify for long-term care coverage through Medicaid, contact your State Medical Assistance (Medicaid) office.

Strategies for Funding Long-Term Care: Several strategies are presented for funding long-term care needs, including:

• Private Insurance: Traditional long-term care insurance and "hybrid" policies (combining life insurance with a long-term care benefit) are options, although the market for traditional policies has shrunk and policies can be complicated and costly, requiring medical qualification.

• Self-Funding: Affluent individuals may be able to pay out-of-pocket, but this requires significant planning and allocation of financial resources, considering factors like health status, desired care setting, and the financial needs of a surviving spouse or heirs. Utilizing various account types (tax-deferred, tax-free, taxable, HSAs) is suggested.

• Retirement Income: Maximizing guaranteed retirement income like Social Security by delaying claims can help meet long-term care expenses.

• Informal Care: Relying on family members and friends for care is common (64% of caregiving hours are provided by informal caregivers), but this can have significant financial and personal costs for the caregivers, including reduced spending, difficulty paying bills, lower career earnings, and decreased savings.

• Fact: Fewer than half of adults said they’ve talked seriously with loved ones about how they would obtain or pay for long-term care.

• Fact: Among near-retirement individuals, just 28 percent say they have set aside money for it.

• Fact: 64 percent of caregiving hours are provided by children, spouses, other relatives or nonrelatives.

• Fact: 56 percent of people who provided or paid for someone’s long-term care cut back on spending on food, clothing or other basic needs.

Gen Z's Willingness vs. Financial Preparedness: A recent survey reveals a significant disconnect between Gen Z's stated willingness to care for their aging parents and their understanding of the financial costs involved. A large majority of Gen Z plan to be caregivers or provide financial support, but very few correctly estimate the average annual cost of senior care. This lack of awareness, coupled with rising costs and stagnant wages, raises concerns about their ability to fulfill these intentions without significant planning.

• Fact: 72% of Gen Z plan to be a caregiver for their parents in the future.

• Fact: 60% of Gen Z plan to financially support their parents’ senior care.

• Fact: Only 16% of Gen Z... know how much senior care costs.

• Quote: "I am concerned that even with their preparation and our contribution, we won’t be able to afford the kind of life I would want them to live in their last chapters." - N. Taylor, a 27-year-old Gen Zer.

The Importance of Planning and Communication: The sources emphasize the critical need for open communication within families about future care needs and proactive planning. Many families and seniors are unprepared for the costs and complexities of long-term care, leading to challenges in accessing necessary services in a timely manner. Starting the conversation early and taking concrete steps like exploring options, understanding costs, and discussing preferences are crucial.

• Quote: “The greatest issue plaguing seniors and their families is the lack of preparing and planning early enough.” - Susann Crawford, VP of Sales at Caring.com.

• Fact: Fewer than 40% of Gen X and Baby Boomer parents have talked to their children about their potential future care needs.

• Fact: Only 10.5% of Gen X and Baby Boomers have a plan in place for caregiving and/or financial support.

Conclusion:

The U.S. faces a complex and escalating challenge in providing and funding long-term care for its aging population. The confluence of increasing demand, a constrained labor supply, rising costs, public misinformation, and the significant burden on informal caregivers necessitates urgent attention and proactive solutions. While the willingness of the younger generation to provide support is encouraging, their lack of awareness regarding costs highlights the critical need for improved education and planning across generations. Addressing the labor shortage, ensuring adequate and accessible funding mechanisms (particularly through Medicaid), promoting public understanding, and fostering family communication and planning are essential steps in navigating this impending "storm" in the long-term care industry.