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Who Pays for Long-Term Care?

About 10 million Americans need long-term care. Long-term care refers to the assistance and services provided to people who are limited in their ability or unable to perform basic activities, such as bathing or dressing, because of chronic illness or disabling conditions.

Most people with long-term care needs rely heavily on unpaid help from family and friends. Still, spending for long-term care services is substantial.

In 2002, national spending on long-term care totaled $180 billion, or about 12 percent of total health care (including medical and long-term care) expenditures. Nearly two-thirds of long-term care expenditures are for institutional care.

For individuals with extensive long-term care needs, long-term care services can be costly. In 2002, the average annual cost of nursing home care was $52,000 for a semi-private room and $61,000 for a private room. The average hourly rate for home care provided by a home health aide was $18.5 At this rate, four hours of home care daily would total about $26,000 annually.

Medicaid is the nation’s largest source of financing for long-term care, followed by out-of-pocket payments by the people receiving care and their families. Medicare and private health insurance provide limited coverage for nursing home and home health care. Few people make any long term care planning and have private long-term care insurance, although the number is growing.

Source: Fact Sheet

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