A new industry survey finds that roughly six in 10 middle-class households are without an adequate plan to pay for long-term care, a gap that could hit union retirees as they plan for life after a career.
The survey by the American Council of Life Insurers found that 39% of middle-class households expect Medicare to cover long-term care costs that the program does not actually cover. Medicare pays for short-term medical needs like hospital stays or rehab after surgery, but not for the ongoing, non-medical help many older adults eventually need, such as assistance with bathing, dressing, or daily living. Another 23% of households surveyed said they haven’t made any plan at all to cover long-term care costs.
Most respondents said they’d instead be self-funding care out of savings or Medicaid, which only kicks in after a household has spent down most of its assets.
For union members, the numbers carry a particular weight. Many workers count on negotiated retirement benefits to carry them through their later years, and an unplanned long-term care expense can erode savings built over a career fast. The median cost of care can range from $74,000 to $129,000 a year, depending on the type of care.
Many Americans will support loved ones with long-term care. Someone turning age 65 today has almost a 70% chance of needing some type of long-term care services in their later years. Without financial protection, this can pose a particular threat to retirement savings.
“Union families bargain for benefits with the expectation that they will be in place when they are needed,” said Lauryl Dodson, Vice President, Federal Relations for Financial Income Security, Diversity & Inclusion, ACLI. “Without a long-term care plan, an unexpected health need can deplete hard-earned savings very quickly.”
Long-term care insurance is built to close exactly this gap. Through this protection, life insurers can turn a promised retirement into a secure one.
