Please ensure Javascript is enabled for purposes of website accessibility

Will COVID-19 Drive Up the Cost of Long-Term Care?

By Maurie Backman – May 1, 2020 at 6:31AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The outbreak has hit long-term care facilities hard. Will that lead to a shift in standards -- and added expenses for seniors?

An estimated 70% of seniors aged 65 and older will end up needing some degree of long-term care in their lifetimes, and that care doesn't come cheap. Here's a snapshot of what it looks like today, according to Genworth's 2019 Cost of Care Survey:

Long-Term Care Service

Average Annual Cost

Assisted living facility

$48,612

Home health aide

$52,624

Nursing home -- shared room

$90,155

Nursing home -- private room

$102,200

DATA SOURCE: GENWORTH.

Furthermore, Medicare generally won't pay for long-term care since it's custodial in nature -- meaning, it relates to assistance with everyday living and isn't strictly medical. As such, seniors and their families are often left to absorb these astronomical costs on their own.

Older man sitting with food in front of him while smiling man in scrubs pats his shoulder

IMAGE SOURCE: GETTY IMAGES.

Unfortunately, though, the above numbers may start to look like a bargain in the coming years as facilities change their policies -- and pricing models -- in the wake of COVID-19.

Will COVID-19 make long-term care even more expensive?

Though the impact of COVID-19 has been felt all over the country, nursing homes are an unquestionably hard-hit subset. As of April 23, there were more than 50,000 reported COVID-19 cases in long-term care facilities, according to the Kaiser Family Foundation. And in 6 of the 23 states that are publicly reporting death rates (Delaware, Massachusetts, Oregon, Pennsylvania, Colorado, and Utah), deaths in long-term care facilities represent more than 50% of all COVID-19-related fatalities.

All told, COVID-19 has made a known appearance at more than 4,000 long-term care facilities across the country and has caused more than 10,000 deaths among residents and staff members alike. As such, it's likely that nursing homes and other long-term care establishments will need to rethink the way they train and rotate staff and implement sanitary standards to avoid a repeat scenario.

All of this is apt to come at a cost, though. The question is: Will that cost get passed on to seniors who can barely afford these facilities to begin with?

Protect yourself from a potentially monstrous expense

Without a crystal ball, it's impossible to predict whether you'll need long-term care in the future and to what extent. And also, we don't know how substantially long-term care costs will rise in the coming years in COVID-19's wake. Your best bet, therefore, may be to secure long-term care insurance while you're still young enough to qualify.

The ideal time to apply is during your mid-50s. That way, you're not paying those premiums for too many years but you're also applying at a time when you're relatively young and therefore more likely to snag a discount on your premiums based on your age and health. That said, if you've already missed that boat, it pays to apply in your 60s, too, especially if your health is decent.

Of course, not all long-term care policies are created equal, and different policies offer varying levels of coverage. Your best bet is to assess your financial resources, research the cost of long-term care in your neck of the woods, and see how much coverage you need.

Even if COVID-19 doesn't directly result in substantial increases, the cost of long-term care has already been climbing from year to year. The more financial protection you have, the less stress you and your loved ones will have when you're older.

The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.