Introduction
In the United States today, we are at a demographic threshold. Not only are people generally living longer, but the members of the baby boom generation — a population cohort of 78 million people born between 1946 and 1964 — are approaching the age of 60. As a result, our country’s elderly population will increase substantially in the coming years, putting a serious strain on employer-sponsored retirement plans, the Social Security system, the healthcare delivery system, the Medicare program, and other services and programs for the aged.
But the needs of the elderly are not limited to retirement income and medical care. As people age they become more likely to develop a chronic condition that prevents them from functioning normally — they may not be able to move about easily or dress or feed themselves, or they may suffer from disorientation or impaired memory. When such a loss in physical or cognitive functioning occurs, a person needs long-term care: home healthcare, assisted living, nursing home care, or other services.
These services are expensive, and if they are needed for an extended time, the cost can be substantial. How can the average person pay for long-term care? And how can we as a society ensure that the need for long-term care is met without placing such a burden on government benefit programs that they become no longer viable? That is the focus of this course.
To fully understand long-term care funding, long-term care insurance, and state partnership programs — which will be discussed in the chapters that follow — we must first understand long-term care itself. What exactly is meant by long-term care? When is it needed? What services and settings does it include? And how much do these services cost?
What Is Long-Term Care?
Long-term care is a broad range of services provided over a prolonged period, the purpose of which is to minimize or compensate for a person’s loss of physical or mental functioning resulting from an illness, disability, cognitive impairment (such as Alzheimer’s disease), or simply the frailties of old age.
To understand long-term care, it is helpful to understand how it differs from acute care.
- Acute care is medical treatment for an illness or injury. Its purpose is typically to cure the patient and restore previous levels of functioning. Acute care is provided by physicians, nurses, and other medical professionals, and it normally takes place in a hospital, clinic, or doctor’s office. It typically lasts a relatively short time.
- Long-term care, unlike acute care, is not primarily intended to cure or treat a medical condition. Instead, it focuses on coping with a person’s reduced level of physical or cognitive functioning over an extended time, sometimes indefinitely. Some long-term care services are rendered by healthcare professionals, but it is more often provided by nonprofessional personnel such as home health aides, or by informal caregivers such as family and friends.
Coping with a person’s reduced level of functioning can include medical treatment, skilled nursing care, and various kinds of therapy. But it more typically involves assisting a person with the following:
- Basic functions, such as bathing, dressing, getting in and out of bed, going to the toilet, and eating (called activities of daily living, or ADLs)
- Household chores, such as meal preparation and cleaning
- Life management, such as shopping, money management, and taking medications
- Transportation
Long-term care also often involves the supervision required by a person with a cognitive impairment so that he will not harm himself or others.
When Is Long-Term Care Needed?
Whether a person needs long-term care and what care she needs are determined by a healthcare professional, such as a physician, nurse, or medical social worker experienced in long-term care. An important part of the process is an assessment of the person’s ability to perform activities of daily living (ADLs) — basic functions required for a person to take care of herself. The inability to perform ADLs is the most reliable and objective indicator of the need for long-term care services.
The following six ADLs are commonly used to assess this need:
The inability to perform ADLs constitutes functional (or physical) impairment. However, some people can perform all ADLs but still need long-term care because of a cognitive impairment — a condition such as Alzheimer’s disease that causes a significant diminishment of reasoning, intellectual capacity, or memory, resulting in confusion, disorientation, impaired judgment, or memory loss.
Long-Term Care Services & Settings
Long-term care can take place in a number of different settings — the home of the person receiving care, community-based facilities such as adult day centers, residential facilities such as assisted living residences, and nursing homes. It is provided by healthcare professionals such as nurses or therapists (who provide skilled care), as well as nonprofessional personnel, family, and friends (who provide personal care and supervisory care).
Most people prefer to receive care in their home. Remaining at home reinforces a person’s sense of independence and allows him to maintain accustomed habits and daily routines. An innovative approach called aging in place lets the person stay at home with needed services provided there or in the community, made possible by:
- Home health care — paid personnel coming into the home to provide personal care, supervisory care, nursing, therapy, and homemaker/chore services
- Community-based care — adult day centers, senior centers, congregate meal sites, transportation services, and home-delivered meals
- Residential care — independent living spaces with access to personal care and household support, including assisted living residences and continuing care retirement communities
The Cost of Long-Term Care
The cost of long-term care varies according to the service provided and the geographic location.
- A semiprivate room in a nursing home in the United States costs an average of $328 per day in 2026, with an average annual cost of about $118,104. The cost of a private room averages $376 per day, ranging from approximately $190 per day in lower-cost states to over $1,000 per day in Alaska.
- The average cost of a home health aide in 2026 is $35 per hour, with local costs ranging from $23 in Louisiana to $42 in Washington.
- The average base rate for a one-bedroom unit in an assisted living residence is $6,200 per month in 2026. (In many residences this base rate does not include personal care or various other charges.)
Sources: CareScout/Genworth Cost of Care Survey (2025 data, published 2026); MedicaidPlanningAssistance.org (2026); SeniorLiving.org (2026).
The total amount a person spends on long-term care in her lifetime depends both on the price of services and on how long she uses those services. A few statistics will give an idea of what one should expect:
According to one study, the average nursing home stay is 2.5 years, but 17 percent of stays exceed five years. Based on a yearly cost of approximately $118,104, the average stay would cost about $295,260, and a five-year stay would cost more than $590,000. But many people receive home healthcare or residential care for a considerable time, often years, before they enter a nursing home (if they ever do). For example, the average stay in an assisted living residence is about three years. So the true lifetime cost of long-term care is typically much more than the cost of an average nursing home stay.
Moreover, these figures are based on current prices, and most people are concerned about needing long-term care in the future, not today. Long-term care costs have roughly doubled over the past two decades. If current projections hold, the monthly cost of a semiprivate nursing home room is expected to reach approximately $11,077 by 2030 — underscoring why planning well in advance and factoring in future inflation is so important.