U.S. Long-Term Care Insurance Users Average $1.4M in Household Wealth: Study

The big picture: Gruber and McGarry found that, in 2018, formal nursing home care cost $142 billion and served 1.1 million people.

Formal home health agency care cost $89 billion and served 4.1 million people.

One method for analyzing the informal care provided by friends, neighbors and family members valued it at about $86 billion. Another method valued it at $151 billion.

All forms of U.S. long-term care likely cost $317 billion to $382 billion in 2018, with public programs accounting for $165 billion of the spending and private payers and providers accounting for $152 billion to $217 billion, according to the researchers.

Private long-term care insurance: The researchers broke the U.S. long-term care insurance market down into two segments: U.S. residents ages 65 and older and U.S. residents ages 85 and older.

The researchers estimate, based on health expenditures data from the Centers for Medicare and Medicaid Services, that private insurers paid for 9% of U.S. nursing home care and 12% of U.S. home care in 2018.

In 2018, 7.7 million of the people in the 65-and-older group, or 15% of the people in that group, had long-term care insurance.

Although the long-term care insurance users had an average annual household income of $72,000, their median household income was $49,000, meaning that half had income over $49,000 and half had income income under $49,000.

People in the 65-and-over age group without long-term care insurance were less affluent.

The uninsured people had average annual household income of just $49,000, median household income of $33,000 and median total household wealth of just $239,000 including the value of homes.

Long-term care insurance users were healthier than the uninsured as well as more affluent, thanks to factors such as long-term care issuers' underwriting efforts, the cost of long-term care insurance, and the tendency for people with long-term care insurance to be conscientious about their personal health as well as about their finances.

Only 11% of the long-term care insurance users needed help with common activities such as shopping and bathing. About 13% of the uninsured people needed help with common daily activities.

The same pattern held for people ages 85 and older, although that group tended to have a lower income, less household wealth and more health problems.

In the 85-and-over category, 26% of the long-term care insurance users and 33% of the uninsured people needed help with common daily activities.

Jonathan Gruber. Credit: House Oversight Committee