Long-term care costs: what are the odds?

Wednesday, April 20th, 2022
Farmer holding clipboard with tractor in background and Legal Groundwork Series title

By Robert Moore, Attorney and Research Specialist, OSU Agricultural & Resource Law Program

There is no doubt that Long-Term Care (LTC) costs are a financial threat to many farms.  Some farmers go to great lengths to protect their farm assets from potential LTC costs.  Protection strategies include gifting assets to family members, transferring farm assets to irrevocable trusts and buying LTC insurance.  But what do the statistics say about the actual risk to farms for LTC costs?

According to the Administration for Community Living, someone turning age 65 today has an almost 70% chance of needing some type of long-term care services in their remaining years.  Due to women having longer life expectancies, predictions are that women will need an average of 3.7 years of care and men will need 2.2 years.  While one-third of today's 65-year-olds may never need long-term care support, 20% will need it for longer than 5 years.  The following data from the ACL provides more details as to the type and length of care needed:

This table shows that of the three years of LTC needed on average, two of those years are expected to be provided at home and one year in a facility.  It is noteworthy that a majority of LTC services are typically provided at home because most people do not want to leave home for a facility, some at-home care isn’t paid for, and home care is less expensive than facility care.  Many people may think all LTC will be provided in a facility, but as the data shows, this is not usually the case.

The next important statistic is cost.  The following are costs of various LTC services from the 2021 Cost of Care Survey provided by Genworth Financial, Inc. 

Nursing home costs are significantly higher than in-home services.  People may think of LTC costs in terms of nursing homes, but as discussed in the previous paragraph, the majority of LTC services are the less expensive, in-home type. So, while all LTC costs are significant, they might not be as high as commonly thought.

Let’s use this data to come up with some possible numbers for an Ohio farmer.  Assume the following:

  • A 65year-old farmer has a 67% chance of needing LTC
  • The length of that care will be around 3 years
  • 1 year of care will be unpaid inhome services
  • 1 year of care will be paid, inhome services at around $60,000/year
  • 1 year of care will be in a nursing home at around $90,000/year

Based on the above assumptions, a 65-year-old Ohioan, on average, can expect about $100,000 in LTC care costs ($60,000 + $90,000 x 67%). Keep in mind that these costs are per person and a married couple will have double these potential costs. The next question is, can the average farmer absorb LTC costs without jeopardizing the farm?  That's a question we'll examine in a future post in the Legal Groundwork Series.