Takeaways

  • Long-term care is common and expensive — and for many families, a few years of paid care can erase decades of savings.
  • Medicare does not pay for long-term care. Medicaid does, but poverty is the price for admission into the Medicaid program.
  • Elder Law attorneys who do Medicaid planning (not all do) can help families plan to avoid catastrophic long-term care costs and those as well, caught in an unexpected and unprepared for crisis.

For most Americans, the plan goes something like this: work hard, save diligently, pay off the house, and pass something on to the kids. This quiet promise at the heart of the American Dream is that a lifetime of effort can translate into security for you and the next generation.

A study published by the Roosevelt Institute in April suggests that for most Americans, that promise is being broken — not by bad luck or poor choices, but by the crushing, largely unseen cost of long-term care.

The report lays out a stark picture: The long-term care system in the United States isn’t just failing older Americans in their final years but systematically draining the wealth of most families, making it nearly impossible for the next generation to get a financial foothold.

What Is Long-Term Care and Why Does It Cost So Much?

Long-term care refers to the ongoing help people need when they can no longer fully care for themselves. It can encompass everyday tasks, such as cooking, cleaning, and driving, and, as decline progresses, help with activities of daily living, such as moving about (ambulating), toileting, bathing, dressing and feeding. Care can be provided in various settings, include at home with the assistance of health aides, at adult day care programs, assisted living facilities, and nursing homes.

Over half of Americans aged 65 will need long-term services and supports in their lifetime, and one in five of those adults will need care for more than five years. This is not a fringe issue; it is, statistically speaking, a near-universal part of aging in America — and the costs are staggering.

In 2025, the national annual median cost of in-home, long-term care was about $80,000. The annual cost of community and assisted living ranged from $25,000 to $74,000, and nursing home care was between $115,000 and $129,000 per year. In Pennsylvania, the costs tend to be higher. Notes George Vasiliadis, an attorney with the law firm of Vasiliadis Pappas Associates, “nursing home care in the Lehigh Valley typically costs $180,000 per year”.

Meanwhile, the median household income for Americans aged 65 and older is approximately $57,000 — meaning a single year in a nursing home can cost more than double or triple what a typical senior household earns in a year.

Why are prices so high? Over the past two decades, long-term care costs have risen sharply as the over-65 population has grown rapidly.

Demand for long-term care services is increasing as American adults age, but the industry has long had problems attracting and retaining workers. Long-term care workers often face low pay and poor working conditions, with 36 percent living at or near the poverty line, which makes recruiting and retaining staff difficult. When demand outpaces supply, prices rise — and have been rising for years.

Why the System Leaves Most Families Exposed

You might assume that government programs like Medicare and Medicaid would provide a safety net. However, the reality is far more complicated and far less generous than most people realize.

Medicare, the federal health insurance program for adults 65 and older, provides only short-term skilled nursing or rehabilitation care after a qualifying hospital stay. It does not cover ongoing assistance with daily activities like using the bathroom, eating, or getting in and out of bed. For the millions of Americans who need help with these basic tasks for months or years, Medicare offers essentially nothing.

Medicaid does cover long-term care but only after a family has nearly run out of money. To access Medicaid long-term care, adults must fall below income and asset thresholds that vary by state. In Pennsylvania, countable nonexempt assets must fall below $8,000 (for higher-income persons $2,400) to qualify for Medicaid. “Countable” assets are anything that an applicant and, if married, the applicant’s spouse, can get their hands on to pay for care. For example, assets in a revocable trust count against the asset limit.

This leaves many families in a difficult position. They have too much money to qualify for Medicaid, but nowhere near enough to comfortably afford years of private care. After the onset of care needs, care recipients face permanent wealth reductions, in many cases, impoverishment.

Even families who consider themselves financially comfortable are not immune. Among upper-middle-class couples with lifetime earnings over $4.75 million, nearly half will spend down their assets paying for long-term care and eventually enroll in Medicaid if they require long-term care for five years or more.

The Ripple Effect on the Next Generation

Much has been made in recent years about the so-called “Great Wealth Transfer,” the enormous sum of money that Baby Boomers are expected to pass down to their children and grandchildren. The Roosevelt Institute’s findings puncture that narrative for most families.

Without the assistance of a qualified elder law attorney, the spend-down process required to qualify for Medicaid leaves little to be passed on to younger generations. This interrupts the potential for building generational wealth after what is often a lifetime of work and saving, perpetuating cycles of wealth inequality.

The consequences ripple outward in another way, too: through the unpaid labor of family caregivers, who are overwhelmingly women. In 2021 alone, unpaid caregivers provided an estimated $600 billion in economic value, often at the expense of their own career growth and retirement savings.

When someone steps back from their career to care for an aging parent, sacrificing promotions, raises, and retirement contributions, the long-term financial cost to them and their family can be enormous. So, the care crisis doesn’t just affect the person receiving care — it spreads.

What Families Can Do

Fortunately, there are practical steps that families can take to reduce their exposure:

  • Medicaid Planning. Seek the assistance of an elder law attorney knowledgeable with Medicaid to incorporate long-term care planning as part of your retirement and estate planning. This will typically include powers of attorney that contain special provisions facilitating measures commonly used to protect assets of Medicaid applicants. Another likely tool may be a Medicaid Asset Protection Trust.
  • Financial Products. Long-term care insurance exists specifically to cover these costs and is most affordable when purchased in your 60s, before health conditions make premiums prohibitive or coverage unavailable. Hybrid life insurance policies that include long-term care riders are another option worth exploring with a financial advisor.
  • Have the hard family conversation. Discussing aging, care preferences, and finances before a health crisis is uncomfortable but is far less painful than making those decisions under pressure. Who will provide care? Where will funding come from?
  • Understand what Medicare actually covers. Many families are blindsided when they discover how little Medicare pays for custodial care. Knowing the limits in advance allows you to plan accordingly rather than scramble when a crisis arrives.
  • Don’t assume the “Great Wealth Transfer” will apply to you. If your parents haven’t accounted for long-term care in their financial planning, a significant portion, or all, of what you expected to inherit may go toward care costs. Adjusting your own savings strategy accordingly is prudent.

Conclusion. Long-term care poses a grave risk to the financial well-being of many families in America today. But with proper planning and with the help of qualified professionals, you can protect your family. The lawyers at Vasiliadis Pappas Associates have many years of experience in Medicaid planning. Call us. We can help!