EBRI: Long-Term Care One of the Most Under-Addressed Retirement Risks

In a July 22 webinar, the Employee Benefit Research Institute and Morningstar Inc. revealed that employees’ perceptions of long-term care needs, knowledge and accessibility of long-term services and supports, as well as longevity, influence their financial readiness in retirement. 

The webinar was based on findings from EBRI’s Employee Long-Term Care Survey, fielded in 2024, as well as results from Morningstar’s “The Overlooked Cost: How Long Term Services and Supports Impacts Retirement-Income Adequacy,” released in May.  

“America is aging, yet nearly 40% of households are expected to run short of money in retirement,” said Bridget Beardon, research and development strategist at EBRI, in a statement. “Awareness of long-term care needs remains low, and private insurance is unaffordable for most. … But there is room for optimism, thanks to public and private innovation.”

Employee Perspectives 

EBRI’s research included 2,445 workers ages 20 to 74, surveyed about their awareness of, access to and perspectives on LTC financing. Four in 10 workers said they are likely to need LTC as they age—yet only 23% of those surveyed had strong knowledge about how to access long-term services and supports, or LTSS, as experts refer to it. Thirty-seven percent reported low or no knowledge of how to access LTC services in their community. 

Meanwhile, only 24% of benefits-eligible employees said their employer offers LTC insurance, and only 9% of eligible employees enrolled, the report stated. 

EBRI’s report showed that 15% of future caregivers expect someone they care for will need financial support, and 45% expect that person to need direct, physical care. Most (75%) caregivers expect to be delivering these forms of care themselves.  

“The employees [who are providing physical care themselves] may need to take time [off] from work, they may need alternative programs, flexible work schedules, eldercare concierge, all sorts of benefits and programs to assist them as they are navigating the care for [these] individual[s] in their lives,” Beardon stated. 

Beardon added that while only three in 10 respondents said Medicaid would cover the cost of care, there is a strong likelihood Medicaid will cover the cost of a future care recipient. Yet, 36% said they were not sure who would pay for care, and 32% said they themselves would pay for it. 

Additionally, 36% of respondents were unsure how long care would last, impacting an employee’s ability to remain in the workforce and keep his productivity high, Beardon said. 

Beardon shared that survey respondents most commonly cited costs (67%), benefits (53%), access (32%) and reliability (31%) as the most important features to them, were they to consider purchasing an LTC contract. The report showed that among those respondents who had estimated the cost of care for a specific individual (29%), many underestimated the cost of LTC, with most expecting totals to remain below $50,000—well below the projected costs found in Morningstar research. 

Effects on Retirement Adequacy 

Spencer Look, associate director of the Morningstar Center for Retirement and Policy Studies, began his presentation by noting the jump in retirement costs between Baby Boomers—those born between 1946 and 1964—with and without a simulated LTSS need. 

“We found that overall, the mean or average cost [of healthcare in retirement for Baby Boomers] was $131,000,” Look said. “When you focus on just those with a simulated long-term care need, that number jumps up to $242,000.” 

For context, Look added that one in four (43%) Baby Boomers are projected to incur LTSS costs in requirement. 

Morningstar’s report found that the percentage of Baby Boomers with LTSS needs in retirement varied both by age of death and gender.  

“As you move from left to right, [from age 75 to age 95,] there’s a higher … likelihood of needing long-term care. … This underscores … that longevity risk and long-term care risk are very much interconnected,” Look said. 

Men who die at age 75 are 23.99% likely to incur LTSS costs, while those at age 95 are 51.80% likely. Women, who generally have longer lifespans than men, were 27.38% and 59.99% as likely, respectively. 

Women—in particular, single women—were especially exposed to LTSS risk. Fifty-two percent may face retirement shortfalls with LTSS risks, compared with 34% without. 

Projected LTSS costs varied by longevity quartile, as well. 

“The costs for the mean and median—just across the board—are increasing as you live longer,” Look said. “[It’s] really important to keep that in mind for planners, and for [other] folks out there.” 

The Legislative Landscape and Recommendations 

The webinar concluded with a legislative update and recommendations from Steve Cain, director of LTCI Partners. 

Cain said that, currently, Washington is the only state with a publicly-funded LTC program. New York and Massachusetts have proposed legislation to establish LTC programs; California and Minnesota completed task forces, studies and/or actuarial assessments; and three other states have those studies or assessments “in flight.” 

At the same time that legislation is expanding, interest in long-term care is moving beyond the sandwich generation, or those caring for both their children and their aging parents. 

“Different generations are actually interested in long-term care,” Cain said. “We enroll 50 plus cases [per] year … it used to be that our average purchase age [of group long-term care] was 57. It’s 47 today.” 

Catin also highlighted reasons for employers to offer group LTC programs to their employees, including better underwriting —specifically leveraging the group’s purchasing power to secure better coverage— as well as better pricing on group rates, and an opportunity to augment financial wellness education offerings. 

“The only constant in life is change,” Cain said. “And we have seen tremendous change in the long-term care industry over the years.”