Do Misperceptions About Medicare Coverage Explain Low Demand For Long-Term Care Insurance?

More than half of Americans aged 65 will likely need long-term care services at some point in their lifetime, and they’ll spend an average of almost $140,000 on such services. Yet, only 14% of people age 60 and over have private long-term care insurance, and about one-third of all long-term care expenses in the U.S. are paid for out of pocket. This paper explores the extent to which misperceptions about Medicare, which doesn’t cover extended use of long-term care services, limit the size of the private long-term care insurance market.