As populations around the world age, demand for long-term care (LTC) is likely to increase, making it difficult for governments to balance financial sustainability with the need to provide effective protection against the financial risks associated with LTC needs.

The OECD framework for comparing social protection for LTC across countries makes it possible to estimate the financial costs that older people face, and the protection they receive, in different scenarios of LTC needs, and for any level of income and wealth.

TOTAL COSTS OF CARE

Total costs of long-term care can be very high compared to median disposable income in old age.

Total costs of care as a share of median disposable income of over 65-year olds

Note: National median disposable incomes are for people of retirement age or older (e.g. the costs of long-term care in South Tyrol are compared to the national median disposable incomes in Italy). Severe needs correspond to 41.25 hours of care per week. Older person with severe needs receiving long-term care at home is assumed to live with a spouse who can provide 24- hour supervision, help with taking medicines, and manage the finances, but cannot provide care for any other activities of daily living and instrumental activities of daily living.
Source: OECD analyses based on the OECD Long-Term Care Social Protection questionnaire and the OECD Income Distribution Database.

Financial public support for the total costs of long-term care varies widely.

Share of total long-term care costs that would be covered by public social protection systems, for care recipients earning a median income and holding no net wealth, by severity and care setting

Note: Low, moderate and severe needs correspond to 6.5, 22.5 and 41.25 hours of care per week, respectively.
Source: OECD analyses based on the OECD Long-Term Care Social Protection questionnaire and the OECD Income (IDD) and Wealth (WDD) Distribution Databases.

Out-of-pocket costs of long-term care can represent a significant share of median disposable incomes in old age.

Out-of-pocket costs of long-term care as a share of old age median disposable income after public support, for care recipients holding no net wealth, by severity of needs and care setting

Note: Low, moderate and severe needs correspond to 6.5, 22.5 and 41.25 hours of care per week, respectively. Low income is the upper boundary of the 20th percentile of income and high income is the upper boundary of the 80th percentile of income, both among people of retirement age or older.
Source: OECD analyses based on the OECD Long-Term Care Social Protection questionnaire and the OECD Income (IDD) and Wealth (WDD) Distribution Databases.

WWithout public social protection, the out-of-pocket costs of long-term care would push most older people into relative income poverty, based on income deciles from distributions of income in old age. For example, in Spain, at least 60% of older people would be in relative income poverty after paying the total costs of home care for low needs without any public financial support; with public social protection, at least 10% of older people would be in relative income poverty after paying for home care for low needs.

Proportion of the old age population that would be in relative income poverty after paying for the out-of-pocket costs of long-term care, for different severities of needs and care settings, assuming care recipients have no net total wealth

Note: Income deciles are derived from the incomes of all people of retirement age or older, whether or not they have LTC needs. Care recipients have no net total wealth. Low, moderate and severe needs correspond to 6.5, 22.5 and 41.25 hours of care per week, respectively. Individuals are identified as being in relative income poverty if their equivalised disposable income is less than 50% of the national median equivalised disposable income after social transfers have been taken into account.
Source: OECD analyses based on the OECD Long-Term Care Social Protection questionnaire and the OECD Income (IDD) and Wealth (WDD) Distribution Databases.