The aging of the baby boom generation is projected to dramatically increase the population aged 65 and older in the coming decades. In particular, those aged 85 and older (the 'oldest old') are expanding at a faster rate than any other age group and by 2050 are expected to make up 4.5 percent of the population, compared to 1.9 percent in 2012. Faster growth in the percentage of older people (65+) in rural than in urban areas is likely to challenge the healthcare and long term services and supports (LTSS) capacity in many rural communities.

This study used Medicare Current Beneficiary Survey data to profile rural and urban Medicare beneficiaries aged 85+ with respect to their demographic and socioeconomic characteristics, the residential settings in which they live, their health and functional status, and their healthcare use. In addition to some demographic and socio-economic differences, rural beneficiaries aged 85+ had greater functional limitations, were more likely to live alone in the community or in nursing homes, and less likely to reside in assisted living facilities. The greater proportion of rural individuals relying on nursing homes to meet their LTSS needs has financial implications for consumers and for state Medicaid programs that are the primary source of public financing for LTSS. The reliance on nursing homes in rural areas may partly be due to a scarcity of home and community based services (HCBS) options. The growing evidence of increased cost-effectiveness of HCBS suggests the importance of federal and state policies that support expanded access to and use of these services in rural communities.