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Long Term Care Blog

Costs of Long Term Care Rise Again

by Jack Lenenberg

Long Term Care Costs

Experts say over 70% of people age 65 or older will need long term care at some point in their lives, and for this subset of Americans the cost of long term care services has increased again.

According to the Genworth 2017 Cost of Care Survey released this month, the annual median cost of long term care services increased an average of 4.5% from 2016 to 2017.  This increase is nearly three times the average US rate of inflation of 1.7% based upon the CPI Index.

Although the costs of receiving care increased considerable across all care options during the past 12 months, the increased care costs was most pronounced for home health aides.

The study found the following average long term care costs nationwide:

• Home health aide services, up 6.17% to $21.50/hour
• Homemaker services, up 4.75% to $21/hour
• Adult day health care services, up 2.94% to $70/day
• Assisted living facilities, up 3.36% to $123/day or $3,750/month
• Semi-private room nursing home care, up 4.44% to $235/day or $7,148/month
• Private room nursing home care, up 5.50% to $267/day or $8,121/month.

Most people prefer to receive care in their own homes.  The good news is that the cost of staying in your own home is still less expensive than a private nursing facility.  An 8 hour visit from a home health aide at $21.50 hour will cost $172.00 day, or $62,780 year.  The cost for a private room in a nursing facility is up to $8121 month or $97,452 per year.

See the 2017 cost of care in your state

Labor shortage, stricter Medicare rules contribute to increasing LTC costs

The costs of home care had been flat for a few years, however over the past 2-3 years home care costs have risen.  This is due to a spike in the labor costs due to a shortage of available caregivers, as well as increases in minimum wage requirements in some states and the new health insurance and overtime requirements. 

Facility costs of care are rising due to the increased labor costs as well as tighter Medicare rules which are resulting in shorter hospital stays.  Often, chronically ill patients are discharged to private nursing facilities for rehabilitation.

Increased labor costs have also factored into the increased room and board costs of private pay assisted living facilities as consumers are demanding more luxurious accommodations in this marketplace.

Americans still assume government will pay for care

In a companion survey, Genworth found that nearly two-thirds of Americans assume that government programs will pay for their care.

While Medicaid is the largest single-payor of nursing facility care, Medicaid has stringent income and asset requirements.  You will have to spend down your assets to the poverty level to qualify for Medicaid.

Medicare will pay for a limited nursing home stay, generally only up to 100 days and only if you meet Medicare rules which require a 3 day prior hospital stay.  Medicare does not pay for home care, if skilled care is not needed. Custodial care (long term care) is specifically excluded from Medicare coverage.

Study underscores need to explore long term care financing options

With increasing costs and tightening government programs, it is important for you to explore your financing options to ensure you can receive your care with dignity in the setting of your choosing where your family and you will be comfortable.

Long term care insurance will help to defray the costs of care when you are older.  The best time to apply for your long term care insurance coverage is when you are young and healthy.  We work with the leading underwriters of long term care insurance including Mutual of Omaha, Lincoln Financial, OneAmerica/State Life, Pacific Life, Nationwide, Minnesota Life, Transamerica, and more.

To learn more about your options and to receive free no-obligation quotes please call us today at (800) 891-5824.  Or complete your quote request from. We look forward to helping you with your long term care planning.

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