Genworth Financial has released its 2014 Cost of Long Term Care Survey this month and the survey shows the cost of long term care facility services continues to rise at a rate higher than the inflation index creating significant financial planning challenges for the 12 million Americans currently receiving long term care services.
The promising news for consumers is that the cost of receiving care at home through homemaker services or through a home health aide is rising at a more modest rate. Genworth extensive claims experience data compiled from 1974-2013 evidence that almost three quarters of people needing long term care prefer to stay at home.
The Cost of Long Term Care
Nationwide, the median cost of home care services for a homemaker or an aide hired through a home healthcare agency is $19.75/hour. Home health aide services have risen approximately 1.4 percent annually over the past 5 years.
The cost to receive long term care in a facility setting is increasing at a much faster rate.
The median annual cost of receiving care in Assisted Living is currently at $42,000 year. This is an increase of 4.2% over the five year period of 2009-2013.
Meanwhile, the annual cost to receive care in a nursing facility is now $87,600 year, approximately $240.00 day. Private nursing home rooms are also increasing at a rate of 4.2% annually over the past five years.
Based upon Genworth's claims experiences the average long term care claim is about 3 years. In 25 years when many baby boomers will need long term care, an average 3 year stay in a nursing home will cost approximately $750,000 a huge expense many Americans will not be able to afford.
One measure for concern is that the Genworth study encompasses the years 2009-2013. This five year period is when the United States was coming out of its worst recession since the Great Depression. Many measures of inflation were flat during the period of 2009-2011. Thus, while the Genworth 5 year study is helpful, you should be cautious about incorporating blind inflationary assumptions that the past 5 years will predict the next 25 years.
The primary takeaway for you should be that inflation protection is a must to include in your long term care insurance coverage.
Start Planning for Long Term Care
Retirement planning specialists have pointed out that many Americans no longer have traditional pensions and far too many baby boomers have saved too little for retirement. Thus, long term care insurance is the most efficient way for baby boomers to plan for this future expense looming ahead.
Have a conversation
The first step towards planning is to open up a conversation. Sit down with your partner, your children, or your trusted advisers. Discuss your concerns. Consider your needs. Having your conversation with your loved ones today can make your planning process easier.
Long term care planning involves many choices and options. Learn about your options. Understand the pros and cons of each approach. Determine what works best for you.
Implement your plan
Once you have a better understanding of your options, and what the costs are for you put your plan into action. If you feel long term care insurance will benefit you, the best time to apply is today. Coverage is purchased with your good health. You will never be as healthy as you are today.
LTC Partner is an independent long term care insurance brokerage. To discuss your options; or to receive free comparison quotes of the leading companies please contact us at (800) 891-5824. Or complete your quote request form.
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