Rising long-term care costs are creating financial planning challenges for many, particularly baby boomers, according to Genworth.
Genworth’s 11th annual Cost of Care Survey found that the average length of long-term care is about three years. As the population ages, Genworth says it is important to be aware of the options available and the costs involved in order to build a long-term plan.
Indeed, the U.S. Department of Health and Human Services says at least 70 percent of people over 65 will need some form of long-term care services and support during their lifetime.
One alternative to long-term care in a designated facility is in-home care. Nationally, the 2014 median hourly rate for the services of a home health aide hired from a home care agency is $19.75, which has risen a surprisingly small 1.32 percent annually over the past five years, according to the survey.
According to Genworth, three years of in-home care provided by a home health aide based on that rate would cost nearly $136,000, assuming 44 hours of care per week, multiplied by 52 weeks for three years.
The median monthly rate to receive care in an assisted living facility is $3,500, which has increase 4.29 percent annually over the past five years. Three years of care in one of these facilities would cost about $126,000, says Genworth.
The comparable cost for a private nursing home room for three years would exceed $262,000.
Based on a three percent inflation rate over 25 years, when many baby boomers may require long-term care services, costs for an average three year length of stay in a private nursing home facility will be about $840,000, says Genworth.
“Since we first launched this study, we have seen long-term care costs march higher year after year,” said Bob Bua, Genworth vice president and business leader of its wholly owned subsidiary, CareScout. “If you live to 65, there is a 70 percent chance you will need some form of long-term care services [in your lifetime], so creating a sound financial plan for managing future long-term care costs is very important.”
CareScout, a Genworth company, conducted the survey of more than 14,800 nursing homes, assisted living facilities, adult day health facilities and home care providers. Survey respondents were contacted by phone during January and February of 2014.