Long Term Care Costs

One of the most important parts of planning for long term care is the decision of how you are going to pay for long term care services. Long term care can be very expensive, and despite what some people believe, Medicare does not pay for a majority of long term care received. Although certain individuals might qualify for Medicaid, most people will not. As a result, if you are one of the seventy percent of Americans over the age of 65 who will require long term care services – there is a significant possibility you will be required to pay for some or all of your care from personal assets.

This can be a challenging task, especially if you have a spouse who does not require long term care. Based on the Genworth 2011 Cost of Care Survey, the national average for semi-private nursing home care is $196 per day or more than $71,000 per year. In order to make the best decision on how best to pay for long term care services you may need – it is important to understand what long term care services cost, what options are available, and what option would work best for you.

What Does Long Term Care Cost?

Long term care covers a range of health and support services required by individuals as they age or if they are disabled. Many of these types of services include personal care or assistance with Activities of Daily Living (ADL). In some cases, family members are able to provide some, if not all, of this type of care without cost. However, as needs and support requirements increase, professional care can be required to assist family members and the care recipient. These additional services may include facility care, which include nursing home or assisted living facilities for individuals who can no longer be cared for in their home.

Long term care costs can vary significantly dependent upon the type of care required and the geographic location of where care will be received. The average costs of long term care in the United States are as follows:

  • Nursing Home (Private Room): $213 daily / $77,745 annually
  • Nursing Home (Semi-private Room): $193 daily / $70,445 annually
  • Assisted Living Facility: $3,261 monthly / $39,135 annually
  • Home Health Aide: $43,472 annually1
  • Homemaker Services: $41,184 annually2

Based on Genworth 2011 Cost of Care Survey

1 Annual rate is based on 44 hours/week multiplied by 52 weeks
2 IBID

Use the following map to determine the cost of care in your state. The costs shown are annual and range from home care to nursing home care.

Who Pays for Long Term Care?

There are few options when it comes to paying for long term care. Health insurance typically does not cover costs for ongoing care related to chronic illness or disability. In most cases, if you choose to obtain a long term care insurance policy, you will be doing so in order to reduce the likelihood of using other sources of money to cover long term care expenses.

Your Savings or Selling Assets

It is always possible to utilize current income or liquid assets to help pay for needed long term care services. In certain cases you may need to sell illiquid assets to maintain independence and care. Before doing so it is important to understand the financial impact this may have on a spouse or children – both financially and emotionally.

Medicare

Medicare primarily covers skilled care after being hospitalized for three days or more. It usually doesn’t provide any coverage for personal or home care services. It wasn’t designed to help pay for extended long term care services and shouldn’t be realized upon as a resource to cover long term care expenses.

Medicaid

Medicaid is a program that has been designed to provide nursing home care for individuals who are extremely poor. To become eligible for Medicaid individuals must have minimal assets and meet a very strict income test. As a result, individual who qualify for Medicaid are usually destitute.

Individuals and families with sufficient income and assets will likely pay for long term care from personal savings or long term care insurance. For those with limited financial resources and who meet the eligibility requirements, Medicaid may be option to pay for care. If the need for care is for a short period of time Medicare may pay for some or a portion of that care.

With the cost of long term care on the rise for nursing home care, assisted living facilities, and home health care, a few short years of requiring long term care services can eliminate a lifetime of savings. In addition, the federal government has estimated that, on average, a 65-year old today will likely require some form of long term care services for an average of three years during their lifetime. Twenty percent will require that care for at least five years.