Cost of Long-Term Care on the Rise

According to a recent survey by Genworth Financial, the Midwest offers the most choices and the lowest cost for long-term care. The Northeast and West Coast states generally offer fewer affordable alternatives. That might not come as a surprise, given the difference in cost of living in these areas.

Genworth’s Choice & Affordability Index highlights regions where nursing home care choices are both numerous and most affordable in proportion to the area’s 65-and-older population, according to a release of the survey results. It does not measure or reflect the long-term care services capacity (i.e., number of beds) available in a region, or the quality of care, but rather reflects the number of facilities in the region in proportion to the 65 and up population, along with the cost of care in that area.

According to the Choice & Affordability Index, the top 10 states for nursing home care availability and choice include:

1. Iowa
2. South Dakota
3. Kansas
4. Nebraska
5. North Dakota
6. Oklahoma
7. Missouri
8. Arkansas
9. Wyoming
10. Louisiana

Among the 50 cities in America with the greatest number of affordable nursing home care options, the following are select cities with populations greater than 250,000, listed with their rank out of 50:

• Kansas City, Missouri (2)
• Baton Rouge, Louisiana (8)
• Little Rock, Arkansas (18)
• Wichita, Kansas (20)
• St. Louis, Missouri (25)
• Oklahoma City, Oklahoma (28)
• Louisville, Kentucky (41)

Cost of Care

While nursing home and assisted living costs have risen sharply over the past five years, home care costs have remained relatively flat, Genworth said. According to the survey, 74% of initial claims are for long-term care services received in the home. The hourly private pay rate for a non-Medicare certified, state-licensed home health aide is $18.50. Since 2005, the cost for this type of care has increased at an annual rate of 2%.

The cost of care in a nursing home or assisted living facility continues to rise at a rate nearly twice that of the median annual inflation rate of 2.3% over the same period of time, measured using the Core CPI (which excludes food and fuel) reported by the U.S. Bureau of Labor Statistics, according to the release. The annual cost for a private nursing home room is $74,208, or $203 per day, representing an increase of 4% annually since 2005. At this rate, the cost is expected to exceed $270,000 a year in 30 years, when the nation’s youngest Baby Boomers will be in their mid-70s.

The annual cost for a one-bedroom unit in an assisted living facility is $33,903, excluding any one-time community or entrance fees, a 5% increase annually since 2005. The cost for this type of care is forecasted to exceed $220,000 in 40 years, when the youngest Baby Boomers will be in their mid-80s, according to Genworth.

“While countless American families have seen the value of their homes and investment portfolios dwindle during the current economic downturn, the cost of long-term care continues to rise,” said Buck Stinson, president, insurance products at Genworth Financial, a provider of long-term care insurance. “This environment creates significant financial planning challenges for individuals’ long-term care needs. For individuals who had planned to tap their hard-earned nest egg to cover future long term care costs, this may no longer be a viable option. A trusted adviser, financial planner, or insurance specialist can help families talk about and evaluate their options. Now, more than ever, is the time to develop a financial plan to cover future potential long-term care costs.”

Genworth’s 2009 Cost of Care Survey, conducted by CareScout, covers more than 14,000 nursing homes, assisted living facilities, and home health and adult day health care providers in 331 regions across America.

More results are available at Genworth.com/CostofCare.