The cost of long-term care went up again in 2017, this time at three times the rate of inflation, according to the Genworth “2017 Cost of Care Survey,” released recently.
The annual median cost of long-term-care services increased an average of 4.5 percent from 2016 to 2017, which is the second-highest year-over-year increase for nursing homes and home care since the study began in 2004; the increase is nearly three times the 1.7 percent U.S. rate of inflation, Genworth said.
The increase was most pronounced for home health aides, whose cost increased 6.17 percent to $21.50 an hour. The cost of assisted-living facilities increased by 3.36 percent to $235 a day, and the cost of a private room in a nursing home went up 5.5 percent to $267 a day.
After remaining flat for some time, the cost of care at home has been escalating over the past three years because of an increase in labor costs. Nursing home costs are increasing because of a combination of higher labor costs and tightened Medicare rules, which have resulted in shortened hospital stays and sicker patients being sent to rehab nursing homes.
Two-thirds of consumers mistakenly believe government programs will cover all or part of long-term-care costs. Medicare, for the most part, does not cover long-term care and Medicaid has strict income and asset limits.
Approximately 70 percent of those people now over 65 will need long-term care at some time in their lives, Genworth said. Consequently, long term care is a high probability event with potentially devastatingly high costs. It is something that needs to be addressed in your retirement planning – give yourself peace of mind.
Like anything with retirement planning, there is no one solution – in fact the solution should consider 2 or more of the most used payment considerations in combination:
- Long-term care insurance
- Your home equity as a resource
- Self-insurance thru dedicated savings
Finally, long-term care should be thought of as a family matter – especially if you are someone who can be both a care giver and eventual recipient. How long term care needs will be handled should be discussed before the decisions are taken out of your hand.