A new report shows for the first time, the cost of skilled Long Term Care is now averaging over $100,000 per year. The national average price of a private room is now reaching $102,900. Lincoln Financial Group's annual “What Care Costs” study, shows the national average private skilled nursing room cost jumped 3.3% in 2016, up from $99,600 in 2015. Semi-private room costs are less with an average national cost of $89,305, up 2.6% from $87,000 in 2015. Lincoln National is a major marketer of Long Term Care Planning products.
Most long-term care is not skilled care nor is it in nursing homes. However, the cost of all extended care continues to increase and impact more families as people continue to age and have age-related issues. The cost of care varies dramatically from state to state. Texas, Missouri, and Louisiana were the least expensive states at $56,210, $59,860 and $60,955, respectively for skilled care. Alaska, Connecticut, and Massachusetts to be the most expensive states for annual semi-private skilled nursing costs at $167,535, $155,490 and $143,080, respectively.
People require Long Term Care services due to illnesses, accidents or the impact of aging. Most people require care at home first. The average national fee for a home health aide today is an approximate $23 per hour, up 2 percent from the prior year. For instances requiring the medical skills of a registered nurse, the national average for a home visit is $139. Most long-term care is non-skilled. As more people need more care, the costs will impact savings and the lifestyle of the individual and the other spouse. Also, a recent AARP report showed the tremendous impact of family caregivers who many times become default caregivers in the absence of an advance plan.
“Today, more than one in two Americans turning 65 will need some form of long-term care in their lifetime, and the total number requiring care is expected to more than double by 2050,” said Andrew Bucklee, senior vice president and head of insurance solutions distribution for Lincoln Financial Distributors.
“Those services are often attached to some significant costs that can impact retirement plans, savings, and assets, and importantly, the level of care one receives. That’s why it’s so important that people speak with their family and their financial advisor about their long-term care preferences and put a plan in place. Lincoln’s What Care Costs website can be a great starting point for these conversations and provide some clarity around the potential costs associated with long-term care.”
With the risk of long-term care being high with an expectancy 70% of all people who reach the age of 65 is expected to need some form of LTC service (according to the US Department of Health and Human Services). Many people fail to plan for the financial costs and burdens created by aging and long-term care. While many people focus on a nursing home, most care starts at home and can avoid or delay the need for a formal facility.
"The number of Americans in their 70’s, 80’s and even older who live in their own home keeps increasing while the number of people living in institutional settings keeps decreasing," said Jesse Slome, executive director of the American Association for Long Term Care Insurance (AALTCI) a national consumer education and advocacy group.
Long Term Care insurance will pay for care at home or in a facility. There are three types of plans available. Asset-based “hybrid” plans, like those offered by Lincoln and other companies, offer a life insurance policy with a rider for long-term care. If you never need care, your estate will get the death benefit. Traditional plans provide long-term care benefits with a premium but usually with no death benefit. These usually are less expensive, but if you are lucky and never need care, your family will not get any money back. Most states offer partnership plans which provide additional dollar-for-dollar asset protection, but this is only available with a traditional policy. Then there are so-called “short-term” policies which provide a smaller benefit but many times available for those who may be older or are less healthy.
Keep in mind a specialist in long-term care planning can discuss which type of plan best fits your retirement plans. Also, your age and health will also be a factor in cost and availability of coverage. The AALTCI tells consumers on their website that if you have some health conditions or take common prescription medications, you'll want to speak with that knowledgeable long-term care insurance professional as each company sets their own acceptable health conditions. You will want your insurance broker to "shop your health" to get you the best coverage for the best cost.
Many experts suggest starting planning in your 40’s and 50’s as part of your overall retirement plan. Many people won’t want to think of a time they may need help with normal living activities or even supervision due to memory impairment. However, it is a part of aging that has increased because of the advancements in medical science. An advance plan to safeguard your 401(k), IRA, 403(b) from the costs and burdens of aging will protect assets and ease the burdens placed on your family.