Genworth's Annual Long Term Care Cost of Care Survey

Genworth Financial which is one of the heavy weights in the Long Term Care Insurance (LTCI) industry, came out with their annual LTC cost survey this past week in which they surveyed the cost of long term care across the U.S. to help give Americans clear picture of the actual cost of care is in their area of the country. Armed with this data it will give baby-boomers an idea on what this financial risk will mean to their retirement since 2/3 of people 65+ will need LTC before they die. This is the most detailed study of its kind and was conducted by CareScout, which surveyed more than 14,000 nursing homes, assisted living facilities, and home health and adult day health care providers in 331 regions across America.

A really helpful new tool Genworth’s team developed is the Genworth Choice & Affordability Index. This cutting edge tool helps one:

Identify regions where nursing home care choices are both numerous and most affordable in proportion to the area's 65+ population - creating an index of the best places in the U.S. for nursing home care. The Choice & Affordability Index 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+ population along with the cost of care in that area.

Genworth's Choice & Affordability Index highlights the great disparity nationwide between regions with many alternatives for affordable nursing home care and those with more limited options. 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, following are select cities with populations greater than 250,000:

Select Cities with Most Affordable and Most Number of Nursing Home Care Options (Rank, out of 50):

Kansas City, Mo. (2)

Baton Rouge, La. (8)

Little Rock, Ark. (18)

Wichita, Kan. (20)

St. Louis, Mo. (25)

Oklahoma City, Okla. (28)

Louisville, Ky. (41)

After thumbing through the entire LTC survey data in the PDF there are some interesting trends and findings. For example, nursing home and assisted living facility costs have sharply risen over the past 5 years, but home health care costs have remained flat for the most part. As an economist and financial advisor I always ask why this is so. My personal best guess is the economy began peaking back in 2006 and has been on the decline ever since so thus the people who are out of work are competing for those home care jobs which most require little education since most home care is custodial care anyway.

Furthermore, Genworth’s data shows:

• That 74% of initial long term care insurance claims are for home health care care.
• The hourly private pay rate for a non-Medicare certified, but 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 percent. 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 percent 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.
• The annual cost for a private nursing home room is $74,208, or $203 per day, representing an increase of 4 percent 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. According to the Centers for Disease Control and Prevention, more than 76 percent of nursing home residents are 75 years of age or older.
• The annual cost for a 1-bedroom unit in an assisted living facility is $33,903, which is a 5 percent increase annually since 2005. The cost for this type of care is forecast to exceed $220,000 in 40 years, when the youngest baby boomers will be in their mid-80s.
• The average age of residents in assisted living facilities was 85 years old in 2006, as reported by the National Center for Assisted Living.

What does this increasingly high cost of long term care mean to you?  The rally in this is to plan ahead if you have assets to lose and independence to protect.  If you have no assets then you can potentially qualify for Medicaid (welfare) but like anything in life nothing is for free and you’ll have to sacrifice your independence and care quality and they ship you off with the rest of the heard to the first open bed which might be 50 miles away or so from your home.  The bright side is if you simply plan ahead and just at least get a basic plan in place (you can buy too much insurance) you will build a shield around your entire nest egg protecting it from the high cost of long term care.  If you’d like to learn more simply fill in the form below and we’ll mail you out your quotes and info.  Thanks for reading our blog today…we really appreciate it.