Study underscores cost of long-term care

Maryalene LaPonsie | March 1, 2012

The price of long-term care varies significantly by region as well as by the type of care received, according to a recently released Northwestern Mutual study.

In addition, the study found that approximately 45 percent of Americans aren't sure how they plan to address their potential long-term care needs. Less than 28 percent are currently saving for their future long-term care.

Average rates for long-term care

The Northwestern Mutual study considered three forms of long-term care: home care, assisted living and nursing homes. The study reports both the national average cost of care as well as the regions with the highest and lowest cost of care.

  • Home care. The average cost nationally was $20.65 per hour. Sioux Falls, S.D., had the most expensive rate, at $33 per hour. New Orleans had the least expensive rate, at $13 an hour.
  • Assisted living. The average cost nationally was $3,372 per month for a single occupancy, private unit. Bethesda, Md., had the most expensive rate, at $6,618 per month. Milwaukee had the least expensive rate, at $1,263 per month.
  • Nursing home. The average cost nationally was $246 per day for a private room. Anchorage, Alaska, had the most expensive rate, at $526 per day. Corpus Christi, Texas, had the least expensive rate, at $133 per day.

Nationally, the annual of cost of staying in a nursing home is almost $90,000. With the Department of Health and Human Services estimating the average stay lasts 2.4 years, individuals and their families should be prepared to spend an average of more than $215,000 for nursing home care.

"While costs vary greatly from region to region, the need for long-term care planning does not," Steve Sperka, vice president of long-term care for Northwestern Mutual, said in a statement announcing the study results. "The data is sobering, and doesn't even include the added expenses of medical equipment, transportation, drugs and other hidden costs."

Paying for long-term care

Most health insurance plans do not cover ongoing long-term care. In addition, Medicare may pay only for short-term home health care services. While Medicaid will pay for nursing home care, individuals must first exhaust most of their assets to become eligible for coverage. Once eligible, their choice of facilities may be limited.

For those who do not have the means to pay for long-term care out of pocket and who do not wish to depend on government programs, long-term care insurance offers an alternative. According to the Society of Actuaries, there are three forms of this supplemental health insurance coverage:

  • Individual policies
  • Group plans offered through an employer or organization
  • Hybrid plans that combine long-term care coverage with life insurance or an annuity

Long-term care insurance policies may be purchased by through insurance agents, employers or online.


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