Long-Term Care Costs Favor Home-Based Treatment

US News

Nursing home and assisted living costs for long-term care continue to rise at rates greater than overall inflation, according to Genworth Financial's 10th annual Cost of Care Survey. However, the cost of in-home care has risen at annual rates of 1 percent or less during the past five years, and this is the place where people overwhelmingly prefer to be treated if possible.

"If you look at national private nursing home costs over the past 10 years that we've done this study, the median annual costs have gone up from $65,200 to $83,950, increasing at more than four percent a year," Pat Foley, Genworth's head of distribution and marketing, said in a prepared statement. "The better news is that costs for homemaker services and home health aides have remained almost flat. Since 70 percent of Genworth's first time long term care claimants choose in-home care, these costs have remained more manageable."

Genworth's annual survey includes cost information from nearly 15,000 long-term care providers, and breaks down different types of care for all of the nation's 437 metro areas. It provides detailed online results that consumers can use to compare costs across different urban areas and also to project what future costs might look like.

"Since we first did this study, we have seen a steady move away from traditional nursing home care to less-expensive options that include in-home care, assisted care facilities and adult day care," says Bob Bua, business leader of CareScout, a Genworth subsidiary that conducted the survey. "In addition to being the kind of care most people prefer to receive, the difference in the relative cost of these services versus private residential nursing care can be dramatic."

The Genworth survey tracks care in nursing homes, assisted living facilities, adult day care, at-home expenses for homemaker services and at-home costs for home health aides.

Nationally, the annual cost of a private nursing home room rose 3.6 percent from 2012 to 2013 to $83,950, and has risen at an annualized rate of 4.5 percent over the past five years. A semi-private room in a nursing home cost an average of $75,555 a year in 2013, up 3.3 percent from 2012 and, on average, up 4.2 percent a year since 2008. Costs in an assisted living facility rose 4.6 percent during the past year to $41,400, and have increased at a 4.3 percent annualized rate during the past five years.

In-home expenses, by contrast, rose much less. The 2013 median hourly cost of homemaker services rose about 1.4 percent last year to $18 an hour; these costs have increased at an annualized rate of only 0.84 percent a year during the past five years. For home health aide services, the national median hourly rate was $19 an hour in the 2013 survey, up 2.3 percent from 2012 and up by about 1 percent a year during the past five years. Homemaker services include domestic help and aren't considered personal-care services. Home health aides do provide personal care but not medical care for things such as help with bathing and dressing.

A sixth cost area tracked by Genworth is the costs of adult day care. The national average in 2013 for such care was $65 a day, up 6.6 percent since 2012 but up an average of only 1.6 percent a year since 2008.

Genworth and many other private long-term care insurers have either raised rates, stopped writing new business in some areas or even stopped all new business. The recession hurt sales and, more recently, low interest rates have badly hurt industry profits. In addition, some insurers underestimated claims cost on long-term care policies and have produced new underwriting standards that have led to higher premiums and, in some cases, tougher standards about who qualifies to buy the policies.

Twitter: @PhilMoeller



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