Assisted living isn’t getting cheaper, so plan now
Retirees shopping for long-term care services — including home health aides, adult day health care and assisted living facilities — are likely to face more and more sticker shock.
Annual costs of services continue to rise steadily, and the annual median cost of a private room in a nursing home has nudged past $100,000 for the first time, according to an annual survey by insurer Genworth Financial.
The rising cost of care has risen faster than inflation, the 2018 Cost of Care study shows. Through June this year, the Consumer Price Index for urban consumers grew by 2.1 percent year-to-year, while the annual median cost of a room at an assisted living facility grew by almost 7 percent over the same span. Nationally, the annual median cost of a private room in a nursing home climbed to $100,375.
Prices are rising because of growing need and lack of skilled workers
Alaska, Hawaii, D.C. are costliest
The most expensive state for nursing home care in 2018 is Alaska, where the annual median cost of a private room in a nursing home is $330,873, the Cost of Care study found.
The highest median cost for a room at an assisted living facility is $111,195 in the District of Columbia, the highest cost in that group.
The survey categorized assisted living facilities as those that offer residents more independence and less medical care and assistance than nursing homes.
For retirees who choose to live in their own home but receive care there, home health aides are available — but they’ll cost $68,640 annually in Hawaii, the most expensive state in that list.
How Tennessee compares
Cost of services in Tennessee are up 2-3 percent in every category based on five-year annual growth, the survey indicated, although costs in Nashville are up even more in two specific categories.
For a room at an assisted living facility, costs in Nashville rose 5 percent to $54,000; that’s compared to $47,040 statewide.
For a private room at a nursing home, the median price tag in Nashville is $90,338 annually, up 4 percent but still below the national median. That compares to $82,125 statewide.
The state annual median for homemaker services ($43,358), home health aide ($45,188) and adult day health care ($17,420) all are comparable to costs in Nashville.
| Homemaker Services | Home Health Aide | Adult Day Health Care | Assisted Living Facility | Nursing Home Private Room |
| Nashville $43,449 |
Nashville $45,646 |
Nashville $16,900 |
Nashville $54,000 |
Nashville $90,338 |
| Tennessee $43,358 |
Tennessee $45,188 |
Tennessee $17,420 |
Tennessee $47,040 |
Tennessee $82,125 |
| National $48,048 |
National $50,336 |
National $18,720 |
National $48,000 |
National $100,375 |
Why costs are rising
An estimated 10,000 baby boomers turn 65 every day, and experts say the growing demand is partly behind the growing cost of care.
Another key factor: Lack of workers. Home-health aides are a fast-growing job sector, with a projected growth rate of 41 percent from 2016 to 2026. But those jobs can be difficult to fill because of median annual wages that hover well below national averages at just above $23,000, according to the Bureau of Labor Statistics.
Planning for care
The costs can be intimidating, but current employees can prepare now by developing a plan with help from an advisor.
The biggest question to tackle from the start: Where, when and how do you want to receive care in your later years? Keep in mind that even you might expect to receive care at home during retirement, but a change in health could require a move to an assisted facility or nursing home, where costs are higher.
It’s also important to talk with an advisor about whether a long-term care insurance policy or life insurance with a long-term care option might be worthwhile.
Long-term care insurance policies have seen a decline over recent years. In 2012, there were about 233,000 buyers of those policies, which accounted for $550 million in premiums, according to LIMRA, an insurance industry association.
By comparison, in 2017 there were just 66,000 purchasers of long-term care insurance amounting to about $176 million in premiums.
At Kraft Asset Management LLC, we can work with you to develop a retirement plan that takes into consideration the cost of long-term care services and the potential benefit of long-term care insurance. Contact us for information.