A 65-year-old has a nearly 70% chance of needing long-term care services in their lifetime, according to the U.S. Department of Health and Human Services. While the financial burden on families varies based on where they live, consumers around the country vastly underestimate the costs, new research shows.
Long-term care refers to a variety of services that help people manage day-to-day life. Long-term care service providers can help clients with personal tasks, such as bathing, dressing, eating and moving around.
Each year, financial services provider Lincoln Financial Group commissions long-term care services provider LTCG to survey more than 30,000 long-term care options to determine the costs, including collecting data from skilled nursing home, home health care and assisted living facility providers.
The findings show people vastly underestimate the financial toll long-term care services can take.
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For example, previous Lincoln Financial Group research found that consumers, on average, estimate the annual cost of a private room in a nursing home to be about $54,000. However, the study notes that the national average cost of a private room was nearly twice that amount, at $105,485 per year. For $54,000, you would more likely be able to afford a studio apartment in an assisted living facility, since the national average for such a setting is $49,632, according to the study.
Consumers may also not be accounting for the rise in long-term care costs. For example, the study showed that the price to rent a private room in a nursing home has risen approximately 3% since 2016.
Geography is key
While national averages can provide an idea of long-term care costs, the actual amount consumers can expect to pay varies widely based on where they live. For instance, the three least expensive states to hire a home health aide are in the Southeast — Louisiana ($37,440 per year), Mississippi ($39,520 per year) and Alabama ($39,520 per year). In comparison, the state where a home health aide is most expensive is North Dakota, at $64,480 per year.
When it comes to nursing homes, meanwhile, 3 of the 5 most expensive states for a private room are in the Northeast — Connecticut ($169,725 per year), Massachusetts ($159,140 per year) and New Jersey ($145,635 per year). In those states, consumers would pay substantially more than they would in the least expensive state, Louisiana, where the average price is $68,620 per year.
No one can predict what kind of long-term care services they will need throughout their life. But one way to prepare, no matter what the cost turns out to be, is to purchase long-term care insurance, which will cover at least some of the costs.
Young people may also need to consider the cost of care for aging parents if those parents haven’t saved for long-term care services themselves. That could include finding an affordable facility, or in some cases, having aging parents move in with them, a trend that has grown in recent years.
Date: July 26, 2019
Source: Yahoo Finance