This Retirement Expense Is Rising Fast — Have You Planned for It?

Health care isn't the only retirement expense that can run you six figures. Long-term care is a separate expense to prepare for -- and it's growing faster than inflation.

This Retirement Expense Is Rising Fast — Have You Planned for It? Photo by wavebreakmedia / Shutterstock.com

Long-term care is expensive — and it’s growing even more costly.

The annual median cost of long-term care services increased by an average of 4.5 percent from 2016 to 2017, according to Genworth Financial’s 2017 Cost of Care Survey. That rate outpaces inflation.

Long-term care offers help with everyday tasks such as eating, bathing and dressing. Among people ages 65 and older, 70 percent eventually are expected to need some type of long-term care, according to Genworth, an insurance company. Standard health insurance policies do not cover the cost of long-term care.

Genworth found that the specific long-term care services that increased most in cost over the past year are:

  1. Home health aide services — up 6.17 percent to $21.50 an hour
  2. Private room nursing home care — up 5.5 percent to $267 a day
  3. Homemaker services (such as cooking, cleaning and running errands) — up 4.75 percent to $21 an hour
  4. Semi-private room nursing home care — up 4.44 percent to $235 a day
  5. Assisted-living facilities — up 3.36 percent to $123 a day

Long-term care costs can also vary considerably by state. For that reason, it’s important that retirees ask critical questions about long-term costs before moving.

For example, the median annual cost of home health aide services is $49,192 nationally. But the median cost can be much higher within a state. This cost is highest in:

  1. North Dakota: $63,972
  2. Alaska: $63,492
  3. Minnesota and Wyoming: $61,776

The median annual cost of a private room at a nursing home is $97,455 nationally but significantly higher in some states. It’s highest in:

  1. Alaska: $292,000
  2. Connecticut: $162,060
  3. Hawaii: $158,593

You can learn more about long-term care costs in your state by using Genworth’s cost comparison tool.

Paying for long-term care

Clearly, the cost of long-term care can exceed the budgets of even middle-class Americans.

Medicaid generally covers the costs of long-term care in nursing homes and at home, according to the federal government website LongTermCare.gov. But not everyone is eligible for Medicaid. It’s a joint federal and state health insurance program for folks with low income or with disabilities.

Medicare, the federally subsidized health insurance program for seniors, generally does not cover long-term care. Under certain circumstances following a hospitalization, Medicare will help pay for a skilled nursing facility, hospice care or home health care — but only for up to 100 days.

This leaves long-term care insurance as perhaps the most affordable solution for many people. Money Talks News founder Stacy Johnson details the pros and cons of it in “Ask Stacy: Should I Buy Long-Term Care Insurance?

Just note that long-term care insurance is a purchase best made by sometime in your 50s, as we explain in “Retirement Is Coming — Make These Money Moves in Your 50s.”

How do you feel about the rising cost of long-term care? Sound off below or on our Facebook page.

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