Many people look forward to retirement as a period of more free time to spend on hobbies and with family. However, it’s increasingly becoming a period of panic: 81 percent of seniors are not confident that they can handle the cost of long-term care.
The State of Long-Term Care Costs
Genworth Financial produces an annual report on the median cost of long-term care across the nation. According to their calculations, costs for care facilities have been increasing dramatically. For nursing homes especially, the annual increase is 4 percent.
As with the cost of regular housing, the Pacific Northwest and the upper East Coast are particularly expensive for long-term care. A private room in a nursing home in Oregon costs an average of $102,018, while the cost of an assisted living facility is $49,764 annually. But Alaska holds the title of most expensive — its assisted living facilities average $68,430, with a room in a nursing home coming in at $281,145 per year.
These high costs mean many long-term care facilities are not getting as much funding as they need to provide the best level of care they can. They also mean seniors are looking for cheaper options.
Are Costs Rising Across the Board?
The extreme spike in long-term care costs is not consistent for every type of care. While the costs of nursing homes may be rising 4 percent annually, the cost of in-home care has remained fairly stagnant.
There are a few reasons for the differences in the cost growth.
Fewer seniors are choosing to live in nursing homes, so these facilities are losing money. As for in-home care options, although the increased demand may put a strain on care providers, more and more companies are competing in this field, which keeps costs down.
Who’s Going to Foot the Bill?
This is the question that leaves everyone scratching their heads, and as of right now it is still unanswered. Medicare does not cover long-term care, and many seniors and their families don’t realize this until it’s too late. With the overwhelming — and ever-increasing — number of people who need long-term care, insurance companies are not able to cover the costs either.
Without Medicare or insurance, few options remain, and the brunt of the burden falls on the seniors themselves. Many are forced to liquidate their assets until they can qualify for Medicaid. Some sell their life insurance policies to pay for long-term care. Neither of these options is a good one, and both Congress and insurance companies are working to find better solutions.
The state of long-term care is approaching a crisis point. By 2030, the over-65 set will make up 20 percent of the U.S. population. Almost three-quarters of them will require long-term care, and unless something drastic is done now, many will not be able to afford it.