RADNOR, Pa.--(BUSINESS WIRE)--More than one in two Americans turning 65 are expected to need some form of long-term care in their lifetime, according to the Department of Health and Human Services. Yet unfortunately, many do not plan accordingly and significantly underestimate the cost of long-term care services, in some cases by nearly 50 percent. Lincoln Financial Group has released the annual What Care Costs study which shows that rates for long-term care services can vary greatly depending on the type of care and location, with national annual averages ranging from $49,920 for a full-time home health aide to $105,485 for a private room in a nursing home. To help consumers and advisors prepare for long-term care needs and expenses in their area, Lincoln provides its interactive What Care Costs map website, www.whatcarecosts.com/Lincoln.
“When it comes to needing long-term care, people often think ‘it won’t happen to me,’ and don’t plan, which may eventually lead to rushed and expensive decisions,” said Mike Hamilton, vice president of MoneyGuard product management, Lincoln Financial Group. “The reality is that more than half of us will need some form of long-term care in our lifetime, which may come with ‘sticker shock’ when people begin to evaluate professional care options. To help people receive the care they need and in the setting of their preference, we provide our What Care Costs website as a resource for conversations between families and financial advisors.”
Decreasing Caregiver to Care-Recipient Ratio Makes In-Home Independence More Costly
Long-term care typically begins in the home, with family members and friends providing informal care as loved ones age. However, the caregiver ratio is projected to decrease from 4.8 caregivers per person in 2010 to 2.8 by 20301, the year in which all baby boomers will be older than age 65. If these informal support structures are not available or the need for care is too great, the professional services of a home health aide may be hired to assist with activities of daily living such as bathing or dressing. The average national fee for a home health aide today is approximately $24 per hour, a four percent increase since 2016.
For care in the home requiring the medical skills of a registered nurse, the national average for a home visit is $137, which can add up to $50,005 annually if visits are needed daily.
Most/Least Expensive States for a Home Health Aide |
|||||
Most Expensive |
Least Expensive |
||||
State |
Hourly |
Annually |
State |
Hourly |
Annually |
North Dakota |
$31 |
$64,480 |
Louisiana |
$18 |
$37,440 |
Alaska |
$31 |
$64,480 |
Mississippi |
$19 |
$39,520 |
Minnesota |
$31 |
$64,480 |
Alabama |
$19 |
$39,520 |
Washington |
$30 |
$62,400 |
West Virginia |
$20 |
$41,600 |
Hawaii |
$29 |
$60,320 |
Arkansas |
$20 |
$41,600 |
|
|||||
Most/Least Expensive States for In-Home Registered Nursing |
|||||
Most Expensive |
Least Expensive |
||||
State |
Per
|
Annually |
State |
Per
|
Annually |
Delaware |
$194 |
$70,810 |
Ohio |
$107 |
$39,055 |
Oregon |
$174 |
$63,510 |
Florida |
$107 |
$39,055 |
Kentucky |
$170 |
$62,050 |
New Jersey |
$108 |
$39,420 |
Idaho |
$168 |
$61,320 |
Massachusetts |
$110 |
$40,150 |
Montana |
$166 |
$60,590 |
Alaska |
$117 |
$42,705 |
Consumers Continue to Underestimate Facility Care Costs
Lincoln research finds that consumers estimate the annual expense of a private room in a nursing home to cost $54,0002. However, the actual national average for a private room costs $105,485 annually, up roughly 3% since 2016. A studio apartment in an assisted living facility averages $49,632 per year, up approximately three percent from 2016. With these types of costs, it’s not surprising that advisors estimate clients without a long-term care insurance solution can spend their savings two-to-three times faster than expected if long-term care is needed2.
Most/Least Expensive States for a Private Room in a Skilled Nursing Home |
|||||
Most Expensive |
Least Expensive |
||||
State |
Daily Avg. |
Annually |
State |
Daily Avg. |
Annually |
Connecticut |
$465 |
$169,725 |
Louisiana |
$188 |
$68,620 |
Massachusetts |
$436 |
$159,140 |
Oklahoma |
$197 |
$71,905 |
Hawaii |
$428 |
$156,220 |
Missouri |
$206 |
$75,190 |
Alaska |
$424 |
$154,760 |
Arkansas |
$207 |
$75,555 |
New Jersey |
$399 |
$145,635 |
Kansas |
$219 |
$79,935 |
|
|||||
Most/Least Expensive States for a Studio Apartment in an Assisted Living Facility |
|||||
Most Expensive |
Least Expensive |
||||
State |
Monthly
|
Annually |
State |
Monthly
|
Annually |
New Hampshire |
$6,339 |
$76,068 |
Louisiana |
$3,117 |
$37,404 |
New Jersey |
$5,972 |
$71,664 |
Utah |
$3,132 |
$37,584 |
Maine |
$5,881 |
$70,572 |
Mississippi |
$3,158 |
$37,896 |
Delaware |
$5,769 |
$69,228 |
Oklahoma |
$3,235 |
$38,820 |
Connecticut |
$5,544 |
$66,528 |
Alabama |
$3,262 |
$39,144 |
Confusion High, Confidence Low When It Comes to Paying for Care
Most people believe they will pay for care through Medicare, health insurance or Medicaid. However, Medicare and health insurance only cover very limited and specific types of long-term care, and Medicaid is only available to those meeting income and eligibility requirements. Many also expect to pay for long-term care using personal savings and assets, yet only a third of consumers feel confident of having the financial resources to pay for long-term care.2
Today many different types of private long-term care funding solutions are available that may help mitigate the costs of care events. Hybrid solutions, which are life insurance or annuity products with long-term care riders, have been growing in popularity in the marketplace as they are designed to meet multiple client needs.
“By 2030, those 65 years of age and older will represent 20 percent of the nation’s population, increasing the demand for long-term care services,” said Bill Nash, senior vice president and head of distribution for MoneyGuard solutions, for Lincoln Financial Distributors. “Long-term care may be a daunting topic, but taking the time to understand the costs, plan and determine how care would be paid for may make all the difference in maintaining independence and dignity, easing the burden on loved ones, and protecting retirement savings and assets.”
Long-term Care Planning Resources:
Planning for long-term care may be an overwhelming experience. To help families and their financial advisors start the conversation and develop a thorough plan for potential long-term care needs and expenses, Lincoln provides the following tools and resources:
- www.whatcarecosts.com/Lincoln- a searchable database of long-term-care costs for in-home services, skilled nursing homes and assisted living facilities for states and metropolitan areas nationwide. Enter the code ‘Lincoln’ in the upper right corner
- Long-term care videos, key planning considerations and information on funding options (for use only in AZ, CA, CT, DC, De, FL, HI, IN, MT, NJ, NY, ND, SD, VI)
- Long-term care videos, key planning considerations and information on funding options (for use in all other states)
About the What Care Costs Study
The What Care Costs survey was designed and implemented by LTCG, a leader in long-term care administration services. Each year LTCG surveys thousands of Skilled Nursing Home, Home Health Care and Assisted Living Facility providers to collect cost of care data. The cost of care averages are calculated from over 30,000 different providers at the national, state and MSA (metropolitan statistical area) level. What Care Costs is provided as a service by Lincoln Financial Group.
About Lincoln Financial Group
Lincoln Financial Group provides advice and solutions that help empower people to take charge of their financial lives with confidence and optimism. Today, more than 17 million customers trust our retirement, insurance and wealth protection expertise to help address their lifestyle, savings and income goals, as well as to guard against long-term care expenses. Headquartered in Radnor, Pennsylvania, Lincoln Financial Group is the marketing name for Lincoln National Corporation (NYSE: LNC) and its affiliates. The company had $253 billion in assets under management as of March 31, 2019. Lincoln Financial Group is a committed corporate citizen included on major sustainability indices including the Dow Jones Sustainability Index North America and FTSE4Good. Additionally, Lincoln is dedicated to upholding a diverse and inclusive organization and was recognized by Forbes as one of the Best Large Employers, Best Employers for Diversity, and Best Employers for Women and received a perfect score of 100 percent on both the Corporate Equality Index and Disability Equality Index. Learn more at: www.LincolnFinancial.com. Follow us on Facebook, Twitter, LinkedIn, and Instagram. Sign up for email alerts at http://newsroom.lfg.com.
- Merrill Lynch and Age Wave, The Journey of Caregiving: Honor, Responsibility and Financial Complexity, October 2017
- Lincoln Financial Group and Versta Research, Long-Term Care Research: Findings from Surveys of Advisors and Consumers, September 2017
