Long-term care is one of the largest costs you’re likely to face as you get older. For many, it’s also easy to ignore until it’s too late. But doing so can leave you exposed to risk that can derail even an otherwise well-prepared retirement plan.
Having a clear understanding of long-term care costs, how costs vary, and what factors influence them can help you create a strategy for addressing them.
Types of Long-Term Care Costs
Before getting into cost estimates, you need to understand the different types of long-term care costs you may encounter. These can vary depending on the services needed and are most heavily influenced by the type of facility where care is administered.
Some of the most common types of care to be aware of when considering long-term care include:
- In-Home Care
This type of care is provided in the home rather than a special facility. It includes a wide range of services, from routine help provided by friends or family to home health aides who bathe, dress, or feed the individual. Visits from medical professionals could fall into this category, as well.
- Adult Day Care
This refers to dedicated day facilities that provide a wide range of services, such as providing meals, exercise classes, physical therapy, counseling, and other personal care.
- Assisted Living
Assisted living is a live-in facility for people who still maintain a fair amount of independence. These facilities may provide meals, social activities, and limited medical care.
- Nursing Homes
A nursing home provides a higher level of 24-hour care. Rooms may be private or shared, with medical staff on duty that perform routine checks.
- Specific Services and Equipment
Depending on the nature and severity of conditions, some individuals may need specialized medical equipment or care that’s not normally provided in ordinary care facilities. Home modifications may also be needed, such as replacing stairs with ramps or installing lifts.
Average Costs of Care
These services can be quite expensive, which is part of the reason why planning ahead is so important. The national average is a good place to start, as it will at least give you some idea of what to expect, although the exact price can vary substantially.
According to Genworth and CareScout’s Cost of Care survey, the national average costs of care are:
- Home health aide: $77,792
- Homemaker services: $75,504
- Adult day care: $26,000
- Assisted living: $70,800
- Nursing home
- Semi-private room: $111,325
- Private room: $127,750
While this can give you a rough idea of what to expect, don’t assume this is what you’ll pay. This is a national average, and the exact costs can vary significantly from state to state. For example, the median cost of an assisted living community is $135,735 in Hawaii, while it’s $52,200 in South Dakota. The difference is even more pronounced for semi-private rooms in nursing homes, with a median cost of $364,453 in Alaska to $65,700 in Texas.
It’s important to research the exact facilities you may use to get a more accurate cost estimate.
Drivers of Long-Term Care Costs
A number of factors go into determining the price you may pay for long-term care. While some of them are systematic and beyond your control, you may be able to manage others. Understanding what drives the cost of care can help you navigate them more effectively as you plan.
- Inflation: As prices rise, in general, so do the costs for long-term care. The cost of medical care tends to grow at a faster rate than other expenses. Although you may not be able to curb it, you can account for inflation in your long-term plan to reduce its impact.
- Location: Long-term care costs tend to be higher in areas with a higher cost of living, making geographic location a major factor in what you’ll pay. While family ties, personal preferences, and practical considerations may limit your ability to relocate, moving to a lower-cost area could significantly reduce the strain on your budget.
- Duration of care: Long-term care needs may only last for a few months or go on for several years. You may have little control over the length of time you need care, but in some cases, you do have a degree of influence. Exercising, eating healthy meals, and following caregivers instructions can help and may allow you to recover to a point where you no longer require services.
- Level of care: Lower levels of care, such as cooking or bathing, will not cost as much as more intensive medical care. As with duration of care, you may not have much control over the services you require, but utilizing the lowest level of care needed can help trim your long-term care expenses.
Common Hidden or Overlooked Costs
Although the direct costs for facilities and service providers are the major components of long-term care expenses, they aren’t the only ones. Some expenses are less obvious than others, and many go overlooked. This can cause you to significantly underestimate the amount you’ll spend and the true cost of long-term care.
- Your condition may require home modifications. These often include things such as expanding entryways, installing ramps, and adding lower shelving or cabinets. There are also alterations to bathrooms, such as handicap accessible showers. While these may be one-time costs rather than ongoing, they can each be several thousand dollars.
- Family members often pitch in their time to help. The brunt of this unpaid help often falls on adult children who have jobs and families of their own. Even if it doesn’t cost you anything directly, if they take off work, their income may take a hit. Also, if you plan to have family provide most of your care free of charge, they may need breaks themselves or risk burning out. You’ll still likely need to pay for occasional professional help to give them time to recoup.
- Getting to and from your appointments, or daily trips to the adult day care center, can add expenses. This is especially true if you require specialized help due to mobility challenges.
Plan Ahead for Long-Term Care
Planning ahead for long-term care can help ensure you’re prepared when the need arises. Understanding the different types of care, typical cost associated with each, the factors that influence those costs, and how you can manage them can help you make the right decisions for you and your loved ones. Revisiting your estimates regularly allows you to make adjustments as needed so you can stay on track.
We’re Here for You!
Bankers Life is here to help customers with their financial and insurance needs. Please visit us at BankersLife.com to learn more.
Bankers Life Securities, Inc., Bankers Life Advisory Services, Inc., and their representatives do not provide legal or tax advice. Each individual should seek specific advice from their own tax or legal advisors.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors. To determine which investment(s) may be appropriate for you, please consult your financial professional prior to investing.
Bankers Life is the marketing brand of various affiliated companies of CNO Financial Group including, Bankers Life and Casualty Company, Bankers Life Securities, Inc., and Bankers Life Advisory Services, Inc. Non-affiliated insurance products are offered through Bankers Life Securities General Agency, Inc., (dba BL General Insurance Agency, Inc., AK, AL, CA, NV, PA).
Securities and variable annuities offered through Bankers Life Securities, Inc. Member, FINRA/SIPC (dba BL Securities Inc., AL, GA, IA, IL, MI, NV, PA). Advisory products and services offered by Bankers Life Advisory Services, Inc. SEC Registered Investment Adviser (dba BL Advisory Services, Inc., AL, GA, IA, MT, NV, PA).
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk.
Investments are: Not Guaranteed. Involve Risk. May Lose Value.
