The cost of long term care can be deceivingly expensive – especially when you consider the fact that generally, Medicare will not pay for long term care. Also, Medicaid cannot be relied upon to pay for the costs of long term care services unless you first become eligible by having very few resources and a very low income. Even then, Medicaid will only pay for some of the cost of long term care (keep in mind that Medicaid is a State and Federal program that does differ from state to state in its eligibility requirements and other specifics).
Long Term Care Costs: Big Variances From State To State
The true cost of long term care can vary quite a bit depending on your state of residence. According to the 2007 Genworth Financial Cost of Care Survey the average nationwide cost for a single occupancy private room at a Medicare certified nursing home came to $74,806 annually or $204.95 a day. Alaska ($196,735), New York City ($135,853), and the non-urban areas of Connecticut ($120,479) have the most expensive annual private room nursing home rates in the United States. Some of the least expensive areas include the non-urban areas of Louisiana and Missouri where the annual average is somewhere in the $44,000 range.
The Cost Of Long Term Care Is Increasing
The cost of long term care also has been steadily trending upwards over the last several years. Long term care costs have been rising at approximately a 5% clip per year for quite a few years. These costs do not appear to be heading towards a plateau or leveling off anytime soon. It is predicted that the cost of long term care will continue to feel the upward price pressure that increasing medical costs exert on the overall cost of receiving nursing home care, hospice care, and assisted living facility care.
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Additional Long Term Care Costs
Long term care can be very expensive and the real amount you will spend depends on the level of services you need and the length of time you need care. One year in a nursing home can average more than $50,000. In some regions, it can easily cost twice that amount. Home care is less expensive but it still adds up. Bringing an aide into your home just three times a week (two to three hours per visit) to help with dressing, bathing, preparing meals, and similar household chores can easily cost $1,000 each month, or $12,000 a year. Add in the cost of skilled help, such as physical therapists, and these costs can be much greater.
Average Long Term Care Insurance Cost
In 2002, a policy offering a $150 per day long-term care benefit for four years, with a 90-day deductible, cost a 50-year-old a national average of $564 per year. For someone who was 65 years old, the national average cost was $1,337, and for a 79-year-old, the national average cost was $5,330. The same policy with an inflation protection feature cost, on average nationally, $1,134 at age 50, $2,346 at age 65, and $7,572 at age 79. These costs are very affordable when you consider the statistic that over 40% of all Americans will spend at least some amount of time in a nursing home or other skilled nursing facility!
With the rising cost of care, whether it be in home care or in a facility, it is important to prepare for your future. Oftentimes a good option is to purchase long term care insurance to help you cover the costs that Medicare will not be able to as for most Americans it is estimated that Medicare and Medicaid combined will cover less than 5% of all long term care costs. If you do decide to purchase long term care insurance the premiums generally remain the same each year (unless they are increased for an entire class of policyholders at once) – this type of long term care policy is called “guaranteed renewable”. That means that the younger you are when you first buy a policy, the lower your annual or monthly premium will be.
The amount of your premium also depends on the amount of the daily benefit and how long you wish that benefit to be paid. For example, a policy that pays $100 a day for up to five years of long-term care costs more than a policy that pays $50 a day for three years. Elimination or deductible periods are the number of days you must be in residence at a nursing home or the number of home care visits you must receive before policy benefits begin. For instance, with a 20-day elimination period your policy will begin paying benefits on the twenty-first day. Most policies offer a choice of deductible ranging from zero to 180 days. The longer the elimination or deductible period, the lower the premium. However, longer elimination periods also mean higher out-of-pocket costs. For instance, if have a policy with a 100-day waiting period and you go to a nursing home for a year, you must pay for 100 days of care. If your stay costs $150 a day, your total cost would be $15,000. With a 30-day elimination period, your cost would be only $4,500.
Should you decide to prepare for future long term care there are several factors that should drive your decision. When you’re considering a long-term care policy, you should determine, not just how much you can pay for premiums but also how long you could pay for your own care. Bear in mind that while 45 percent of nursing home stays last three months or less, more than one-third last one year or longer. The more costly longer stay may be the devastating financial blow that you may want to insure against. You should also consider the geographic area where you will most likely be receiving long term care services. The cost for services is generally higher in metropolitan areas.
Second, think about whether or not you’ll need a Comprehensive Option plan or a Facilities Only Option plan. A Comprehensive Option plan is a feature which covers both facilities-based and home-based care. Under the FLTCIP, this option covers services provided in a nursing home, assisted living facility, adult day care center, care at home, hospice care (in a facility or at home), respite services (in a facility or at home), bed reservations and caregiver training. A Facilities-Only Option plan is a feature which covers facilities-based care only. Under the FLTCIP, this option covers services provided in a nursing home, assisted living facility, hospice care in a facility, respite services in a facility, bed reservations and caregiver training is better for your needs.
Third, consider how much money you can contribute from your savings to help cover the cost of care and how much you are able to afford in long term care insurance premiums. You may be able to pay a portion of the cost of care in return for a lower coverage amount and lower premium. Calculate how much you might be able to self-fund.
Finally, take into consideration the rising cost of medical expenses by carefully selecting an inflation protection option. After you have taken into consideration these basic items you should then decide what care option you want to cover. The three most common care options are home health care, assisted living, and nursing home care.
Average Nursing Home Cost
The cost of nursing homes is very high. Average costs range from $40,000 to $65,000 per year. While the national average daily cost for private nursing home care is $194, the cost varies widely from state to state, according to the Genworth Financial 2006 Cost of Care Survey. The survey evaluated the daily cost of assistance in a nursing home for a person suffering from debilitating conditions, such as Parkinson’s disease. It did not include costs for therapy, rehabilitation or medications. Look into your specific location to see if you fall into the low or high end of the bracket. Speak with a local insurance agent that is familiar with long term care insurance and the cost of long term care in your area. Use our free long term care insurance quote finding tool at the top of the page to compare quotes from multiple insurance companies and agents side by side. Get free long term care insurance quotes now!
Residential Care (Assisted Living)
The term residential care refers to a system of non medical custodial care which can be provided in a single family residence, a retirement residence or in any appropriate care facility including a nursing home. More than 90% of the residential care homes are licensed for six or fewer residents housed in a private residential home setting. There are facilities licensed to care for more than six residents but they are usually retirement complexes or specialty facilities built to care for elderly people. In this setting the facility is often called an Assisted Living Facility.
Residential care is very cost effective as well, on the average about half the cost of nursing home care. The cost of residential care for an elderly person can range from $850 to $4,000 a month, depending on the care needs, the quality of the accommodations and the location of the facility. For example, a care home in Beverly Hills will cost considerably more than one in Anaheim. The average cost in a six bed home is $1500 a month for a shared bedroom and $1900 a month for a private bedroom for a California resident. Other states offer lower and higher costs. Most residential care homes have private rooms available for their residents as well as shared rooms. Very few of the smaller homes will accept someone on SSI unless the family can supplement the SSI rate, usually by a few hundred dollars a month. Some larger facilities will still accept someone on SSI who needs personal care services as long as the services are not needed except intermittently.
The larger residential care facilities will vary in price from about $850 – $4000, depending on the program, the accommodations and the type of residents they accept. An average cost for a shared accommodation (usually a one room apartment with a bath) is around $1,500 a month. Private apartments generally average around $1900 a month (this includes help with all activities of daily living – bathing, dressing, medication supervision, escort service, transportation to doctor’s appointments).In a residential care setting an elderly person still has the ability to carry on as normal a life as they wish or are able. They can go shopping, have friends and family visit whenever they want, go for walks, dine out, etc.
Residential care can be a very dignified and cost effective way of dealing with not being able to live independently. Most families if given the choice will choose residential care over nursing home care for these reasons. Keep in mind, however, that quality of care and the quality of the homes can vary greatly among residential care homes.
Home Health Care
Home health care helps seniors live independently for as long as possible, given the limits of their medical condition. It covers a wide range of services and can often delay the need for long-term nursing home care.
More specifically, home health care may include occupational and physical therapy, speech therapy, and even skilled nursing. It may involve helping the elderly with activities of daily living such as bathing, dressing, and eating. Or it may include assistance with cooking, cleaning, other housekeeping jobs, and monitoring one’s daily regimen of prescription and over-the-counter medications. The cost of home health care varies across states and within states. In addition, costs will fluctuate depending on the type of health care professional required.
Home care services can be paid for directly by the patient and his or her family members, or through a variety of public and private sources. Sources for home health care funding include Medicare, Medicaid, the Older Americans Act, the Veterans’ Administration, and private insurance. The average cost in 2006 for home health care was $18 an hour.
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No matter which type of long term care will be needed in the future it is important to research the costs in your area of the country and be prepared for the future. Planning for the future may often be difficult but finding cheap long term care insurance doesn’t need to be.
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