Archive for March, 2011

$84,680 per Year: The Current (October, 2010) Cost of Long Term Care Services*

March 22, 2011

$84,680 is the average annual cost for a Metro-Denver, CO nursing home stay.**  Do you want something better than average?  Nicer nursing homes are available, but cost even more.  $84,680 per year will also pay for about 10 hours per day of professional home care by a home health aide.  Let’s look at Metro-Denver Long Term Care costs in more detail.

Home Care

        Home Health Aide: The hourly rates range from $15 – $40 with $24 as the average.  Home health aides are trained to provide hands-on assistance to people who need help with performing the Activities of Daily Living (bathing, dressing, eating, continence, toileting, and transferring).  Home health aides can also help with tasks such as meal preparation, laundry, shopping and light housekeeping.

        Homemaker (or Companion Care):  The average rate is $21 per hour.  Agency-provided Homemakers are not trained to provide assistance with Activities of Daily Living, but can perform meal preparation, light housekeeping, and companionship. 

Adult Day Care: The average cost for a full day of Metro-Denver Adult Day Care is $64.  This can be a wonderful option for a situation in which one person (typically a spouse or adult daughter/daughter-in-law) would otherwise be the 24/7 caregiver.  By utilizing Adult Day Care, the caregiver can still have a life.  She (sometimes he) can remain employed, go to school, and have time to take care of everyday things that need to be done.  The caregiver can also have some time with friends.   

Assisted Living:  The Metro-Denver average Assisted Living base rate is $2,463 per month.  Pricing for most assisted living facilities start with a base rate and then cost is added as more services (such as medication management, help with bathing, escorting to and from meals, etc.) are needed.  For planning purposes, I would assume the average monthly assisted living cost to be about $3,000 per month.  Nicer than average assisted living facilities cost more and not as nice cost less.

Nursing Home:  The range of surveyed Metro-Denver nursing home costs for a private room is $181-$290 per day ($66,065-$105,850 per year) with an average of $232 per day, or $84,680 per year.  Semi-private rooms ranged from a low of $167 per day to a high of $275 per day with an average cost of $209 per day.  Nursing homes are appropriate for those needing 24 hour supervision and/or extensive care.  Unfortunately, Medicaid nursing homes are filled with people who have run out of money but could be better cared for at home or in assisted living if they had only done a good job of planning.

Bottom Line: Long Term Care services are expensive.  You must have a plan to pay for these services when you need them or you will find yourself, and your family at the mercy of whatever public programs may still be available.

*Source for this article: The 2010 MetLife Market Survey of Nursing Home,Assisted Living, Adult Day Care Services, and Home Care Costs.  October, 2010.

** Average annual cost for a private room in a Postal Code 800xx and 802xx nursing home.  Semi-private rooms cost about 10% less.

Disclaimer: Actual policy language, rather than the contents of this eNewsletter always takes precedence.  Long term insurance policies vary from company to company & as well as within the same company.  Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice.  Consult your tax advisor or attorney for these matters.

 © Raymond Smith, The Long Term Care Specialist, 2011

Future Cost of Long Term Care Services

March 22, 2011

What will Long Term Care services cost when you need them?  Today $84,680 per year will buy you 10 hours per day of professional home care or a private room in an average-priced Metro-Denver nursing home*.  While I do not know the future cost with certainty, I do know what the increase have been over the past five years.  Nursing home and assisted living costs have grown an average of 6%-7% per year.**   Home Care costs have grown an average of 2% per year during this period.**  The costs of operating a nursing home or assisted living facility are both labor-intensive and capital-intensive (facility financing costs).  The cost of providing home care is almost entirely labor.  As our population ages, each year we have more people needing long term care services and fewer available caregivers to provide the service.  That shortage of labor can only drive up the cost of future care.

U.S. inflation, as measured by the Consumer Price Index – All urban Consumers (the generally accepted inflation rate) has been as follows:

  • 2005:  +3.4%
  • 2006:  +3.2%
  • 2007:  +2.8%
  • 2008:  +3.8%
  • 2009:  -0.4%

So how can we have “inflation” running between -0.4% and + 3.8%, from 2005-2009, yet the cost of care in assisted living and nursing homes growing by an average of 6%-7% per year?  The answer is the Consumer Price Index is a changing (some may say manipulated) “market basket” of items supposedly routinely purchased by consumers.  The growth rate for Long Term Care services cost is based upon actual changes in pricing.  This strengthens my argument for using at least a 5% annual inflation projection for assisted living & nursing homes.  But what about the only 2% annual cost increase for home care?  For now, there are too many home care agencies chasing too few customers.  This will change as our population continues to age…resulting in many more people needing care and fewer workers to take care of them.  

All of this seems like a lot to justify my using a projected 5% annual inflation rate for Long Term Care services.  Actually, I think 5% is conservative.  Given a 5% annual cost growth rate, this is what you can expect to pay for one year of care in your future:

  • Today:          $ 84,680
  • In 5 years:    $102,929
  • In 10 years: $131,366
  • In 20 years: $213,982
  • In 30 years: $348,554

If you are now age 50, needing care in thirty years (at age 80) is a reasonable assumption.  $349,000 for one year of care for one person.  If you are now age 60, one year of care will likely cost $214,000 when you are age 80.  Where will the money come from?  Planning is the answer.

*   The 2010 MetLife Market Survey of Nursing Home,Assisted Living, Adult Day Care Services, and Home Care Costs.  October, 2010.

** Genworth 2010 Cost of Care Study, April 2010.

Disclaimer: Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice.  Consult your tax advisor or attorney for these matters.

 © Raymond Smith, The Long Term Care Specialist, 2011