So you've probably heard about the importance of planning for long-term care. Statistics indicate that at least 70 percent of people over age 65 will require it, Genworth said. And you’ve probably also heard about how expensive it is. According to LongTermCare.gov, the average price tag for a private or semi-private room in a long-term care facility in 2010 was $6,000 to $7,000 per month.
Furthermore, you may be aware that Medicare does not cover long-term care expenses. To pay for your long-term care in the future, you either need to be independently wealthy, prepared to spend a big portion of your life’s savings, or you can purchase a quality long-term care insurance policy (the earlier, the better).
Feeling in the know? Good, because you are. Almost half of Americans (44 percent) mistakenly believe that Medicare will cover their long-term care needs, PBS said. Only 35 percent set aside money of their own to pay for it. Yet roughly one-third aren’t concerned about being able to pay for it.
When you compare the high likelihood of needing long-term care to the high costs involved, it's easy to see crisis on the horizon for those who aren’t aware enough to prepare. Usually, it turns into a crisis for their adult children who end up paying the price – either by providing the care themselves or helping parents pay for the care they need.
Even those who are aware and prepared for the cost of long-term care often make one crucial mistake: They use today’s prices to calculate the price of care they need to pay for later.
Are you calculating future costs based on today's prices?
It's easy to find data on how much a given type of long-term care costs right now. For example, here are the national median annual costs for 2015, according to the latest Cost of Care survey by Genworth:
- Adult day health care: $17,904
- Assisted living facility (private room): $43,200
- Homemaker services: $44,616
- Home health aide services: 45,760
- Nursing home (semi-private room): $80,300
If you're several decades away from needing long-term care, and you're using these numbers to calculate the coverage you'll be able to pay for at that point, you may be in for a rude surprise later.
Genworth observed that the price tag for all types of long-term care has been rising steadily. For in-home care (including homemaker and home health aide services), the increase was somewhat moderate over 2014, having risen between about 1.3 and 2.6 percent.
For adult day health care services, however, the rate was much steeper. At over 5.9 percent, it nearly doubled the rate of increase for homemaker services, and more than quadrupled that of home health aide services.
For other types of community care (including assisted living facilities and nursing homes), the increase ranged from 2.86 percent to 4.17 percent. That's is a bit less sharp than the rise in adult day health care costs, but still well over the rate of increase for in-home care.
The point? Don’t forget to factor rising costs into your long-term care plans. Use online tools to calculate future costs so you know exactly how much you need to save. If you’re not sure exactly how to cover those costs, get the guidance you need. Building an appropriate strategy now can make a world of difference in you and your kids’ quality of life later. Talk to us.