June 7, 2011

Facility-Based Health Care Costs Up, In-Home Care Remains Flat

Large labor supply and lower costs lead to steady growth rate for home care

Genworth's eighth annual Cost of Care survey found that costs for care in assisted living facilities and nursing homes have increased over the past year, while in-home care has held steady. The median annual cost of care for a private room in a nursing home increased over 3% to $77,745, according to the report released May 26, while the median annual household income is $49,777.

The hourly cost for homemaker services such as help with cooking and cleaning was $18, and for home health aide services, which include non-medical personal care such as bathing, was $19. Both types of care increased 0% over 2010. The report found the median cost for adult day care $60 per day, which also experienced no increase over 2010.

Care in an assisted living facility, however, increased 2.39% over 2010 to over $3,000 per month. A semi-private room in a nursing home costs $193 per day, while a private room costs $213 per day.

“Advisors have spent their careers talking to clients about wealth accumulation. In today’s economy, a conversation that includes wealth protection is imperative in order to create a truly comprehensive retirement plan,” said Colleen Goldhammer, senior vice president of long term care distribution at Genworth Financial, said in a statement.

Genworth found that the compound annual growth rate for facility-based care is 4.35%, while for home care, the growth rate is just 1.38%. Part of the reason for this, according to the report, is increased competition among agencies and the availability of unskilled labor, in addition to lower costs than those associated with a stand-alone facility.

Goldhammer stressed the importance of being prepared for health events that could come up unexpectedly.

“The risk of an unexpected long term care event is a common concern for many American families, and can have a significant impact on family’s financial future. Financial advisors have a great opportunity to educate and plan with each and every client to address this very real risk," she added.

The American Association for Long-Term Care Insurance announced May 31 that sales of life insurance policies with long-term care benefits increased nearly 80% in 2010, with women leading new sales. Most of those women were between ages 65 and 74, while male purchasers tended to be slightly older.

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