Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Long-Term Care Planning

Long-Term Care Cost Inflation Picks Up: Genworth

Your article was successfully shared with the contacts you provided.

Long-term care cost increases have slowed in recent years, but they started to speed up this year.

The average increase for six types of care rose 4.5% this year, according to CareScout, an arm of Richmond, Virginia-based Genworth Financial Inc.

The average rate of increase for 2017 is up from just 1.1% in 2016, and it’s up from a five-year average of 3%.

(Related: Feds: ERISA Plans Must Share Their Decision Support Tools)

In 2016, changes in national median prices ranged from a decrease of 1.2%, for adult day care, to an increase of 2.6%, for homemakers, or aides who help people with tasks such as cooking and shopping.

This year, changes ranged from a 3% increase, for adult day care, to an increase of 6.2% for home health aide services.

A home health aide helps people with activities such as bathing, or transferring from a bed to a wheelchair.

The median national cost of the services of a home health aide is now $22 per hour.

CareScout bases the data in the report, which is available here, on a survey of 47,000 long-term care providers.  

Long-Term Care Planning Strategies

Fifteen years ago, issuers of long-term care insurance typically encouraged clients to buy coverage with 5% compound annual inflation protection, or at least 5% simple inflation protection.

In recent years, low interest rates and high long-term care insurance claim rates have reduced insurers’ ability to offer policies with 5% inflation protection at an affordable price. The insurers that still offer new stand-alone long-term care insurance policies have been encouraging consumers to buy policies with 3% inflation protection.

The 4.5% increase in long-term care services costs for 2017 means that, for many long-term care insurance benefits users, increases in care costs may have outstripped growth in policy benefits for the first time in several years. 

Genworth’s Strategy

Genworth is using the long-term care cost report to draw consumers’ attention to the fact that Medicare does not pay for long-term care, and that Medicaid pays for nursing home care only for people who meet strict income limits.

Genworth is encouraging consumers to consider buying stand-alone long-term care insurance and single-premium immediate annuities.

— Read John Hancock’s best and worst cities for LTC costs on ThinkAdvisor.

– Connect with ThinkAdvisor Life/Health on
Facebook and Twitter.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.