Data Reveal High Cost of Long-Term Care

The average annual rate for a private nursing home room was almost $90,000 in 2011

By Stephen Miller, CEBS Jan 24, 2012

The consistently high costs for home health care, assisted living and nursing home care across the U.S. underscore the need to address long-term care as part of financial security planning, according to insurer Northwestern Mutual's 2011 Cost of Long-Term Care study, which collected data from August through November 2011 from nearly 4,400 assisted living facilities, nursing homes and home health care providers across the U.S.

Further complicating the issue, America is getting older. According to the 2010 U.S. Census, there are more Americans over the age of 65 than any other age group, and U.S. Department of Health and Human Services (HHS) statistics show that people reaching age 65 have an average life expectancy of an additional 18.6 years (19.8 years for women and 17.1 years for men).

“Most people realize they will need care, and yet by their own admission they’re not sure how they will plan for it,” said Steve Sperka, Northwestern Mutual vice president of long-term care. “The first step is very simple. Sit down with a trusted advisor to coordinate a financial plan that addresses this risk. By addressing these questions early on, you put yourself in the driver’s seat when it comes to difficult decisions down the road.”

'Sobering' Data

While costs vary widely based on location and type of care, the study shows that the national average daily rate for a single-occupancy, private nursing home room was $246.06 per day, or almost $90,000 for one year of care. According to HHS, the average length of stay in a nursing home is 2.4 years, which equates to more than $215,000 in care alone.

“While costs vary greatly from region to region, the need for long-term care planning does not,” continued Sperka. “The data is sobering and doesn’t even include the added expenses of medical equipment, transportation, drugs and other hidden costs. Relative to other financial commitments in retirement, long-term care costs are disproportionately high, and people need to think ahead to lessen the financial and emotional impact.”

Other highlights from the Cost of Long-Term Care study include:

• Assisted living facilities. The national average monthly rate for a private, single-occupancy room in an assisted living facility in the U.S. was $3,372.41. The national average monthly rate for a shared room in an assisted living facility was $2,592.40.

• Home health care. The national average hourly rate for home health aides provided by a certified home health care agency was $20.65. The national average hourly rate for home health aides provided by a noncertified home health care agency was $23.98.

• Long-term care costs vary considerably across the country. The national average for the monthly rate for a private, single-occupancy room in an assisted living facility is $3,372.41. Comparatively, in Washington, D.C., Virginia and Maryland the cost for this same care is just over $6,600 per month, while in Milwaukee an individual would pay just $1,200 per month.

Northwestern Mutual's Long-Term Care Cost Calculator highlights the potential cost of long-term care services, and its Lifespan Calculator helps estimate how many years a person can expect to live in retirement.

Stephen Miller, CEBS, is an online editor/manager for SHRM.

Related Video:


The Need for Long-Term Care

Most employees are unprepared for the enormous expenses posed by long-term care, says Peter Goldstein, EVP at Univita Health.

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Related Articles:

Americans Unprepared for Long-Term Care; Impact on Women Greatest, SHRM Online Benefits Discipline, November 2011

Death of CLASS Act Won’t Solve Long-Term-Care Concerns,SHRM Online Legal Issues, October 2011

What Is Long-Term-Care Insurance?, SHRM Online Tools and Templates, November 2009

Planning for the Future: Long-Term Care as an Employee Benefit, SHRM Online Benefits Discipline, October 2008

Quick Links:

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SHRM Online Health Care Reform Resource Page

SHRM Online Retirement Plans Resource Page

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