As the cost of assisted living facilities and nursing homes keeps rising, the option of bringing long-term care services into the home keeps getting more attractive.
According to the Genworth 2014 Cost of Care Survey, the national median cost of ALFs has increased by 4.25 percent annually over the past five years, to $3,500 per month. The national median cost of a private room in a nursing home has increased by 4.19 percent annually, to $240 per day ($87,600 per year).
Meanwhile, the national median for homemaker services has increased by only 1.2 percent per year, to $19 per hour; the national median for home health aide services has increased by 1.32 percent, to $20 per hour. (Homemakers clean rooms, make beds, wash laundry and prepare meals. Aides also deliver medication and personal assistance.)
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You can access the full Genworth report here: www.genworth.com/corporate/about-genworth/industry-expertise/cost-of-care.html
Why are costs of home-based LTC services rising by about one-third the rate of costs for facilities-based services?
The answer is supply. The supply of facilities-based services is limited by rooms or beds available, which is not growing as fast as the elderly population.
The supply of home-based services is limited only by skilled labor. This line of work is very attractive to immigrants, especially women. In many countries abroad, young women are expected to care for their own elderly. When they move to the U.S., their care-giving traditions and skills become revenue-generating work.
Families often have more flexibility in arranging home-based care services, especially when family members wish to stay involved.
For example, here is one plan: Granny, who lives in Chicago, needs 20 hours per week of homemaker services and 40 hours per week of home health aide services. Family members say they can provide half of each. According to Genworth, the median cost of 10 hours per week of homemaker services in Chicago is $220. The median cost of 20 hours per week of home health aide services also is $440. In total, home-based care will cost $660 per week, compared to $1,776 per week for an average nursing home in Chicago.
Go here to compare cost of home-based and facilities-based care for your state or city: www.genworth.com/corporate/about-genworth/industry-expertise/state-maps.html
Given this trend, it's important to make sure that any long-term care insurance clients purchase includes reimbursement of home-based care. Some policies don't cover any. Other policies will only cover care delivered by a licensed caregiver working for an accredited agency.
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