Understanding Costs
Long-term care costs can be difficult to predict. Costs vary depending on many different things. In some parts of the country, costs are higher than in other places. Urban areas tend to be more expensive than rural, but not always. A study by Genworth Financial (2008) found that assisted living costs were on the average 13% higher in urban cities than non-urban areas.
The cost of long-term care services is usually directly related to how much assistance a person needs. Some people may need help with daily tasks such as bathing or dressing, or help with managing money or shopping. Others may need daily medical assistance.
Often the level of assistance that people need is defined by Activities of Daily Living (ADLs) or Instrumental Activities of Daily Living (IADL). ADLs are defined as eating, bathing, toileting, dressing, moving from one location to another, continence, and sometimes cognitive ability. IDLs include independent activities such as managing money, shopping, meal preparation, and doing heavy housework. Generally, to qualify for long-term care insurance, a person needs to be able to document that they need assistance with two or more ADLs.
According to Lui and associates (2000), people who need assistance with three or more ADLs or IADLs spent (on the average) about five times more on home services than did people who needed help with only one ADL or IADL.
Costs vary depending on whether someone receives help at home, in an assisted living facility, or in a nursing home. Many people choose to have help in their home. In 2010 (according to Genworth Cost of Care Survey), the national median rate was $19 an hour for licensed home health aide services. A home health aide proves “hands on” personal care, but not medical care, such as bathing and dressing.
The median annual rate for an assisted living facility (one bedroom/single occupancy) ranged from $28,200 to $58,680 in the U.S. For Illinois, the median annual rate was $34,020 according to the 2010 Genworth Cost of Care Survey.
Nursing homes are typically more expensive than assisted living facilities as they provide more care, including skilled nursing care 24 hours a day. The median annual rate for a semi-private room in a nursing home for the U.S. is $67,525 and $55,480 for Illinois, as reported by the 2010 Genworth Cost of Care Survey. Again, the range of rates in different locations was great.
Long-term care can be very expensive. Even assistance at home can add up fast. To have help in the home for eight hours a day, five days a week would cost a family about $40,000 a year.
It’s important to find out the costs and availability of services in your community. Knowing your options can help you plan for managing long-term care expenses.
Source: Genworth 2010 Cost of Care Survey (2010, April)
Source: Liu, K., Manton, K.G., and Aragon, C. (2000, January). Changes in Home Care Use by Older People with Disabilities: 1982-94—Executive Summary [online].
