Long Term Care Costs Continue to Increase

For the 70 percent of people older than 65 who the experts say will need long term care at some point in their lives1, the costs just notched up again.

According to the Genworth 2017 Cost of Care Survey released today, the annual median cost of long term care services increased an average of 4.5 percent from 2016 to 2017, the second-highest year-over-year increase for nursing homes and home care since the study began in 2004 and nearly three times the 1.7 percent U.S. rate of inflation.

Although the national median cost of receiving care rose considerably across all care options during the last 12 months, the increase was most pronounced for home health aides:

  • Home health aide services, up 6.17% to $21.50/hour
  • Homemaker services, up 4.75% to $21/hour
  • Adult day health care services, up 2.94% to $70/day
  • Assisted living facilities, up 3.36% to $123/day or $3,750/month
  • Semi-private room nursing home care, up 4.44% to $235/day or $7,148/month
  • Private room nursing home care, up 5.50% to $267/day or $8,121/month.

"The purpose of the study is to raise awareness about the cost of aging and help start the conversation about planning for long term care," said David O'Leary, president and CEO of Genworth's US Life Division. "We know that most people prefer to begin receiving long term care in their homes and the good news is that home care is still more affordable than nursing home care."

Labor shortage, tighter Medicare rules contribute to rising care costs

After remaining flat for some time, the cost of care at home has been escalating over the past two to three years.  "That's due to an increase in labor costs, caused by a shortage of caregivers, increases in minimum wages in some states, and new health insurance and overtime requirements on the part of some providers," said Noreen Guanci, CEO and co-founder of Long Term Solutions, which provides care coordination services and nurse assessments for Genworth long term care insurance claimants.  

Nursing home costs are increasing due to a combination of higher labor costs and tightened Medicare rules, which have resulted in shortened hospital stays and sicker patients being sent to rehab nursing homes for shorter stays, where costs have risen to cover those chronic medical conditions, she said.

Labor costs also figure into the rising cost of assisted living facilities. Room and board also has increased to accommodate residents who are sicker, but not sick enough to require nursing home care, and the luxurious accommodations that private payers demand, she said.

Most consumers assume government will pay for care

In a companion consumer sentiment survey conducted in conjunction with the 2017 Cost of Care Survey2, two-thirds of respondents said they expect government programs to cover all or part of their long term care costs. But those consumers may be surprised to learn the facts about these government programs.

Medicaid, the largest payor of long term care costs, has strict income and functionality requirements.3 Medicare will pay for limited nursing home care following a three-day hospital stay, but only if the patient has been formally admitted to a Medicare-certified nursing facility as an in-patient and not for observation, as is increasingly the case.  Medicare also does not pay for home care, if skilled nursing care is not needed.

"Our population is aging, living longer, and not prepared," O'Leary said. "At Genworth we are focused on this issue every day and know first-hand how aging impacts families. Our hope is that people will take the first step by checking out our Cost of Care website or app to start the conversation about planning for their own long term care needs."

Resources for Understanding Care Financing Options

As costs continue to rise and traditional sources of government funding become more restrictive, consumers can take advantage of the following resources to educate themselves about the cost of care and alternative funding options:  


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