The first thing most people learn when they confront the daunting U.S. eldercare system is that they can’t afford it.
Two-thirds of Americans will need some type of long-term care as they get older, according to federal data, but the price, whether for in-home services, assisted living or a nursing home, can easily cost more per year than the average American makes. Medicare and other health insurers pay little, if any, of the bill.
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Costs can vary widely by location, according to data from a November 2021 survey conducted for insurance company Genworth by its subsidiary, CareScout.
Select a state:For example, assisted living costs more than twice as much on average in Rhode Island or the District of Columbia than in Missouri or South Dakota.
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A year in a nursing home runs about $73,000 in Oklahoma or Louisiana but $182,000 in Connecticut.
And round-the-clock health aides in your own home probably will set you back more than $160,000 a year, even in the least expensive states, such as West Virginia.
About one in five people who need long-term care need it for more than five years and one in 10 need it for a decade or longer, according to the same federal data.
Yet few are prepared to pay for it.
“Most people, when they think about getting old, they look in the mirror and they say, okay, I’m going to have grayer hair or no hair. I might slow down a little bit, but I’m basically just the same person, older,” said Marc Cohen, co-director of the Leading Age Long Term Services and Supports Center at the University of Massachusetts-Boston, which researches solutions for the needs of an aging society.
They don’t plan for the functional and cognitive impairments that are much more likely to come with age, he said. “They think it’s going to happen to someone else and not them.”
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More care means higher costs
The price tag also depends on how much help a person needs. Are they mobile? Do they need daily nursing? Can they feed, bathe and dress themselves? Keep track of medications? Do the laundry or scoop the cat litter?
The four basic types of care each have variations within them that can result in higher costs.
Nursing home: These residences may provide skilled nursing and a lot of help with daily activities to people who can’t be cared for at home but don’t need to be in a hospital. The median cost for a private room is $108,405 per year; a semiprivate (shared) room is a bit less, $94,900. State averages range from $71,175 for a semiprivate room in Missouri to $378,140 for a private room in Alaska.
In-home care: The average cost for a home health aide, who helps with personal care such as bathing, dressing and medications, is $27 per hour. A homemaking aide who does chores such as cooking and cleaning but no personal care costs a little less. Prices range from an average of $19 in West Virginia to $36 in Minnesota. One key consideration: Most providers require a minimum commitment of several hours per shift, several days per week. In most places, round-the-clock home care is the most expensive option of all, often running more than $200,000 a year.
Assisted living: These live-in facilities provide room and board in addition to some assistance with daily life. They usually have private rooms or apartments and common dining rooms, activity areas and on-site aides, physical therapists and nurses. Prices for basic assisted living range from an average of $36,000 a year in Missouri to $83,730 in the District of Columbia, and the cost rises with the level of care a resident needs. Memory care for people who have dementia, for instance, costs an additional $1,700 per month, on average, according to a 2020 report by the National Investment Center for Seniors Housing & Care.
Adult day care: This group setting provides meals, planned social activities and basic medical care during typical working hours, and many include transportation. The average cost is $78 per day, ranging from $35 in Alabama to $156 in North Dakota.
Why costs differ so much from place to place
Costs for these services don’t necessarily track with cost of living, so just because your grocery bill or your home price is lower than those in other places doesn’t mean you’ll pay less for long term care.
For instance, the priciest state for adult day care is North Dakota (median annual cost: $40,600). And a year of home health aide service costs the same in Minneapolis as in San Francisco (about $85,000).
CareScout CEO Samir Shah, whose team surveys providers in each state every year, said the pricing often comes down to competition and proximity to people seeking care.
When you’re in a metropolitan area such as New York or D.C., you have many providers and a dense population base, he said. Not so in more rural areas.
“You might not have 3, 4, 5 providers to choose from. You might only have one, and you might only have one provider that serves in hundreds of Zip codes where you live,” he said. “So your options become lower, and hence the pricing power for the provider becomes higher.”
Shah suspects that scarcity is a big reason the survey found that a year in a nursing home in Alaska costs a median of $378,140, more than twice as much as in any other state. Although its territory covers nearly 700,000 square miles, Alaska has just 18 nursing homes, according to its state health department. (The cost is such an outlier in the data that we didn’t put it in the chart above because it meant all the other states’ numbers were crammed together at the far left.)
In addition, in very spread-out areas, aides and day care transportation drivers have to travel farther to reach their clients, so agencies’ travel costs — and customers’ mileage fees — are higher. And facilities in less populated areas, whether nursing homes or assisted living buildings, need to keep the lights on and pay employees even if their rooms are not full. So there are certain fixed costs that may keep care costs unexpectedly high.
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Wait — Medicare doesn’t pay for this?
Probably not.
If an older person is injured or becomes seriously ill, Medicare, the federal health insurance program for people over age 65 (and a few others), will pay for a hospital stay and perhaps a few weeks of rehab in a skilled nursing facility.
But Medicare does not cover day-to-day help for people who simply can no longer take care of themselves.
Medicaid, a separate state-and-federal health insurance program that covers low-income and disabled people, will pay for some types of long term care, but it won’t kick in until a person has spent down nearly all their remaining savings, income and assets. Even then, not all facilities accept Medicaid vouchers.
Long term care insurance exists but few people have it, and it has its own problems and limitations that make it unattainable for many people and insufficient for others.
“If you don’t have private long term care insurance, you didn’t buy a policy, you’re going to pay out-of-pocket,” Cohen said. “And if that money runs out, and you’ve spent down your assets, you will have Medicaid. But you may not be able to have the level of flexibility and choice that you would using an alternative payment source.”
Because most people who need long term care are neither wealthy enough to pay for it themselves nor poor enough for their state to pick up the bill, friends and family members may end up cobbling together the best care possible with limited resources.
About 80 percent of long-term care at home is provided by unpaid caregivers, according to federal data, and a 2020 Brookings studyfound that slightly more than 1 in 10 U.S. adults provide some type of care for another adult. Often it is adult children caring for their parents.
“When an adult child takes on those roles, a lot of times they have to give something else up. And sometimes that’s some of their work or all of their job,” said Jan Mutchler, director of the Gerontology Institute at the University of Massachusetts, which produces the Elder Index, a cost-of-living calculator for older adults. “The bottom line is there are costs to long term care. There are costs to taking care of older people who need assistance. And somebody has got to pay it one way or another.”
Those costs, by the way, are going up.
So where do I start?
Figuring out care is challenging and requires research to find and vet providers, but many people don’t take advantage of help that may be available through local programs, Mutchler said. She suggests starting with the eldercare locator operated by the federal Administration for Community Living to get contact information for agencies in your area.
Data sourced from Genworth Cost of Care Survey.
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