Nursing Home Costs Could Reach $190K a Year by 2030
Financial planners and insurance providers have been warning baby boomers to be prepared for the cost of nursing home care for years, but just how much should they expect to pay? On average, U.S. nursing homes now charge $54,900 a year, and this could reach as high as $190,000 by 2030, when the last of the boomers reach age 65.
The five costliest areas are Alaska, New York City, Connecticut, New York state, and Washington DC, with costs ranging from $88,000 to $106,500 per year, according to a new study by GE Long Term Care Insurance. The survey evaluated costs of caring for a person with a debilitation such as Parkinson’s disease. The lowest average annual cost was in Louisiana, at $36,000 per year, according to GE. “Nursing-home costs have been rising 5 percent or more a year, outpacing inflation,” said Herb Perone, spokesman for the American Council of Life Insurers. “The elderly population is starting to grow. It’s the simple law of supply and demand.”
The American Council of Life Insurers estimates that one out of every three men who live beyond 65 will require nursing-home care, compared to one out of two women. Medicare will only cover short periods of nursing-home care after a hospital stay, for example, if a patient needs therapy to recover from an accident. As a result, some Americans take out long-term care insurance policies to meet nursing-home costs, while others will simply pay out of pocket. About 70 percent get help from Medicaid, the government health program for lower-income Americans, according to AARP.
Financial planners are now urging more Americans, especially those in their 50s,- to take a hard look at their financial situation and determine if taking out long-term care insurance should be part of their overall retirement-planning strategy.
In the meantime, some workers will be able to apply for long-term care insurance through an employer. About 20 million federal employees and retirees will be eligible to apply starting March 25 through the Federal Long-Term Care Insurance Program that’s being serviced by Metropolitan Life Insurance Company and John Hancock Life Insurance Company.