Weighing Costs & Need for LTC Insurance
I‘m teaching a “short course” on long-term care insurance for my law students this semester. Therefore I’m collecting as much current information on policies and costs as possible to share with my students. Along that line, WTOP-News in the D.C. area recently posted a two part discussion on “Weighing the Costs and Need for Long Term Care Insurance.”
From the first part of the series:
Based on a 2016 Department of Health and Human Services study, about half of Americans turning 65 today will require long-term care services during their lifetimes (47 percent for men and 58 percent for women) with most needing assistance for an average of two years. About 12 percent will need between two and five years of long-term care, and nearly one in seven adults will require five or more years. . . .
Now let’s turn to the potential costs of long-term care services which varies by state and type of care. Genworth, a provider of long-term care insurance, released its 2017 Cost of Care Survey stating the national average annual cost of a private room in a nursing home is $97,452 which is an increase of 5.5 percent from one year ago and a five-year annual inflation increase of 3.5 percent. Interestingly, the biggest increase in long-term care costs was for a home health aide, which increased 6 percent from 2016 to 2017, to $49,162 per year for 44 hours per week.
Summary of Genworth’s median annual 2017 long-term care costs are below:
Adult Day Care (5 days/week) $18,200
Assisted Living (one-bedroom) $45,000
Homemaker Services (44 hours/week) $47,934
In-Home Health Aide (44 hours/week) $49,192
Nursing Home (semi-private room)$85,775
Nursing Home (private room) $97,455
Source: Genworth 2017 Cost of Care Study
The article also has a good summary of key features of LTCI, including inflation riders, elimination periods, maximum daily benefits vs. maximum benefit period, lifetime maximums, guarantees on renewability, nonforfeiture options and shared care.
The writer, Nina Mitchell, who is a advisor for The Colony Group, says that she plans to focus on “alternative long-term care solutions, such as hybrid policies that combine life insurance with long-term care insurance” in Part 2.