Long-term care expenses are growing, with sizable hikes for home-based services as the industry struggles to meet soaring demand from aging Americans.
That’s according to Genworth’s 2021 Cost of Care Survey, a yearly report covering nationwide senior caregiving.
While the median yearly costs rose across all provider types, home-based expenses — such as home health aids for bathing, dressing or eating, and homemaker services for cooking, cleaning or errands — grew by double-digit percentages in 2021.
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The annual median cost for home health aids grew by 12.5% to $61,776, and homemaker services increased by 10.64% to $59,488 in 2021, a growing expense for those aging in place.
“Our research indicates that people typically prefer home-based care options,” said Patrick Gantz, customer insights senior manager at Genworth.
Indeed, nearly 80% of adults age 50 and older want to stay in their homes as long as possible, according to a survey from AARP, a percentage that has been consistent for more than a decade.
But the biggest problem is how to pay for it.
While some seniors can afford to pay out of pocket, many rely on family or try to lessen the burden with insurance. But with high premiums for long-term care insurance, many are seeking other options.
“Standalone long-term care policies are no longer financially palatable,” said certified financial planner Jay Spector, partner at Barton Spector Wealth Strategies in Scottsdale, Arizona.
He suggests exploring a hybrid life insurance policy, which is part life insurance or annuity with built-in long-term care coverage, or an accelerated benefits rider, providing some of the death benefit early.
You may also review hybrid policies focused on long-term care protection without a payout at death, he said.
However, it can be more difficult to price shop for hybrid policies than standalone long-term care protection.
“It’s very important to explore all options when planning for their long-term care insurance needs,” he added.
Families may also consider Medicaid, a joint state and federal assistance program for low-income retirees with assets below certain thresholds.
However, it’s critical to know there’s a five-year “look-back” if you’re trying to give away or spend down assets to qualify.
Moreover, you may have limited facility options and the program may not cover in-home care, said Sean Michael Pearson, a CFP and associate vice president at Ameriprise Financial Services in Conshohocken, Pennsylvania.
President Joe Biden called for increased Medicaid funding for home-based and community care as part of Build Back Better. But with the spending plan on hold, it’s difficult to predict the future of these proposals.