insure logo

Why you should trust Insure.com

quality icon

Quality Verified

At Insure.com, we are committed to providing honest and reliable information so that you can make the best financial decisions for you and your family. All of our content is written and reviewed by industry professionals and insurance experts. We maintain strict editorial independence from insurance companies to maintain editorial integrity, so our recommendations are unbiased and are based on a comprehensive list of criteria.

Even with the population aging in greater numbers, Americans are woefully unprepared for the costs of nursing home care and assisted living. And those costs are rising substantially every year.

 

Activities of daily living

The inability to perform a certain number of “activities of daily living,” or ADLs, is the most common way insurance companies decide when you’re eligible for benefits under a long term care insurance policy. Typically, an LTC policy pays benefits when you can’t do two or three of them. The most commonly used ADLs are:

  • bathing
  • continence
  • dressing
  • eating
  • toileting (moving on and off the toilet)
  • transferring (getting in and out of bed)
Source: The National Association of Insurance Commissioners

The average national cost in 2007 of one year in a private nursing home was $74,806 ($205 per day), according to a survey of 11,000 nursing homes by Genworth Financial. Perhaps even more alarming than the price tag is that Americans think someone else will pay for it: Forty-four percent incorrectly believe that Medicare or private health insurance will pay for long term care, according to Genworth.

Costs vary significantly by region: On average, those in the Northeast pay $40,000 more per year for nursing home care than those in the Midwest.

Genworth found that the average annual cost of an assisted-living facility is $32,573 for a one-bedroom unit, up 13 percent in four years. Here, too, Northeasterners are getting a bigger bill: $12,000 more per year than folks in the Southeast. The most expensive one-bedroom unit in the survey was found in Massachusetts for $4,753 per month; the least expensive was in North Dakota at $1,609 per month.

It can be just as expensive to stay at home. The average annual cost to receive 40 hours a week of home health care is $52,977 (based on an average hourly rate of $25.47).

By 2020, 12 million seniors will need long-term care, according to the U.S. Department of Health and Human Services (HHS). People who reach age 65 will have a 40 percent chance of entering a nursing home and about 10 percent of them will stay there five years or more.

With those numbers in mind, long term care (LTC) insurance looks like a steal. The average premium for a long term care policy in 2005 (the latest figure available) was $1,918, according to America’s Health Insurance Plans, an industry trade group. LTC insurance covers nursing home and/or home health care costs (up to a daily maximum). The average LTC insurance buyer is age 61.

The Medicare surprise: No payment for that

If you find yourself in poor health and needing long term care, Medicare is not going to come to your rescue. Medicare will pay only for medically necessary skilled nursing facility or home health care for up to 100 days if you meet certain conditions, according to HHS. After 20 days, you must pay a coinsurance ($124 per day in 2007).

And Medicare does not pay for home health aides to help with activities of daily living such as dressing, bathing and using the bathroom.

 

Medicaid pays for certain nursing home care for seniors with low incomes and limited assets. In most states, Medicaid also pays for some long-term care services at home and in the community. Services and eligibility vary from state to state. In other words, you’ll need to deplete your assets before you’re eligible for Medicaid benefits.

According to AARP, about 65 percent of nursing home residents are supported primarily by Medicaid and it pays for 45 percent of the total nursing home bill.

Average daily and annual room rates for private nursing home in 2007

State

Average daily cost

Annual cost

Alabama$147.80$53,947.00
Alaska

$539.00

$196,735.00

Arizona: Phoenix

$192.67

$70,324.55

Arizona: Rest of state

$195.82

$71,474.30

Arkansas

$127.57

$46,563.00

California: Los Angeles

$219.39

$80,077.35

California: Oakland

$229.00

$83,585.00

California: Sacramento

$229.87

$83,902.55

California: Santa Ana

$258.41

$94,319.65

California: San Diego

$224.68

$82,008.20

California: San Francisco

$301.70

$110,120.50

California: San Jose

$252.64

$92,213.60

California: Rest of state

$209.70

$76,540.50

Colorado: Denver

$204.29

$74,565.85

Colorado: Rest of state

$204.08

$74,489.20

Connecticut: Bridgeport

$325.04

$118,639.60

Connecticut: Rest of state

$330.08

$120,479.20

Delaware

$206.00

$75,190.00

Florida: Jacksonville

$190.15

$69,404.75

Florida: Miami

$235.92

$86,110.80

Florida: Orlando

$201.13

$73,412.45

Florida: Tampa

$212.42

$77,533.30

Florida: Rest of state

$190.66

$69,590.90

Georgia: Atlanta

$151.65

$55,352.25

Georgia: Rest of state

$137.34

$50,129.10

Hawaii

$295.53

$107,868.45

Idaho

$184.72

$67,422.80

Illinois: Chicago

$179.44

$65,495.60

Illinois: Rest of state

$180.47

$65,871.55

Indiana: Indianapolis

$173.38

$63,283.70

Indiana: Rest of state

$180.47

$65,871.55

Iowa

$138.68

$50,618.20

Kansas

$124.93

$45,599.45

Kentucky

$179.70

$65,590.50

Louisiana

$119.93

$43,774.45

Maine

$226.08

$82,519.20

Maryland: Baltimore

$200.11

$73,040.15

Maryland: Rest of state

$199.26

$72,729.90

Massachusetts: Boston

$302.15

$110,284.75

Massachusetts: Rest of state

$271.74

$99,185.10

Michigan: Detroit

$196.32

$71,656.80

Michigan: Rest of state

$202.48

$73,905.20

Minnesota: Minneapolis

$205.80

$75,117.00

Minnesota: Rest of state

$148.67

$54,264.55

Mississippi

$161.59

$58,980.35

Missouri: Kansas City

$146.89

$53,614.85

Missouri: St. Louis

$145.23

$53,008.95

Missouri: Rest of state

$123.30

$45,004.50

Montana

$167.57

$61,163.05

Nebraska

$146.08

$53,319.20

Nevada: Las Vegas

$205.29

$74,930.85

Nevada: Rest of state

$211.07

$77,040.55

New Hampshire

$274.04

$100,024.60

New Jersey/New York

$268.98

$98,177.70

New Jersey: Rest of state

$242.82

$88,629.30

New Mexico

$176.51

$64,426.15

New York: Buffalo, Rochester, Syracuse

$286.28

$104,492.20

New York: New York City, Newark, N.J., Edison, N.J.

$314.43

$114,766.95

New York: Rest of state

$240.49

$87,778.85

North Carolina: Charlotte

$166.80

$60,882.00

North Carolina: Rest of state

$167.72

$61,217.80

North Dakota

$143.26

$52,289.90

Ohio

$183.72

$67,057.80

Oklahoma

$131.88

$48,136.20

Oregon: Portland

$207.67

$75,799.55

Oregon: Rest of state

$194.17

$70,872.05

Pennsylvania: Philadelphia

$251.93

$91,954.45

Pennsylvania: Rest of state

$212.73

$77,646.45

Rhode Island

$240.64

$87,833.60

South Carolina

$159.78

$58,319.70

South Dakota

$147.05

$53,673.25

Tennessee: Nashville

$160.33

$58,520.45

Tennessee: Rest of state

$162.40

$59,276.00

Texas: Austin

$196.55

$71,740.75

Texas: Dallas

$150.75

$55,023.75

Texas: Houston

$177.20

$64,678.00

Texas: San Antonio

$177.02

$64,612.30

Texas: Rest of state

$132.73

$48,446.45

Utah

$166.90

$60,918.50

Vermont

$234.79

$85,698.35

Virginia: Richmond

$181.34

$66,189.10

Virginia: Rest of state

$167.60

$61,174.00

Washington: Seattle

$243.42

$88,848.30

Washington: Rest of state

$206.88

$75,511.20

Washington, D.C./Bethesda, MD

$238.20

$86,943.00

Washington, D.C.

$214.40

$78,256.00

West Virginia

$191.92

$70,050.80

Wisconsin

$204.24

$74,547.60

Wyoming

$163.87

$59,812.55

National average

$204.95

$74,806.06