The cost of long-term health care services has historically advanced at a fast pace. When we consider long-term care costs and insurance policies in our comprehensive financial plans, we assume those costs will double general inflation and grow approximately 6% per year.
According to Genworth’s 2012 Cost of Care Survey, long-term care expenses have moderated a bit for in-home care and nursing home care. These costs have lessened moreso nationwide than in Washington state, however.
Some interesting numbers courtesy of the Genworth study, as relayed by the South Sound Business Examiner:
- Most people prefer in-home care whenever possible. The cost of in-home health aide services in Washington has risen only slightly over the past five years. As the need for these services has grown, competition to provide service has increased keeping prices in check.
- Nationally, the median hourly cost for home health aide services is $19. In Washington it is $22 per hour. The cost reflects an increase of less than 1% over the past five years.
- The median annual cost for care in an assisted living facility is $39,600 nationally. The comparable cost in Washington is $51,000. The national yearly cost for assisted living has increased 5.7% a year over the past five years, while long-term care costs in Washington have increased 7.2% a year during the same time period.
- Nationally, the median annual cost for a private nursing home room rose 4.3% annually over the past five years to $81,030, while costs in Washington increased 4.6% a year during the comparable time period to $96,842.
While competition has grown due to demand for these services, insuring against the risk of long-term care expenses has gotten a little less competitive. Two years ago, MetLife exited the LTC insurance business. This year, Prudential followed. Because more claims have been filed on LTC insurance policies, the business is less profitable than some insurers would like it to be. Others that have not left the business have revised their pricing significantly.
It’s important to think about the critical role that health care expenses play in your overall financial security. In many cases, protecting against the risk of large expenses is a wise move. Long-term care insurance policies can be designed with many different variables that impact the price and the coverage. It’s important to design coverage that fits with your overall financial plan.
~ Brooks, Hughes & Jones, Partners in Wealth Management, Tacoma, WA