SUMMER 2022 21
Three ways to express long-term care cost based on national averages
Annual cost as usually reported
Annual cost based on hours of care *
Assisted living |
Homemaker |
Home |
Nursing home , |
Nursing home , |
|
services |
health aid |
shared room |
private room |
$ 54,000 |
$ 59,488 per year |
$ 61,776 per year |
$ 94,900 |
$ 108,405 |
per year |
for 44 hours of |
for 44 hours of |
per year |
per year |
|
care per week |
care per week |
|
|
|
( 6.3 hours / day ) |
( 6.3 hours / day ) |
|
|
6.3 hours / day — $ 59,488 $ 61,776 — — 12 hours / day — $ 113,568 $ 117,936 — — 18 hours / day — $ 170,352 $ 176,904 — — 24 hours / day $ 54,000 $ 227,136 $ 235,872 $ 94,900 $ 108,405 Cost for 1 hour of care $ 6 $ 26 $ 27 $ 11 $ 12
* Assisted living and nursing home care are 24 hours per day , 7 days per week . Home care varies in this example from 6.3 to 24 hours per day , 7 days per week .
Paid home care will be even more expensive in the future due to supply and demand . On the demand side , more LTC will be needed because the number of people ages 65 and older will increase , in particular , the 85 + population will more than triple by 2050 ; 2 older people will live longer because of improved life expectancy ; and more of them will be disabled because of the increasing prevalence of chronic health conditions . 3 On the supply side , there will be fewer caregivers because families will be smaller and more geographically dispersed ; more women , who are the primary caregivers , will be in the workforce and unable to provide as much care as in the past ; 4 and mismatches of supply and demand .
The relationship between LTC supply and demand is expressed as the caregiver support ratio , which compares the number of potential caregivers in the peak caregiving ages of 45 to 64 to the number of people in the peak care needing ages of 80 and older . As the disproportionately large baby boom generation ages , the caregiver support ratio will decline from about seven potential caregivers in 2020 , to four in 2030 , and finally to only three potential caregivers in 2050 when the last of the baby boomers reaches ages 80 and older . 2
Points of engagement for financial professionals
Most 50-year-olds believe the current caregiving model , where families are widely available to provide free care at home , will still exist when they need help late in life . However , by the time they reach age 80 , there will be a dramatic decline in the number of people who can provide free or paid care . Those who receive paid care at home will hire from a much smaller pool of caregivers . Will they be able to afford it ?
2 Houser A , et al . Across the States : Profiles of Long-Term Services and Supports . AARP Public Policy Institute , August 2018 .
3 Thach NT , et al . An Overview of Long-Term Services and Supports and Medicaid : Final Report . U . S . Department of Health and Human Services . May 2018 .
4 Edwards VJ , et al . Characteristics and Health Status of Informal Unpaid Caregivers – 44 States , District of Columbia , and Puerto Rico , 2015 – 2017 . MMWR Morb Mortal Wkly Rep , 69 ( 7 ): 183-188 , February 21 , 2020 .