2012 Market Survey of Long-Term Care Costs

by Kevin K. Johnson, Certified Senior Advisor (CSA)®

With company pensions gone by the way, employers make available plans to help their employees establish a savings for retirement. One of the most popular of these is the 401K. From Wikipedia, a 401(k) is a type of retirement savings account in the United States and are “defined contribution plans” with annual contributions currently limited to $17,000). Contributions are “tax-deferred”—deducted from paychecks before taxes and then taxed when a withdrawal is made from the 401(k) account. Depending on the employer’s program a portion of the employee’s contribution may be matched by the employer.

When talking to employees, I’ve reached the point where I now tell them that if they have aging parents, they should also think about the costs of their parent’s long-term care. What’s the link to the company retirement savings plan you might ask? Well, financial planners are finding that many of their clients are having their retirement plans significantly disrupted by not having properly planned for their long-term care costs, or by unexpectedly having to address and assist with the long-term care costs of their parents, grandparents, etc…, who did not plan properly.

There are a few outstanding research organizations that provide accurate information regarding issues that impact seniors. MetLife’s Mature Market Institute (MMI) stands out for their excellence and I’m very pleased to acknowledge them for the invaluable work that they do on our behalf. Earlier this month, they published their annual update of long-term care costs.  MMI has been publishing this information since 2002. I think that employees should consider these costs and:

  • Formally prepare for their long-term care with their financial planners
  • Discuss these costs with their elder loved ones
  • Develop a realistic plan to address possible long-term care needs of their elder loved ones

From MetLife, “the average national long-term care costs continue to rise in most categories. Since last year, nursing home rates nursing home rates increased by 3.8% to $248 daily for a private room and 3.7% to $222 daily for semi-private room. Assisted living base rates rose by 2.1% to $3,550 monthly, while rates for adult day services remained unchanged at $70 per day. Home health aide rates were unchanged at $21 per hour, but homemaker/companion service rates increased by 5.3% to $20 per hour.”

Long-term care costs are usually focused on the cost of Nursing Homes, Assisted Living Facilities, and for Home Care Services.

For Nursing Homes: According to the U.S. Census Bureau, in 2011, 66% of nursing home residents were women. The median age of residents was 82.6 years; 16% were under the age of 65.

For Assisted Living Facilities: The average age of the residents is 86.4 years. About 51% provided Alzheimer’s and dementia care, 61% of those charge an additional fee.

For Adult Day Services: The National Adult Day Services Association estimates that there are over 5,000 adult day centers in the U.S. serving over 260,000 participants and family caregivers. Sixty-three percent of surveyed centers provide transportation to and from their locations. Half do not charge a fee for this service. The average cost of transportation for those centers that charge is just under $10 each way.

For Home Care Services: Aging adults may choose to live on their own for many years, many with chronic conditions or illnesses. The majority (68%) of home health care agencies surveyed provide Alzheimer’s training to their employees and almost all (98%) do not charge an additional fee for patients with Alzheimer’s.

By posting these demographics provided by MetLife’s Mature Market Institute, it is my hope that employees can project their financial needs to the point in their lives when they will need to have financial resources to support them, then work with their financial planners to plan accordingly. Additionally, I’m hoping that employees can also see their elder loved ones and the cost that has to be paid for their continued care and also, make plans accordingly.


          Nursing Homes Assisted
   Living Communities
Home Care Adult Day Services
  Semi-Private Room Private
Home Health Aide Homemaker
Rate Type Daily Monthly Hourly Daily
2012 Average Rate $222 $248 $3,550 $21 $20 $70
2011 Average Rate $214 $239 $3,477 $21 $19 $70
$/% Increase from 2011 $8 (3.7%) $9 (3.8%) $73 (2.1%) $0 (0%) $1 (5.3%) %0 (0%)
2012 Annual Rate  $81,030 $90,520 $42,600 $21,840 $20,800 $18,200
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