Residing in an assisted living facility can cost a substantial sum, but rates remained steadier for assisted living than other levels of care between 2015 and 2016, according to the latest Cost of Care Survey from insurer Genworth Financial (NYSE: GNW).
The national median costs for a one-bedroom unit in a private-pay assisted living community ticked up 0.78% in the last year, reaching $3,628 a month or $43,536 a year, according to survey data released Tuesday. That compares with a 2.27% increase for semi-private nursing home rooms, which reached $6,844 per month, and a 1.24% increase for private nursing home rooms, which reached $7,698 per month.
However, as past surveys also have shown, care costs can vary substantially by location. These are the places where annual assisted living costs have a five-year annual growth rate of 4% or more:
On a national basis, the five-year annual growth rate in assisted living costs is 2.16%. States in various regions have been keeping roughly in line with this rate, including Connecticut, Mississippi, Washington, and Wisconsin.
Home care costs surge
While assisted living and nursing home costs continue to increase, the growth in home care costs may be the larger story at the moment.
“You find that home care costs are rising much faster than some of the other settings,” Deb Mitra, senior vice president of business strategy at Genworth, told Senior Housing News. “That’s probably reflective of the fact that that’s a setting in which people like to receive care. That’s also a setting where it’s becoming more scarce to find caregivers, [so] wages are going up. That’s driving up the cost of home care.”
This emphasis on home care cost increases is a switch—between 2005 and 2010, the cost to receive care in the home increased at an annual rate of 1.7%, compared with 6.7% for assisted living facilities during that time.
While the 5-year growth rate for assisted living costs has come down sharply from that level, help with household tasks such as cooking and cleaning became 2.56% costlier over the past 12 months, making this the category with the highest year-over-year increase. For 44 hours a week, costs reached a median of $3,813 per month* for these homemaker services. The 5-year growth rate in this category is at 2.13%.
Non-skilled home care aide services saw a more modest rise of 1.25%, reaching a monthly median of $3,861 for 44 hours of service per week. But over the past five years, both categories of in-home care have become much more expensive, with costs rising 11.1% for homemaker services and 6.6% for health aides.
Many of those who turn to in-home care may be in for sticker shock, as nearly one-third of Americans incorrectly believe that costs will come in under $417 per month, according to a complementary Genworth study. The average American underestimates home care costs by nearly 50%, that study found.
“What they base it on is babysitters or other hired help,” Mitra told SHN. “Most people have not experienced long-term care, so when it comes to finding a home care aide, they just have no baseline to go off.”
People’s misconceptions about pricing might only grow more acute in the coming years, as price increases are destined to continue, according to Mitra.
“What I see here is that snowball effect,” he said. “Every year it just keeps getting bigger and bigger, and it’s maybe in smaller increments, but we’ve seen a shift that the home care costs are actually increasing at a little quicker rate than what we’ve seen at the community rate or the facility pace.”
The 13th Annual Cost of Care Survey was conducted between January and February, capturing data from more than 43,000 long-term care providers in 440 regions. Assisted living data was based on more than 6,200 completed surveys.
*Editor’s Note: This story has been updated to reflect that this is the median cost per month; SHN regrets that a previous version of this story omitted that timeframe information.