One of the concerns that many of us have, for our parents and/or ourselves, is whether we will be able to afford assisted living. The key to understanding what assisted living costs and how we’ll pay for this increasingly popular form of senior housing is good planning. Most likely, it’ll test your commitment to saving and using financial resources wisely.
What Is Assisted Living?
While assisted living was a new concept just a few decades ago, it is now the fast-growing long-term care option for seniors encompassing 31,000-plus communities with nearly 1 million residents nationwide.
The Assisted Living Federation of America (ALFA) defines this form of senior living as a long-term care option that combines housing, support services and health care as needed. Staff members assist residents with such activities of daily living as meals, bathing, dressing, mobility, toileting and medication management. Memory care units provide additional assistance that may be required for those with Alzheimer’s disease or other dementias.
How Much Does Assisted Living Cost?
The 2014 Cost of Care Survey, conducted on behalf of long-term care insurer Genworth, puts the annual assisted living cost for a one-bedroom apartment in an assisted living community at $42,000. However, costs vary based on services provided and geographic location.
LCTG, the leader in business process outsourcing for long-term care insurance, identifies the most expensive location for assisted living in the nation as Washington, D.C., where the average annual cost of a one-bedroom unit is $97,612. The most states with the highest assisted living costs are New Jersey, Alaska, Massachusetts, Connecticut, and Maine.
Affording Assisted Living Care Services
Maribeth Bersani, ALFA’s Senior Vice President of Public Policy, reports that many of today’s seniors pay for assisted living care services through a variety of personal resources that include pensions and Social Security benefits. “People in this generation are excellent savers,” she reports. “They also had the advantage of buying homes during a time when they were increasing in value, and many eventually owned them mortgage-free.”
Looking beyond personal savings and retirement income, individuals at mid-level incomes may wish to consider long-term care insurance as a means of helping them afford care options in the future. “About 6 percent of our residents pay for assisted living care services with long-term care insurance,” Bersani says. However, she stresses the need to understand precisely what your policy covers before purchasing it.
Assisted Living Vs. Nursing Homes
When it comes to the debate “assisted living vs. nursing homes,” assisted living has been shown to be one of the most cost-effective long-term care solutions available. The Genworth study shows the median cost of a semi-private room in a nursing home to be $77,380 annually, with a private room taking that cost up to $87,600.
“Assisted living is the more affordable option,” Bersani says. “Obviously, if you have a set amount of resources, it will go twice as far in assisted living.”
Affordable Assisted Living in The Future
Bersani concedes that the next generation of retirees may be less able to afford long-term care because of the economic crisis that lowered the value of their homes and pensions. ALFA is working to open a dialog with national lawmakers regarding how to expand private-pay options that will alleviate the growing pressure on Medicare and Medicaid to support people in their retirement years and make affordable assisted living more accessible.
“While there is not a solution yet, we are engaging people on Capitol Hill,” Bersani reports. “A lot of baby boomers will be retiring soon. There have to be ways to incentivize people to save.”
Whatever your strategy for long-term care, the best advice is to plan early. “The challenge is getting people to think about it,” Bersani concedes. “Nobody wants to think about getting older. Most people don’t even realize that Medicare or Medicaid won’t pay for assisting living. You shouldn’t wait until you are 80 years old to find that out.”