Each year, the major insurance companies providing long-term-care insurance publish reports on the cost of care. I've been reviewing the reports from two of these companies (Genworth and Met-Life) and here are some of their findings:

Nursing Homes
Nationally, the average annual cost for nursing homes is over $75,000 for a private room and $66,000 for semi-private. However, this cost varies greatly among states and regions. Alaska may be a wonderful vacation spot, but go elsewhere if you need a nursing home, as it has the highest annual cost (nearly $200,000) for a private room. North Carolina's cost is slightly lower than the national average, with a private room averaging around $65,000 and semi-private about $58,000. The costs within North Carolina also vary quite a bit, with the annual private room costs ranging from $44,000 to over $100,000. Not surprisingly, the cost in urban areas is substantially higher than the cost in more rural areas.

Over 72% of nursing home residents are women and 90% of residents are over 65 years old. One interesting statistic was the length of time that individuals currently in the nursing home have been residents. Thirty percent have been there from 1-3 years; nearly fourteen percent from 3-5 years; and twelve percent over 5 years. Therefore, about fifty-six percent of nursing home residents have been in the nursing home at least one year. The average length of time since admission was 876 days, or about 2.4 years.

Assisted Living Assisted Living does not require the same level of care that a nursing home does, so the cost is less. Nationally, it averages $33,000-$35,000 a year for a one bedroom apartment, and North Carolina's average cost is only slightly lower than the national average. However, similar to nursing homes, there is a large variation in the cost in North Carolina, from a low of about $14,000 to a high of nearly $59,000.

Home Care
People naturally desire to receive care, if possible, in their own homes as opposed to a facility. The surveys also look at the cost of home health aides as well as homemaker services.

Met-Life found the hourly cost of a home health aide in North Carolina ranging from $16.00-$23.00, with an average of $19.00. Genworth reported a range of $8.00-$80.00, with an average of $22.20 for Medicare-certified home health care in North Carolina and a range of $8.00-$80.00, with an average of $17.51 for non-certified, but licensed home health care.

It is interesting to note that this hourly cost has actually declined since the previous survey. Perhaps this is a reflection of competition and an increase in the supply of individuals providing these services.

The cost for homemaker services was somewhat less, ranging from $8.00-$23.00 in North Carolina, with an average around $16.00 per hour.

The cost of care is not limited to just the elder who is receiving the care, but impacts the whole family. A final survey I reviewed was one conducted by Evercare, a part of United Health Group, regarding the cost to family caregivers of providing care to their loved one. Caregivers reported personally spending from $5,000 - $15,000 per year in out-of-pocket costs for household items, food, transportation, etc. However, the biggest cost reported by these caregivers was not the money, but the time and emotional stress and how it affected their own career, family and health.

Every situation is different, but studies such as these can be useful in decision-making about your long-term care plan. For example: do you currently have about $500,000 that is not needed for providing your retirement income? If so, perhaps you can self-insure against potential long-term-care costs. Assuming a husband and wife both needing a nursing home and an average length of time spent there, it would cost about that much, in today's dollars, to cover the cost. If you don't have those surplus funds, while there may be other alternatives, long-term-care insurance should certainly be considered.

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Gerald A. Townsend, CPA/PFS, CFP®, CFA® is president of Townsend Asset Managment Corp., a registered investment advisory firm. Email: Gerald@AssetMgr.com.