Research has found that somewhere between 50 and 70 percent of people over the age of 65 will require care services at some point, meaning they’ll need assistance with at least a couple of activities of daily living and possibly even a higher level of care. Approximately 20 percent of people receiving such long-term care will need it for somewhere between 2 and 5 years, and around 13 percent will need it for more than 5 years. But there’s a big difference between needing a little extra help with something like dressing or household chores and needing full-time nursing care.
When a person falls somewhere along this continuum of care, and depending on the person’s unique care needs and living situation, there may be a need to move to either an assisted living community or to a skilled nursing facility, aka, a nursing home. So, let’s take a look at the services provided by these two types of long-term care facilities.
What is assisted living?
Assisted living facilities may be comprised of private bedrooms rooms with shared living areas, or they may have individual apartments for residents. The goal of these communities is to provide residents with the help they need while enabling them to remain in a homelike setting and as independent as possible.
Residents of an assisted living community typically need help with at least one of the six activities of daily living (ADLs) — bathing, dressing, eating, toileting, transferring, and continence. It is likely they also require assistance with instrumental ADLs (IADLs) such as everyday household chores and laundry. Other services provided by assisted living communities might include:
- One to three meals a day, depending on the resident’s accommodations, needs, and residence contract
- Medication monitoring and certain other medical services
- 24-hour emergency monitoring
- Social and recreational opportunities
>> Related: What are the Odds of Needing Assisted Living?
How much does assisted living cost?
While some assisted living facilities use an “all-inclusive” pricing model, in which the cost to residents would be the same regardless of their assistance needs or other additional services, most operate under a fee-for-service model in which residents pay for the care they need and other services, billed monthly.
Contract terms will vary from community to community and depending on the resident’s particular needs, but some general costs you might expect from an assisted living community include:
- A one-time upfront fee (aka a “community fee”): Most assisted living facilities will charge future residents a reservation deposit, which may be a couple thousand dollars or so and reserves the accommodations of your choice for a certain period of time.
- A monthly base fee: The resident’s monthly “rent” payment that includes most utilities, basic housekeeping, maintenance, and some meals. This cost will vary depending upon the size of the residential unit and whether you live alone or have a companion.
- A monthly care services fee: Added to the monthly base fee, this tiered amount varies based on the level of care needed, i.e., the number of ADLs for which a resident requires regular assistance. It can range from $150 or so for tier one and could go up to a few thousand dollars per month for tier five assisted living care.
- A monthly medication management and/or ancillary services fee: If needed, medication management or other ancillary services like physical or occupational therapy usually cost a few hundred dollars per month, depending on the complexity of the medicine administration or frequency of therapies. Non-care-related services such as parking, additional meals, and some activities, would also be billed monthly.
When you add up these costs, assisted living residents can expect to pay a national average of $4,300 per month for a private one-bedroom unit, according to 2020 data from Genworth. This works out to be around $51,600 per year. The amount will vary depending on the resident’s location, specific care needs, and other factors. A high-quality provider in a desirable area could cost substantially more than the average.
According to 2009 data from the National Center for Assisted Living, the average length of stay for residents in an assisted living facility is about 28 months. Doing the math, that could cost an assisted living resident and/or their family around $120,400, give or take.
>> Related: The Cost of Assisted Living- What You Need to Know
What is skilled nursing care (aka, a nursing home)?
According to the National Center for Assisted Living, 59 percent of all assisted living residents will eventually need to move to a skilled nursing facility, also referred to as a “nursing home.”
A skilled nursing facility offers a higher level of medical care than does an assisted living community, and this care is provided around the clock by the nursing staff. Residents typically also need help with ADLs.
Some residents of skilled nursing facilities have chronic illnesses, which require them to remain in a nursing home setting long-term. These residents will receive not only medical care but also any needed rehabilitative services such as physical, occupational, respiratory, or speech therapy. Other residents are there for short-term care, for example, when rehabilitation is needed after a surgery or hospital stay.
Nursing home residents have either a private/individual room, or they may have a semi-private/shared room. Most skilled nursing facilities have common living areas where residents who are able share meals and can take part in other activities together.
>> Related: So I’ll Probably Need Long-Term Care, But for How Long?
How much does a nursing home cost?
Most nursing homes bill residents (or the resident’s legal appointee) monthly. The bill will include the cost of basic care but may include additional charges for ancillary services. The rate will also be determined by factors such as the complexity of care, level of services, the type of room (whether it is private or semi-private), and other amenities.
Genworth data for 2020 found that the average monthly cost of skilled nursing care was $7,756 for a semi-private room and $8,821 for a private room. Annually, this translates to $93,075 and $105,850, respectively. Again, depending on the resident’s location, unique care requirements, and other factors, this cost could be higher or lower.
Although the figures are a bit dated (2004 data), according to the National Care Planning Council, the average stay in a nursing home is 835 days or a little over 2 years and 3 months. For residents who have been discharged, which includes many who received short-term rehab care after a hospital stay, the average stay in a nursing home is 270 days, or around 9 months. (The average stay for Medicare rehab patients alone is 23 days.)
>> Related: How Does Nursing Home Billing Work?
Assisted living and nursing care in one location
As you can see, the level of care provided by an assisted living community differs from that of a skilled nursing facility, and as a result, the monthly costs associated with each can vary widely and can add up quickly.
It is not uncommon for someone to receive care (either paid or unpaid) in their own home for several months (or even longer), followed by a 2+ year stay in an assisted living facility. Nearly 60 percent of those assisted living residents will then require a move to a nursing home, where they will live, on average, somewhere between 9 months and a little over 2 years.
This is one reason some people opt to move to a life plan community (also called a continuing care retirement community [CCRC]). Life plan communities provide their residents with a full continuum of care services — from independent living to assisted living to full-time skilled nursing care — all on the same campus. This enables residents to move one time and then receive whatever level of care they may require for the rest of their lives. They also can remain close to supportive friends and their spouse/ life partner who also live in the community.
How will you pay for your care needs?
There’s no way to predict how much care someone will need, or for how long. If you look simply at averages, you might expect to need somewhere around 4 to 5 years of long-term care services, between care in the home, assisted living, and/or skilled nursing care. In this “average” scenario, the total cost of care could easily exceed $300,000, depending on the cost of care in your region. And of course, this figure could go much, much higher if care services are required for even longer.
This is why it is so important to plan ahead for this potential expense, either with adequate savings or with a long-term care insurance policy that will cover the cost and type of care you might need. Not only is long-term care more costly than most people realize, and needed for longer than most people realize, it’s crucial to know that this expense also may not be covered by Medicare.
Medicare only covers skilled nursing care — not assisted living services — and it only covers nursing care for a temporary period of time — usually up to 20 days in a Medicare-certified nursing home facility. Medicare continues to pay for days 21–100, but a variable rate daily coinsurance amount kicks in, which is the resident’s financial responsibility. Beyond 100 days, 100 percent of the charges become the responsibility of the resident.
Be sure to talk with an experienced financial planner, who can give you advice on saving for potential long-term care costs, including possibly purchasing a LTCi policy. And if and when the time comes for you or your loved one to seek assisted living or skilled nursing care services, be sure you understand the terms of the contract so you aren’t surprised when you receive that monthly bill.
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