The Cost of Uninsured Long-Term Care, In Real Estate Terms

The cost of care for aging Americans is rising fast. One company that provides insurance in this segment has come up with a novel way of showing how expensive this care is becoming.

Denise Gott, CEO of ACSIA Partners, an insurance agency specialized in long-term care insurance, described the cost of care for aging Americans as “…a glutton that devours homes in daily bites that are getting bigger.”

Eleven years ago the agency started translating long-term care costs into square feet of real estate.

In July of 2005 the company calculated that the cost for a private room in a nursing home was “eating” two square feet of the average American home each day.

Now the bites are 29% bigger, 2.6 square feet, according to Gott.

The agency bases these stark figures on various data:

  • The national average annual cost for a private room in a nursing home is now $92,376, according to the Genworth 2016 Cost of Care Survey, conducted by CareScout. That’s about $253 a day, up from $192 in 2005.
  • The National Association of Realtors reports that the median price for U.S. homes is now $240,200.
  • With a median 2,476 square feet per home, according to the U.S. Census Bureau, that equals $97 per square foot, enough to pay for about a third of a day of nursing home care. In 2005, each square foot paid for about half a day, according to Gott.

The ratios vary by region and home type, of course. Here are some examples:

  • 4,000 square-foot home in San Francisco, CA, $1,800,000: 0.56 square feet eaten by one day of long-term care.
  • 1,902 square-foot home in Cleveland, OH, $150,000: 3.21 square feet eaten by one day of long-term care
  • 1,328 square-foot home in Jamestown, NY, $65,000: 5.17 square feet eaten by one day of long-term care

These are sobering figures. They show that the cost of caring for the aged is impairing adult caregivers’ ability to build wealth through real estate – which is the number one way in which middle-class Americans build wealth.

Gott’s organization recommends that families take out long-term care insurance, critical illness insurance, life insurance or annuities with long-term care riders, and other solutions ranging from health savings accounts to Medicare supplement plans.

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