AARP Hearing Center
The cost of long-term care is an often-unexpected expense for older adults and their families that can threaten financial security, and the threat appears to be growing. Most older adults will need some form of care in their lifetime, and only about 1 in 5 will receive Medicaid-funded services at home or in a nursing home. More often, older adults who receive long-term care will pay for it themselves or get help only from family caregivers.
While home care affordability has always been a challenge, rapid price increases in just the last few years have made cost even more of a concern. As the following analysis shows, home care prices have surged faster than most medical categories and other comparable services in recent years.
Home care inflation in the last year quintuples the overall rate
The U.S. Bureau of Labor Statistics’ (BLS) Consumer Price Index shows that between May 2025 and May 2026, home care prices increased by 7.9 percent. This is almost double the rate of overall inflation (4.2 percent), and significantly higher than major categories such as food and housing. Over the last year, nursing home care prices have increased by almost 5 percent, demonstrating higher price increases across the long-term care continuum (figure 1).
What does this mean for the average home care consumer? In 2025, CareScout estimated the median hourly cost of home care to be $35. Applying the BLS data to the CareScout data, an extra 7.9 percent drives the cost up closer to $38 hourly. Someone receiving 30 hours of home care each week could have seen their costs increase by about $90 weekly, or over $4,600 for the year. These services already exceed what most older adults and families can afford, and high home care inflation further strains their household budgets and savings.
A recent PPI report found that the median annual cost of home ($51,480 at 30 hours per week) is more than double the average annual Social Security benefit for retired workers ($23,700). Home care inflation over the last year would consume about one-fifth of that benefit alone, or more than two months of payments. Home care inflation also grew faster than the rate used to calculate Social Security cost-of-living increases (4.4% as of May 2026), meaning the gap between what older adults’ financial resources and what home care costs could keep growing.
Home care inflation poses a new challenge for families
Over the last five years, prices for health and long-term care (“medical inflation”) have grown by about 13 percent, however significant variance exists across services. Home care prices have increased by 39 percent since May 2021. Hospital and nursing home care come the closest to this rate, with prices rising by more than 25 percent in each setting. In general, medical services prices have grown faster than medical goods (e.g., equipment), and home care inflation leads the category.
Home care prices have grown faster than other health care categories
Over the last five years, prices for health and long-term care (“medical inflation”) have grown by about 13 percent, however significant variance exists across services. Home care prices have increased by 43 percent since May 2021. Hospital and nursing home care come the closest to this rate, with prices rising by more than 25 percent in each setting. In general, medical services prices have grown faster than medical goods (e.g., equipment), and home care inflation leads the category.
Home care inflation outpaces comparable services
Home care inflation has also outpaced that of comparable services, defined here as those delivered in person, individually or in small groups, and often provided by non-degreed workers. For example, since early 2021 prices for personal care (e.g., haircuts, nail services, massage therapy) and day care services have increased by 26 percent — unquestionably significant increases but still far below home care’s 39 percent price increase (figure 3).
Overall, the cost of services generally has risen about 27 percent since early 2021, but increases have been steeper in hands-on occupations than in professional fields. Services that used to be available at lower costs, such as a $15 hair cut or a $20 per hour home care aide, are becoming more expensive more quickly than other costs, and in home care, this is happening at a rapid clip unseen in most other categories.
Part of these price increases is likely attributable to wage increases for workers who perform home care and comparable services. While median hourly wages across all occupations increased by 11% percent from 2021 to 2025, such wages for several occupations that provide 1:1 services in person by typically non-degreed workers grew by more than 20 percent (figure 3). Of note, direct care worker wages grew at a rate similar to or slightly below fellow non-degreed service occupations. While wage increases have likely contributed to higher home care prices, they do not alone account for the rapid home care inflation consumers have had to navigate in recent years relative to comparable services. Other factors, including growing consumer demand and agency/provider behavior, are likely at play as well.
Unaffordable long-term care jeopardizes independence and financial security for older adults
A lack of affordable long-term care services leaves few good options that protect the independence and financial well-being of older adults. Consumers who can afford to do so could pay higher out-of-pocket costs at the expense of other needs and their own savings. Higher prices also increase pressures on family caregivers, both to help pay for care and to provide care themselves if the person in need cannot afford paid services. Consumers could also be forced to go without care entirely, increasing the risk of a fall or some other episode that leads to injury or hospitalization.
Long-term care affordability is a problem that will likely only increase over time, as demand for care will increase as the population ages and older adults live longer. Increasing long-term care coverage from Medicare, Medicaid, and other payers would help eligible consumers, yet such coverage may not solve the affordability issue on its own. Increasing the supply of care across the long-term care continuum and with fair worker wages (including for family caregivers), is also fundamental to ensuring that people can not only afford care but also find someone to provide it.
Containing long-term care costs and ensuring access in the years to come will require action at all levels, including the federal government, states, providers, employers, and various private sector stakeholders.
MORE FROM AARP POLICY & RESEARCH
