In its 2008 Long-Term Care Cost of Care research report, Prudential Financial found that assisted living facility costs have risen 13% over two years. Nursing home costs have risen 7% during this same period, and both are expected to continue to rise.

The report, which was based on data from 552 nursing homes, 533 assisted living facilities, and 528 home health care agencies, found that the average daily cost for an assisted-living facility is over $100, or about $3,241 per month. The average daily cost of a private room in a nursing home is now $217, or $79,205 annually. Costs were found to vary according to geographic location. Alaska, New York and Connecticut had the greatest costs, while Louisiana, Kansas and Missouri had the lowest costs.

Home health care experienced the smallest rate increase, rising just 5 percent over the past two years.

The long-term care cost study also found that while consumers understand the importance of saving financially for their future, there are misperceptions about the cost of long-term care and the insurance benefits related to long-term care. Most health insurance doesn’t pay for long term care, and Medicare usually only pays a fraction of the costs.

What’s most alarming is that the average cost of a two- to three-year nursing home stay could exhaust the assets of most Americans; approximately 5% spend at least five years in a nursing home.

The population is aging rapidly, yet people are living longer than before. Accordingly,  the demand for long term care services and the costs will only increase. How are you preparing yourself and your family for what’s ahead?