What do you do if you, or a close family member, become incapable of managing in your own home? While receiving care and support in your home is often available, there may come a time when you have to accept that a residential care home is the only viable option. Now: how are you going to be able to afford it?
Well, do you want the good news first, or the bad news?
The cost of care
The bad news: Residential care is expensive. Bupa Care Services, one of the largest and longest-established health-care providers, runs 300 care homes across Britain, at a cost to residents of between £550 and £1,200 per week.
The good news: This is reassuringly expensive. How much do you think a hotel room might cost per week? Now add in trained staff, cooked meals, structured activities tailored to your needs, and in certain cases specialised medical care, and you can see that residential care cannot and should not be provided on a shoestring budget.
Government help
The good news: Many of those who need care will qualify for funding from their local authority or from the NHS.
The bad news: It is unlikely to be enough. If you are assessed as needing nursing care, the NHS will contribute £110.89 a week. The rest must come from you, or your local authority. Your local authority will only pay if your capital assets are less than £15,500. For every extra £250 up to £23,250 - going up to £118,000 under the recently passed Care Act, they will subtract £1 a week. Above that figure, you will have to pay the full cost (Wales and Scotland get slightly greater benefits). If you own your own home, that counts as capital (unless a spouse or close relative over 60 will still be living there), which is likely to take you over the threshold.
Further help after 2016
The good news: The government has announced a change in the funding system, effective from April 2016. The headline is that there will be a cap of £72,000 placed on the costs an individual has to pay to meet eligible care needs.
The bad news: The eligibility criteria are likely to be high – in other words, the medical need for care must be substantial and pressing. Also, the cap is based on what the local authority would be prepared to pay for care, which does not include accommodation, food etc, and does not reflect the full reality of care-home costs.
So how can you pay?
The good news: You are not alone. There are independent financial experts you can turn to for help and advice. Bupa works with Eldercare, which has specialised in this field for 12 years. Nicky Cave, MD of Eldercare, says for instance that 85% of self-funders are not aware that a care-fees annuity is an option. "With yearly costs," she explains, "in the event of longevity, in certain scenarios the money could run out. If you then become state-funded, some care homes will not agree to keep you, and you will have to move to a state-funded alternative." With a care-fees annuity you pay a lump sum (the exact amount is individually assessed according to age and health), which will pay for care for the rest of your life.
The bad news: Unless you possess sizeable savings, or a spouse or elderly relative will still be living in your property, you may still have to sell your home. Even here there is some good news: most local authorities will enter into a deferred payment agreement whereby they effectively loan you the cost of your care, against the eventual sale (even after your death) of your property; again, however, their payment may not cover the full cost. If you do need to sell your home, Eldercare Property Partners can help manage that process from start to finish.
