Act now to avoid the care home lottery
If you're planning for your old age, you'll have to fight for your rights
Saturday 13 October 2007
Although one in four British people will be living in a care home during the final years of their life, very few families consider the financial implications until the last moment.
Once they do, they soon realise that both residential and nursing homes are very expensive, and that getting any help from the state is extremely complicated – even for those with few or no assets.
This week, however, the Government gave the first hint that it may address the complexity of long-term care funding, possibly removing the means tests that residents in England and Wales are currently subjected to and designing a fairer system, which is more affordable both for the families involved and for the state.
But alas, any changes are unlikely to come into effect for many years. For those negotiating the minefield of care funding today, it is crucial to do your research to ensure that you get the state aid you are entitled to, and to prevent the all-too-common scenario of you or a relative being forced to move care homes because the money has run out.
WHAT STATE HELP AM I ENTITLED TO?
Although a wide range of financial help and benefits is available from the state, the budgets of local authorities and strategic health authorities are so stretched that they will often do everything they can to make sure that you do not receive your full entitlement.
There are two main types of care. Personal care covers your day-to-day needs, such as washing, cooking and cleaning – anything that can be carried out by a regular care-worker. Nursing care, however, relates only to help that must be provided by a medical professional.
In England, the local authority will pay for all your personal care costs, above and beyond what your pension covers, if you have assets of less than £13,000 (£17,250 in Wales, £12,500 in Scotland), and will pay part of your care bill if you have assets of between £13,000 and £21,500 (£22,000 in Wales and £21,750 in Scotland).
Although any property you own will be included in your total assets, it is worth knowing that the authorities cannot take this into account if your partner or another elderly relative is to continue to live in the property. Furthermore, if your property is co-owned with a relative, it should not be counted.
Local authorities are also not allowed to take your property into account during the first 12 weeks after you move into a care home. Many people miss out on receiving the state aid they are entitled to at this time.
As well as local authority aid, all those in care are also entitled to attendance allowance – £43.15 a week for those who only need care in the daytime, and £64.50 a week for those who are in need of round-the-clock assistance.
Anyone in need of nursing care is entitled to an additional NHS allowance of £101 a week. However, if your relative's nursing care needs are very complex, they may be entitled to "NHS Continuing Care" – which means that your local strategic health authority must pay for all their nursing care costs.
"It's worth remembering that although a relative may not qualify for continuing care when they first move into a nursing home, they may qualify later on if their condition deteriorates, so it is worth requesting a review at this stage," says Phil Spiers of the Nursing Home Fees Agency (NHFA), the specialist long-term care adviser.
If you are entitled to state help, you will unfortunately often be restricted in your choice of care home. Spiers says local authorities tend to buy blocks of beds at a small number of care homes – which could be on the other side of the county from their family and other support networks. If a family want their relative to go to a home of their choosing, they may well have to agree to top up their care fees.
"What's getting worse is trying to find accommodation for the price that local authorities are prepared to pay," Spiers says. "In many cases, self-funding patients are being forced to pay higher fees to subsidise those who are state-funded, or families are being forced to contribute more."
Owain Wright of Saga's care-funding arm says that the amount you receive also depends on where you live. "It has become a real postcode lottery," he says. "If you're receiving your care in West Sussex, for example, you might end up receiving less than someone who lives in East Sussex, even though the costs of care are relatively similar."
PAYING FOR YOUR OWN CARE
If you have to pay for some or all of your own long-term care, it's important to seek out financial advice from a specialist long-term care adviser, such as the NHFA or Saga, when working out a financial strategy. Many people end up unnecessarily selling their homes, or running down their capital – wasting money because they have not explored all the options. One of the most efficient ways to pay for care-home fees is to take out an immediate needs annuity, which will guarantee to pay your care fees – rising along with inflation if you wish – for the rest of your life. These often represent very good value. For example, a £200,000 annuity for someone with dementia could pay out in the region of £60,000 a year.
Spiers says that for those who look as though they may run out of money while they are still in care, it is important to make plans as soon as they move into a home. In recent years, there have been dozens of shocking stories of elderly people being evicted from care homes after their money ran out and the local authority refused to pay to keep them at the home of their choice. In some cases, a move of home can be so traumatic it proves fatal.
Both the NHFA and Saga provide free and impartial telephone advice services, as well as a wealth of literature and information on their websites. NHFA: 0800 998 833; www.nhfa.co.uk Saga: 0800 056 6101; www.saga.co.uk/finance/spf/ltc
'There's a conspiracy of silence when it comes to long-term care'
Peter Kalinowski, a management consultant from Surrey, first began to learn about the nightmares of long-term care funding last year, when his mother-in-law was diagnosed with dementia, and he and his wife decided to move her to a care home.
In spite of working as a consultant within the NHS at the time, he was amazed at how difficult it was to get any advice, either about his mother-in-law's medical condition or her financial situation.
"There's a conspiracy of silence," he says. "It took us three years to even get her formally diagnosed with dementia.
"We've met many people who have put their elderly relatives into nursing care, but they've all said they haven't been given the correct advice."
After doing some research, Peter eventually came across Saga's care funding advice service, and says he was relieved to find he was finally dealing with a team of advisers who understood this complex area.
Peter's mother-in-law was facing intimidating bills of £60,000 a year at her new care home.
However, Saga pointed Peter towards an immediate needs annuity, which guaranteed the necessary £60,000 a year, plus inflation, for the rest of his mother-in-law's life – and cost just £200,000.
"It actually didn't cost that much, and it's given us peace of mind," he says. "Now we know that whether she lives one more year or 10 more, we haven't got anything to worry about."
Peter says he only wishes he had discovered the Saga advice service sooner than he did.
"There are a lot of sharks out there. We saw one firm of advisers who wanted £15,000 up front before they would do anything," he says.
"But the service that Saga's advisers provided us with has been absolutely excellent."
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Simon Read: Timeshare owners accuse Macdonald Resorts of land grab
Five Questions: Changes to car tax discs
How to save money: UK is crashing down the European league table for putting money away
A student's guide to financial survival: You don't have to drown in debt at university
Bargain Hunter: Win a new iPhone 6
- 1 Hilary Mantel 'should be investigated by police' over Margaret Thatcher assassination story, says Lord Bell
- 2 Stamford Hill council removes 'unacceptable' posters telling women which side of the road to walk down
- 3 Kim Kardashian 'nude pictures' leaked on 4chan weeks after Jennifer Lawrence 'The Fappening' scandal
- 4 Iranian blogger found guilty of insulting Prophet Mohammad on Facebook sentenced to death
- 5 New Tricks: Dennis Waterman to leave the show after a decade of crime-solving
Scottish independence referendum: A nation divided against itself
Scottish referendum results: Cross-party consensus collapses amid Tory-Labour spat on the 'English question'
Scottish independence: David Cameron is becoming the 'George Bush of Britain'
Russia freezes Ukraine into submission: Kiev admits country doesn't have enough fuel for winter
Archbishop of Canterbury admits doubts about existence of God
Plebgate MP Andrew Mitchell called officer a 'little s**t', claim court documents 'exposing ex-Chief Whip's 'record of abusing police'
iJobs Money & Business
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...
£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...
Day In a Page
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize