IMAGINE having to find up to pounds 30,000 right away. That's the situation faced by anyone with an ageing parent or relative who needs nursing home care. The average cost of care in a home is around pounds 18,000 annually, while employing round-the-clock carers can cost pounds 30,000 a year.
The state will only step in once an elderly person's assets - including investments, savings and the home - dip below pounds 16,000 in value (see box). Around 40,000 people each year are forced to sell their homes to meet care costs. And the problem can only get worse: one in four women who are at retirement age now, and one in six men, will need full-time care at the end of their lives.
No wonder the Government is planning to do something. A Royal Commission looking into the subject of care for the elderly is due to report late this year. One likely recommendation is that we will all be made to enter into a "partnership" with the state. We will be asked to contribute towards care insurance and the state will commit a guaranteed level of funding in return.
In the meantime, local authorities are legally obliged to help with care home fees when people's assets fall below pounds 16,000. Worryingly, some are shirking their duty.
Research from Help the Aged suggests that many elderly people have been forced to raid their savings even when they are eligible for care costs, as local authorities plead poverty.
The charity says its advice line has received more than 2,000 calls about elderly people whose funding has been refused or delayed despite meeting eligibility criteria. Complaints included one from a woman with just pounds 8,000 in savings who was told to pay home fees until her savings had gone down to pounds 1,000. Another woman who had received nursing care for two years and had seen her assets fall from pounds 45,000 to pounds 16,000 was refused help because the local authority claimed other people were worse off.
Some people wonder whether they can simply give their home or savings away to avoid paying for residential care. This is called deprivation of assets and local authorities are wise to this tactic. If someone gives away property or savings in the six months before seeking local authority help, the authority can claw back any care fees from the person receiving the assets. If the transfer of assets takes place more than six months before residential care is needed, the person giving away the assets may be chased for recovery of fees instead.
Financial help depends on an assessment by a representative from the social services department at the local council. You can choose a home for your relative but it must be judged suitable for the patient's assessed needs and should cost no more than the local authority's limit for care costs.
There are long-term care insurance policies on the market but it is estimated that fewer than 30,000 people have bought one. They are very expensive: premiums for a man of 65 insuring for a pounds 1,000 monthly payout towards care costs would cost around pounds 75. A woman would pay pounds 84. If you can, it is worth waiting to find out what the Government comes up with before making any insurance commitments.
q The Help the Aged Freefone advice line is 0800 650065. The charity also has a free residential care information sheet on this number.
When will the state help out with care costs ?
q If you have between pounds 10,000 and pounds 16,000 in assets, the local authority only has to make a partial contribution to care costs.
q The proportion you pay is dependent on your combined income and savings. Income includes pension, state benefits and earnings from savings.
q The authority is legally obliged to pay in full when assets fall below pounds 10,000.
q Although the value of the home is usually taken into account when calculating assets, there are some exceptions. It is ignored if a spouse, unmarried partner or relative aged 60 or over lives there, or an incapacitated relative under 60. A local authority does not have the right to assess a spouse's finances.