How will you afford care home fees?
As cost of looking after elderly soars to £33,000 a year...
Care home costs have shot up by 25% in the past five years to hit an average £33,094 per year, the Mirror reported yesterday.
At the same time, pensions have stagnated at an average of £14,522, which would pay for five months of care and leave a £19,382 shortfall in the annual funding needed.
The average stay in a residential home lasts 30 months, so it leaves many families struggling.
But is there any help out there and who is entitled to it?
Here, we answer your questions on the care funding crisis:
Q Is there any help towards care costs?
A Yes, but it is means tested and you qualify only if you have little or no savings and do not own your own home.
If you have savings and assets worth less than £14,250, you can be entitled to support from your local council, but you will have to contribute to care costs from your income, such as your pension.
If you have savings and assets between £14,250 and £23,250, you may get help, but you will have to contribute on a sliding scale towards care costs.
People with savings and assets of more than £23,250, including property, will usually have to pay their care fees in full.
Q Are there any circumstances in which care is fully paid for?
A Yes, there is a very complex thing called NHS Continuing Healthcare funding which is not means tested. This pays all care costs and nursing home fees when a person’s needs are primarily ongoing healthcare, such as someone with complex medical needs due to a disability, accident or major illness.
The criteria is complicated and can be difficult to access. It is decided by an NHS assessment.
Families must ensure a relative, who is, for instance, moving from hospital to a nursing home, is assessed. The funding is not widely known, which can mean people struggle to pay for care costs or sell their homes needlessly.
Q Will I have to sell my home?
A That will depend. If you have a partner or dependant living in your home it does not count towards the value of your assets for means testing and you won’t need to sell it.
Q What about help with the cost of care in my home?
A The good news here is that the value of your house is not included in the means test for home care. So, you could be eligible for council funding for home care, which you would not get if you actually moved into a care home.
Q What options do I have for raising the cash to pay for my care?
A If you own your home you could consider releasing the equity via an equity release plan. But this won’t be right for everyone. You will only get a percentage of the value of your home, and although you don’t usually have to make monthly repayments on the loan, it means the debt can soon build up.
Releasing a lump sum can also affect your entitlement to state benefits, so you must speak to an independent financial adviser to ensure you fully understand the impact it will have on finances.
You could also consider a deferred payment agreement, which is an arrangement with the local authority that lets people use the value of their home to help pay care home costs. If you are eligible, the council will help pay your care home bills and you can delay repaying the council until you choose to sell your home, or until after your death.
Many local authorities set a limit of between 70% and 80% of the value of the property.
If you have money in ISAs or the bank you could consider buying an immediate needs annuity. This is a type of insurance policy that provides a regular income in return for an up-front lump sum. The income is tax free if paid direct to a care provider.
But you need to thoroughly check this out before you buy as there are risks. You will have to hand over a large sum of money that might cover, say, four years of care home fees. If you live for many years longer then this could be good value, but if you die quite soon, your family would not get any of your money back.
Q Is there anything I can do to help with future finances?
A Having a will in place and setting up Power of Attorney over your finances and healthcare can save lots of heartache.
It means if you take a turn for the worse your family will be able to sort everything out much more quickly and without having to deal with masses of red tape.
If you have savings and assets it can be worth getting advice from a lawyer to find out about the possibility of putting things into trust for your children.
Although this needs to be done when you are fit and healthy – and with caution.
If a council thinks you have deliberately transferred, say, the ownership of your home to your children to avoid paying care fees they will challenge this as “deliberate deprivation”.
In this case any trusts you had set up would be ignored.
HELPING HAND There are ways to plan for future care