Self-funders are paying £1,400 per week for quality homes
Residents who may be considering care home provision have been urged to ‘plan for the worst from a financial point of view’, as one industry expert said self-funding care in Tunbridge Wells can cost as much as £1,400 per week.
A report by another healthcare consultancy Laing & Buisson the firm found the average self-funding resident in England and Wales is charged £754 a week compared to the £511 council funded resident for the same service.
But Debbie Harris, whose business Chosen with Care helps those in the Tunbridge Wells area who are self-funding find suitable accommodation, warned the affluence of the town means the difference is likely to be far higher.
She said: “There are over 50 care homes and nursing homes within six miles of Tunbridge Wells and most of these cater for self-funders costing anywhere between £600 and £1,400 per week.
“People could be looking at bills of £80,000 a year for top of the range care. And overall selffunders are unlikely to be looking at less than £1,000 per week in this area, on average £52,000 per annum.”
But the above average costs for self-funded care in Tunbridge Wells coincides with the below average spending on those needing financial assistance from Kent County Council, currently capped at £463 a week.
Mrs Harris explained: “You can top up and add more to that if you don’t want to go to a council residential home. But imagine what £463 buys you, it’s not brilliant.”
The threat of ever increasing costs was further compounded in July after the government delayed its manifesto pledge to cap total fees at £72,000 until at least 2020.
And Tunbridge Wells residents are far more likely be forced to take the self-funding route than residents from less affluent parts of the country explained Mrs Harris.
She said: “If you have less than £23,250 in assets, savings or investments then they will pay for you. That doesn’t include your house, but it will do, at a certain point. But apply that in this area and you can see why 60 per cent of care home residents are self-funding.”
Inclusion of the home depends on whether or not the self-funder has dependants, a spouse or shared ownership of the property, but ultimately many people are forced to sell up regardless.
Mrs Harris added: “One of the things I urge my clients to do is get financial advice, which only 10 per cent of people do. It’s really important, otherwise you end up selling everything to fund your stay in a care home.”
BRIEF SUMMARY OF THE SIX MAIN WAYS OF PAYING FOR CARE:
THE DEFERRED PAYMENT SCHEME
This is a universal deferred payment arrangement (DPA) which is aimed at ensuring no one (at least during their lifetime) will have to sell their home to pay for care. A DPA enables an individual to access a loan from their local authority, the amount of which is determined by the house price. They in turn put a legal charge on the property in order to cover that loan. The loan plus interest accrued
will need to be repaid 90 days after death.
RENT THE PROPERTY OUT
If you have property it may be feasible to rent it out and put the rental income towards the cost of care.
It may be possible to release capital or income by using the value of your property. However, you will usually have to pay interest on any capital/income that you do release.
You may simply put your capital into a savings account and then put the interest towards the cost of care. But if the interest doesn’t meet the amount you need, then you may end up having to use the capital.
You could look to make your capital work harder in order to produce a greater return than if it were left in cash. Make sure that you invest in the right sort of areas as not all will be suitable for producing a regular income stream. The value of an investment may fall as well as rise so you may get back less than the amount invested.
CASE STUDY 1 – Gail Hall | Warner Solicitor
Warners solicitor Gail Hall, who specialises in providing legal advice to those seeking care, agreed, financial advice should be sought before any decision on care home provision is made.
She said: “Many care homes are money making operations and so you have to be prepared to demonstrate you have enough funds to last anywhere from 12 months to two years.
“If you do not have sufficient funds you could end up in legal difficulties which is why I always recommend you have a second pair of eyes look over any contract before you sign it.
“I will always ask my clients to make sure they have their finances in order especially if they have a spouse who is remaining at the home. Ensuring there is enough money for both people can be stressful.
“I tell them to plan for the worst from a financial point of view.”
“Ways to mitigate some of the costs are by ensuring any partner left at home gets their 25 per cent reduction in council tax as a single occupant.
“There is also the Attendance Allowance, which is a non means tested benefit available to most self-funders. This ranges from £50 to £80 a week and is for those at home or in care.
“The attendance allowance is not available to those who use council funded care.”
Mrs Hall stressed finances were just one of many things people must take into consideration before they decide on moving into care as legal issues were just as important.
She added: “It may not be nice to think about but people should ensure they have their will in order. It is also absolutely essential to ensure a next of kin or another person is given lasting powers of attorney.
“It can be a bothersome task and there is a registration fee of £110 with the Office of Public Guardian.
“There are two types to consider, a health and welfare power of attorney, which is only invoked when the person in care loses their mental capacity and a property and finance type, which can be invoked any time.”
She added the consequences of not having a power of attorney already sorted before realising you may need it could be dire.
She said: “If they have lost mental capacity and then you seek power of attorney you have to apply for a deputyship of the person. It is extremely expensive, takes six months and is stressful.
“In addition it involves making annual reports on the person’s health and estates which is very arduous.”
FIVE TYPES OF CARE AND ITS COST:
1) DOMICILIARY CARE
This is where you are looked after by a personal healthcare professional in the comfort of your own home. You are afforded the freedom and familiarity of staying at home with a few modifications to make mobility and day-to-day living easier and more convenient. Your personal carer visits once or twice a day, ensuring you are kept safe and healthy without infringing on your independence. So, you are able to live your life in a familiar and comfortable environment, while also being safe in the knowledge that you have someone to call upon whenever you need them. About £12-16 p/hr. Appeals to: People who are capable of looking after themselves but would benefit from daily contact and check-ins
2) LIVE-IN CARE
This means that you get to continue living at home, with your personal carer coming to live with and care for you full time. Having someone close by at all times can make everyday tasks considerably easier. Furthermore, extended company with a carer can do wonders for your emotional wellbeing, as they come to know your habits, preferences and requirements intimately, resulting in a more effective relationship that can adapt as needed. It also means peace of mind for your family, who can rest easy knowing that there is always someone at home to look out for you. About £600 p/wk. Appeals to: People who are no longer capable of looking after themselves but don’t want to move out of their home
3) SHELTERED HOUSING
This is where you live independently in designated grouped housing such as a block of flats. Often run by housing associations who work closely with local authorities on a not-forprofit basis, these schemes allow you to look after yourself and come and go as you wish, living your life freely from an established, reliable base. Living as part of a close-knit housing area also allows for a more social
environment, where you can be part of a friendly, supportive community. A manager or officer also resides on site, offering assistance in the case of an emergency. About £12-20 p/wk plus rent or mortgage payments. Appeals to: People who are capable of looking after themselves but prefer to live in a more communal environment
4) CARE HOMES
These are for people who are no longer able to live at home by themselves, providing a wealth of convenience in a safe, comfortable and social environment. They are staffed 24 hours a day with all your meals provided, so you can relax and feel right at home, meeting new people and making new friends along the way. The variety of activities on offer means you can stay busy. You can also lead a quieter lifestyle in a peaceful environment. With a communal atmosphere you’ll be able to enjoy the company of others, safe in the knowledge that you’re being cared for round the clock. About £700-800 p/wk. Appeals to: People who are no longer capable of looking after themselves and require day-to-day living assistance
5) CARE HOMES WITH NURSING
Care homes with nursing are purpose-built facilities aimed at people with medical disabilities who are no longer able to be cared for or look after themselves at home. Nursing aides and skilled nurses are available 24 hours a day, providing premium medical care where home carers are unqualified to do so. Visiting hours are generally more flexible than hospitals, meaning you can see more of your loved ones. Stimulating activities are organised and communal grounds provided, enabling you to socialise with fellow residents while you’re on the mend. About £1,200-1,400 p/wk. Appeals to: People with medical conditions who are no longer capable of looking after themselves and require 24-hour medical assistance
CASE STUDY 2 – Lynne Gadsden | Grovewood Wealth Management
Lynne Gadsden, a chartered financial planner at Grovewood Wealth Management and member of the Society of Later Life Advisors, highlighted various ways of ensuring care home provision could be funded.
She said: “First of all we work out the shortfall between their income and their expenditures, plus care home costs.
“Once we know how much needs to be found we then work out ways of obtaining the money.
“One of the options is using a deferred payment scheme, allowing people to effectively borrow from the government and pay the money back at a later date, but this is often hard to secure.
“Another route is for people to rent out their house, but with people in the Tunbridge Wells area looking at spending at least £1,000 per week on care it is highly unlikely, after tax, this will cover all the costs”.
She explained many people are therefore effectively forced into selling their homes to allow them to free up the capital to be spent on healthcare. But ensuring the money lasts can be tricky.
She said: “Putting the money in the bank will not offer a great return and there are risks when investing on behalf of the elderly.
“A good option is taking out an immediate needs annuity with a care fees plan. This means you will have to pay a lump sum but are guaranteed an income off it for the rest of your life.
“The main downside is if you die early the money dies with you.”