Care costs threaten to decimate the wealth that elderly people have spent their lives accumulating, but what are the options available to keep costs down?
The price of care has risenin recent years, thanks to a combination of short supply, care home operators struggling financially, and cuts to local authority budgets.
An individual in need of nursing care can now expect to pay over £50,000 a year on average, if they have income and assets that exceed the £23,250 threshold above which care has to be self-funded.
According to healthcare research firm LangBuisson, the average fee for self-funded nursing care – which includes medical care from registered nurses – is £1,000 a week. The average for residential care, which includes general support but not specialist medical care, is £700 a week, or £36,400 a year.
This can rapidly deplete the assets of even a relatively well-off pensioner.
For instance, take a couple who own their £400,000 home outright, have a combined income of £30,000 including private and state pensions, and £30,000 in cash savings.
If one partner required nursing care, and the other went into residential care, the total bill would be £88,400 a year on average. After their annual income is used up, the remaining bill would be £58,400.
Their cash savings would be used up in around six months, requiring them to sell their house. If they were both in care for three years, they would have £224,800 of the value of their home sale left at the end.
In other words, care costs for three years would use up half their assets, and all of their income during those years.
For an individual, take someone who owns their £250,000 home outright, with an income of £18,000 including all pensions, and £20,000 in cash savings.
If they went into nursing care, their annual bill would be £52,000 a year on average, or £34,000 after their income is considered.
Their cash savings wouldn’t last much more than six months, requiring their house to be sold.
If they were in care for three years, there would be £148,000 of the house sale amount left at the end, again representing a massive depletion of the value of their estate.
How can you find out what you need?
Ray Hart, of care specialist Valuing Care, explained that many families decide to put an elderly relative into care following panic after an event such as a fall.
But while there may be real concerns, such an event does not automatically mean they need full-time residential care.
Regardless of income, savings or assets, a family can ask for a care needs assessment from your local authority (contact the adult social services department). The person in question needs to agree to it, however.
A social worker or occupational therapist will then conduct an assessment that encompasses both social and emotional needs, abilities and skills, health requirements and more.
A care plan should then be provided, detailing the needs and what could be done to meet them. It’s not a pass or fail test, and the plan has to take into consideration what the person themselves wants; staying in their own home, for example.
At-home care
Building up the level of care, rather than immediately defaulting to a residential or nursing home, could save a substantial amount of money.
The first level of care to consider is at-home care; hiring a carer to help with tasks such as getting of bed, cleaning and preparing meals.
One significant advantage is that if someone is living in their own home, the property can’t be counted towards their total assets and income. That means if their savings run low, and their pension income is below the threshold for self-funding, they shouldbe able to get funding assistance without having to sell their home.
According to online resource the UK Care Guide, it costs between £10 and £30 an hour to hire a carer depending on the level of care needed and the company used.
Whether or not it presents an affordable alternative to nursing or residential care depends on the circ*mstances.
Hiring a carer to help with basic tasks such as getting out of bed, cleaning, and preparing meals for 20 hours a week at £12 an hour would cost £12,480 a year. This is a significant saving compared to the average residential care bill, although the costs of running a home would need to be added in too.
At £30 an hour, for a carer with specialist medical qualifications to come in and provide a more intensive level of care for 30 hours a week, the cost would hit £46,800 a year. Plus there might be home modification costs to consider too. With day-to-day costs included, this is comparable to paying for a nursing home.
Mr Hart said: “People tend to go up to £500 a week, or £26,000 a year, as a maximum for at-home care. Beyond that, it’s worth looking at alternatives – the aim is to use home care to defer having to go into residential care for as long as possible.”
This is both because of the lower overall cost, andbecause it delays the person's home from having to be used as an asset to fund their care.
Extra-care housing
According to Mr Hart, the best halfway house between at-home care and a care home is "extra-care" housing.
This is the next level up both in terms of cost and the care available.
A self-contained property, typically an apartment, in an extra-care development is bought or rented.
Staff are available 24 hours a day to respond to an emergency, there are typically communal facilities, organised activities, and care services are available on a flexible basis. This is similar to sheltered accommodation, but witha higher level of care.
There are usually service and management fees, plus any household bills such as council tax. If their own home is sold, and an extra-care property bought, there will becosts involved there too.
If an extra-care property is just rented, then the person’s house will count towards their total available income and assets.
Care services are paid for as and when they are needed. That means independence can be retained, say with cooking and cleaning, up until the moment it is no longer possible.
“Home care is self service, and residential care is full service – this is half and half,” said Mr Hart.
“There's a risk-reward balance to be struck at every stage. Extra-care is more expensive, but there is less risk compared to being at home –a safety net. It extends the period you're able to stay out of a home."
He added that those who are able to stay in an extra-care apartment for the remainder of their lives would save a substantial amount compared to a care home, although those who opted for it as an option too early on could incur unnecessarily high costs.
The small print
Be certain to read the fine print of any extra-care, sheltered housing or retirement village development carefully.
Some may include controversial exit fees. These are designed to enable residents to defer bills until the end of their tenure,but are facing a government crackdown after the Law Commission found "real potential for abuse".
