Later life care is a need some of us may ultimately face and there is little that can be done to avoid being one of the people the expensive bills befall.
For those who do get dealt the hand of needing care, more often than not financial responsibility falls on them, with data from care home review site Carehome.co.uk revealing 66 per cent of care seekers in the UK are self-funding.
As few as 16 per cent reported that they were able to access local authority funding but there is a national divide: in Scotland, 29 per cent, said they had care costs funded by the state.
Will Donnelly, chief executive and co-founder of care home comparison firm Lottie.org, said seven in 10 families struggle to afford eldery care.
He added: ‘With the cost of care rising by 8 per cent in the last 12 months, families are under increasing financial and emotional pressure.’
With the cost of care at an all-time high, more people having to self-fund, and a threshold for help that has not been increased since 2010, the number of people forced to pay out tens of thousands in later life is on the rise. We explain what you need to know.
Later life care: Two thirds of those looking for care in the UK fund it themselves
How much does care cost in the UK?
Overall care costs are growing as more people need care for longer periods of time.
Some of this is down to longevity combining with illness or frailty in older age.
People are increasingly living longer lives thanks to medical advances but they may not be able to look after themselves alone. Meanwhile, cases of dementia are rising – forecast to climb to 78million people worldwide by 2030, according to WHO data, from 55million people in 2019.
This creates more demand for care for longer, but the cost of providing it is also rising, with energy, staff and facilities costs rising.
This has fed through to eye-watering annual costs for care homes. On average in the UK, residential care costs £1,387 per week, data from Lottie shows. This amounts to an annual cost of £72,124.
Average costs can be even higher than that for some. Nursing care, which sees care provided by registered nurses as well as care assistants, comes in at £1,585 per week. Meanwhile, residential and nursing costs for dementia care average at £1,430 and £1,585, respectively.
The average cost for residential respite care, which allows family to take a break from caring for their loved one, comes in at £1,473 on average.
South West England has the most expensive care costs on average, at £1,419 per week
Figures vary around the UK, and surprisingly according to Lottie’s data, London is not the most expensive area. That unwanted accolade goes to residential care in Wales, where the average cost was £1,485 per week, compared to £1,401 in London and £1,419 in the West Midlands.
Scotland was cheapest at an average of £1,386, although that still amounts to £72,072 per year.
Sue Learner, editor of carehome.co.uk, said: ‘Care home costs are rising due to higher energy bills and food prices as well as an ageing population with more complex health needs.
‘This increase in care costs, coupled with the hike in national insurance for employers and the boost to the National Living Wage announced in the Budget, will inevitably lead to care homes having to charge residents higher fees.
‘The amount of care homes people can choose from if they are state funded will undoubtedly shrink. A growing number of care homes no longer accept local authority funded residents as they say council funding is not enough to cover their costs.’
Is it cheaper to get help at home?
Many people are initially not keen on moving to a care home, and depending on the extent of needs, there are other options available.
Will Donnelly, co-founder and chief executive of Lottie, said: ‘Care at home can often be more cost-effective than living in a care home. It can be arranged hourly or as live-in care, allowing families to tailor services to their loved one’s specific needs.’
The best option largely depends on the level of care required. For those who only require help with specific tasks, care can be organised on an hourly, or even half-hourly, basis.
A visiting care service will see carers come to your home at allotted times to help with things that you are unable to do alone, such as showering, cleaning and shopping.
On average, these carers cost around £15 to £30 per hour, but this will vary depending on the location.
‘This flexibility reduces costs, as clients only pay for the care they require, unlike a care home where expenses are fixed and encompass full-time care, accommodation, meals, and utilities.
‘For example, five hours of visiting care (domiciliary care) at home per week costs approximately £7,280 annually, compared to the average annual care home cost of £72,000,’ Donnelly said.
‘Home care is particularly suitable for older adults who can live independently but may need personal care, household tasks, or companionship support.’
However, full time care at home would likely come in at a far higher cost than paying for a care home, meaning that it is likely only an option for people with access to significant sums.
Live-in care will provide full support in daily tasks, as well as preventing accidents and falls, but it is likely to cost as much as £2,000 per week for 24-hour care.
Who gets financial help with care?
As we’ve seen full-time residential care can be extremely expensive. For many people, this would eat through their savings incredibly quickly.
Those who face paying for care for long periods of time could find that their bill amasses well into the hundreds of thousands of pounds.
Unfortunately, political plans to ease the burden have not come to fruition in recent decades.
The Dilnot Report, commissioned by the 2010 Coalition Government and led by Andrew Dilnot, aimed to establish a fair, affordable and sustainable funding system for social care in England. Its recommendations of a lifetime cap on costs somewhere between £25,000 and £50,000 were never put in place.
Recently, the new Labour government shelved Boris Johnson’s Government’s plans to bring in a cap on care costs.
Under the current system, councils are responsible for care funding but many people do not get help.
Your local authority will carry out a financial assessment after they have determined that you need care through a care needs assessment. The council will establish what level of help they can provide for care costs.
This means testing financial assessment will look at your savings, income, property and other assets to decide whether you get the full cost of your care needs met, help with some of the costs, or you are left to fund the full cost of care.
Only half of the value of jointly held assets is typically included, for example, 50 per cent of the amount in joint savings, or one partner’s share of a property.
In England and Northern Ireland, the savings and capital threshold is £23,250, known as the upper capital limit. If you are judged to have assets of more than this you will be responsible for paying all of your care fees and are classed as a self funder.
In Scotland, the upper limit is £35,000, while in Wales it is £50,000.
When your savings or income fall below the threshold, your local authority will begin to help paying for your care costs.
Your home is not always included in the assessment. It is not included if you only go into care temporarily or you have a spouse or partner still living there.
Other qualifying dependents who live in your property may also mean it is not included in the assessment.
Some people will also be eligible for NHS continuing care. This is available for those with needs arising from a disability, accident or illness that can’t be cared for by universal carers.
Continuing care will cover personal care such as washing and dressing, as well as healthcare, care home fees or carer costs for in-home care.
Age UK has a guide to paying for care that can help you understand more.
How does self-funding care work?
If you don’t qualify for help with care home fees, the costs will come out of your own pocket. For most this will mean putting pension or other income towards the fees and tapping into savings.
If your home will be left empty when you permanently move to a care home, you could rent it out in order to cover your care home fees.
While this could provide a useful source of income, it is important to note that you will need to factor in maintenance costs, periods without tenants and the market rental rate and how this compares to care costs.
Alternatively, some people use equity release to borrow against their home without selling it. Interest is charged on equity release and rolls up to be paid upon death or the sale of the property.
As interest compounds on equity release, over a long term this can mean the loan grows substantially and eats a big chunk of a home’s value. Some plans offer the option to pay some of the interest as borrowers go along.
Whether you choose to arrange this and a care home yourself or not is up to you.
There are companies, and some councils, that will help you to arrange a care home, though it is important to remember that they will charge for their services. This is likely to cost in the region of a few hundred pounds.
If you do qualify for council help but want to move into a more expensive care home than is offered, someone else will have to pay the difference in cost between the two. This is known as a top-up fee.
The council can’t charge you a top-up fee if they place you in a more expensive home out of necessity.
You may not have to sell your home in order to pay for care, as there are options available to defer payments.
Will my spouse lose our home – can I delay the cost?
If your spouse remains living in your home, then your home cannot be sold to pay for care costs.
Carolina Abrahams, charity director at Age UK, said: ‘If you move into a care home permanently, your home cannot be included as part of a financial assessment if your partner, or in some cases a relative, remains living there.’
If your spouse is not living in your home, but you still want to delay the cost of your care, you can apply for a Deferred Payment Agreement with your local council.
The council will pay your care fees, as a loan against the value of your property. This will be repaid when you sell your home yourself, or when you pass away and your home is sold.
These agreements are also suitable for cases where you have little savings and capital, but your property means you are over the asset threshold.
This allows you to benefit from possible increases in the value of your property during the time you are in care.
Deferred Payment Agreements do come with interest charges. In England and Wales, these rates are revised every six months and will be set at 4.65 per cent from 1 January.
In Scotland, there are no interest charges, while in Northern Ireland there is no official DPA system but is available on a case-by-case basis.
What happened to plans to cap care costs?
Under the previous Conservative Government planned reforms would have seen a £86,000 lifetime care spending cap introduced.
The upper capital limit, beyond which no help with fees is given, would also have been raised from £23,250 to £100,000.
The plan was set to take effect from 2025, having been pushed back from a 2023 start.
While it would have introduced a cap, the Conservative plan received its fair share of criticism, with experts warning that the less wealthy could still end up spending most of their assets if they needed care, while those who were better off would face proportionally less impact on their overall wealth.
In a 2022 Kings Fund report, Sally Warren commented: ‘People often talk about catastrophic costs in social care, but what is considered catastrophic is not a single number – it’s a relative, not absolute, concept.
‘To someone with low levels of savings and housing wealth, £86,000 is catastrophic as it will mean care costs would take all or most of their savings and wealth, and as for many of these people their wealth is tied up in the value of their home, it means selling their home.
‘To someone with a house worth more than a million pounds, £86,000 wouldn’t be catastrophic – it would be a small proportion of their wealth.’
Chancellor Rachel Reeves axed the Tory plan last summer when Labour came to power.
It said the planned scheme was unfunded, and that cutting it will save £1billion in the next financial year and £4-5billion per year by the end of the parliament.
The ambition to put a new plan in place was voiced but so far no details are forthcoming and those affected by high care costs remain stranded.
Age UK’s Ms Abrahams told This is Money: ‘The care cap was not a perfect fix but its cancellation was really bad news for older people who were hoping against hope for some relief from their sky-high care bills.
‘In the short term at least, it seems they are on their own as there is nothing yet to replace it.’
‘The immediate problem of high care bills is, however, very real, and the Government must tackle it as part of a broader package of measures designed to urgently stabilise and reform our social care system – and sooner rather than later.’
Is there anything you can do to plan for care costs?
For many years campaigners have argued that the financial industry needs to provide a way for people to save for or insure against care costs.
However, as it is something of a lottery in terms of who ends up needing care, people are not overly keen on either saving for it or paying for insurance.
Throughout most of their working lives people will need to direct spare funds towards mortgages, pensions and other savings and many don’t feel they have money to spare for potential care many years down the line.
Insurers used to offer long-term care insurance, allowing people to pre-fund their future care costs, paying into a plan while they were healthy.
However, these products are no longer offered by most insurance companies, as uncapped care costs meant the cost of premiums became too high for policyholders to afford.
In the absence of a state-backed or formalised system for funding care, people are on their own in terms of saving for it and paying for it.
Beyond making the most of any available benefits, and boosting your savings and pension to help fund future care, it is important to consider how your estate might be affected if you do need care.
Speaking to a financial adviser specialising in this area could help you find out what products could protect parts of your estate and prevent you falling foul of certain rules
Even if you are years away from needing to pay for care, making preparations early can help to ensure that your assets are best protected when the time comes.
Has your family been affected by care costs? What did it cost and how did you cover them. Tell us by emailing [email protected]
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