Planning For Care Costs?

Linton

nigelbb wrote: »

It's not a question of grandma hoarding or stealing from the young it's everyone pitching in to pay a small amount so that those who do need care are looked after. This kind of insurance only works if it's compulsory so everyone pays & everyone is eligible for help if they need it.

It's just the same as healthcare which by your argument grandma should be selling her house to pay for her heart bypass & cancer treatment.

Its not the same as healthcare....


When someone receives healthcare it is expected that they will return to normal life. Paying enormous bills for the healthcare could seriously affect their well-being for the rest of their days. When Granny goes into a care home it is on the basis that she will stay there until she dies. Using her house and savings to pay for it will not affect her future - if she was in a position to use them she would not be in a care home.


The argument is nothing to do with Granny's well being. The real issue is what happens to her money after she dies. It's her beneficiaries who would benefit from state provision. I cant think of any argument that justifies the general public having to pay for someone else's inheritance.



Any argument along the lines of if X why not Y could be used elsewhere. What about housing in general? Why should the state not provide housing for everyone? Similarly transport.

nigelbb

Linton wrote: »

Its not the same as healthcare....


When someone receives healthcare it is expected that they will return to normal life. Paying enormous bills for the healthcare could seriously affect their well-being for the rest of their days. When Granny goes into a care home it is on the basis that she will stay there until she dies. Using her house and savings to pay for it will not affect her future - if she was in a position to use them she would not be in a care home.


The argument is nothing to do with Granny's well being. The real issue is what happens to her money after she dies. It's her beneficiaries who would benefit from state provision. I cant think of any argument that justifies the general public having to pay for someone else's inheritance.



Any argument along the lines of if X why not Y could be used elsewhere. What about housing in general? Why should the state not provide housing for everyone? Similarly transport.

I said nothing about state provision or the general public having to pay for someone else's inheritance. I said that for this sort of insurance to work it needs to be compulsory so that everyone pays a small amount so that those who need it don't get bankrupted. Exactly like healthcare.

BTW plenty of the spending on healthcare is made with no expectation of the individual ever returning to full health or even recovering at all.

LHW99

The argument is nothing to do with Granny's well being. The real issue is what happens to her money after she dies. It's her beneficiaries who would benefit from state provision. I cant think of any argument that justifies the general public having to pay for someone else's inheritance.

I do agree with this, although I would add a couple of caveats:
Since houses and general savings are paid for / built up from taxed savings, then IMO there should be a way for government to provide eg a raised tax-free ISA allowance for moneys used for this - eg by allowing 5 years' ISA contributions to be deposited at once provided withdrawals are only paid directly to the care home.
I also think the currently "NHS continuing care" is a joke - too many times it is denied when it should be being paid, and often relatives are unaware of what they are entitled to, and / or how to challenge a decision.

Malthusian

LHW99 wrote: »

I do agree with this, although I would add a couple of caveats:
Since houses and general savings are paid for / built up from taxed savings, then IMO there should be a way for government to provide eg a raised tax-free ISA allowance for moneys used for this - eg by allowing 5 years' ISA contributions to be deposited at once provided withdrawals are only paid directly to the care home.

What happens if they never go into a care home and their heirs stand in line to benefit from all the extra tax saved?

If the idea is that you get a 5x ISA allowance if you're already in care, this would accomplish almost nothing in exchange for the time it would waste in Parliament. Money earmarked for care is unsuitable for investment as it will most likely be spent within the next two years. The ISA system is designed to encourage long-term investment. Virtually everyone in care does not have a long-term outlook.

I also think the currently "NHS continuing care" is a joke - too many times it is denied when it should be being paid, and often relatives are unaware of what they are entitled to, and / or how to challenge a decision.

Standard modus operandi for benefits - make them difficult to claim to keep the cost down. If everyone successfully claimed it, it would have to be cut.

nigelbb wrote: »

I said nothing about state provision or the general public having to pay for someone else's inheritance. I said that for this sort of insurance to work it needs to be compulsory so that everyone pays a small amount so that those who need it don't get bankrupted. Exactly like healthcare.

Nobody is bankrupted by care costs. Once you run out of money (defined as falling below a certain threshold to deter heirs from hiding trivial amounts of money) you go into Overmydeadbody Grove. (Yes, this is a simplification and not everyone who runs out of money and falls onto the LA gets moved.)

There is no case for the general public to subsidise well-off elderly people's inheritances.

When you move home you have to sell your old one unless you have enough dosh to keep two homes. Nothing changes if the new home is a care home.

Linton

nigelbb wrote: »

I said nothing about state provision or the general public having to pay for someone else's inheritance. I said that for this sort of insurance to work it needs to be compulsory so that everyone pays a small amount so that those who need it don't get bankrupted. Exactly like healthcare.

BTW plenty of the spending on healthcare is made with no expectation of the individual ever returning to full health or even recovering at all.

I do not see any difference between compulsory insurance and state provision paid from tax other than that tax depends on ones ability to pay.



But it would not be a "small amount". I can find no data on what % of people go into long term care. But there are statistics on where people die. These show that about 22% die in care homes and 47% die in hospitals. Clearly some who die in hospitals come from care homes so lets guess that 30% of all people will end up in care homes for the final few years of their lives.


The average length of stay is about 2.5 years - this is rather higher than the median length of stay since people could be in a care home for say 8 more years whereas it could only be for a maximum of 2.5 years less.


If we assume that a care home costs £35K/year the insurance pot per person would need to be £35K X 2.5 X 0.3=£26K. So every adult in the country would need to pay about £590/year between the ages of 21 and 65. This is hardly "a small amount" for many people especially as most would receive no benefit. The vast majority are not concerned about care home costs in the distant future now so there is no great reduction in worry. Then there is the question of what happens to those people who arent working. Note that the £590/year ignores management costs which could be significant.



But is it a viable insurance proposition? Generally insurance works on the basis that a payment now provides cover for a limited period in the future, typically 1 year. In an insurance backed care home scheme we are talking about a payment now providing guaranteed cover for up to 80 years in the future. What about inflation? An inflation guarantee would need to be government backed since it is unlimited.


And finally we have the little problem of what happens between now and when the insurance scheme is 100% established - it would take 44 years before every working person has paid fully for their insurance. Until that time there needs to be some other scheme in place.

lisyloo

nigelbb wrote: »

It's not a question of grandma hoarding or stealing from the young it's everyone pitching in to pay a small amount so that those who do need care are looked after. This kind of insurance only works if it's compulsory so everyone pays & everyone is eligible for help if they need it.

I understand the concept.
I just don’t agree with “just about managing” people paying so that wealthy people can keep their inheritances (and FWIW I’m a beneficiary).
Also in practice I think you’d find demand would balloon as families would have less incentive to look after elderly at home if care was free. There are lots of people doing this work for free at the moment.

There was a paper put forward about capping private care costs years ago and it’s not seen the light of day, so I think we are a long way off.
If it does happen it will be driven by chaos in local authority finance rather than any agenda for fairness, but right now it’s way down the priority list.

Part of the issue is that most of the population just don’t care or have any visibility of the issue, but what you are suggesting is a transfer of wealth to wealthy people and I don’t see the fairness in that.

DairyQueen

drumtochty wrote: »

The lady wants to stay in her home and the son's fund this and they accept it is what she wants. One son has no issue financing his share, another can just about afford his share and the last one has major issues funding his share as he is now retired and did not earn a lot when employed.


The least well of son will probably not break even in the next few years if the mother dies and the house is sold and this will not assist in funding his own and his wife's later years retirement. Not a good situation at all.

This makes me really angry. If the lady wanted to stay in her own home then she should have made provision to finance this. Expecting her children to fund her lifestyle choices (at any age) is unreasonable in the extreme.

My MIL also wanted to stay in her home but could not afford the cost of 24/7 carers. She is now resident in a very good (expensive) home funded by the sale of her house. Her expectation was that one of her children would move in and provide the 24/7 care that she needed.

We all must accept the consequences of our decisions. Age does not preclude us from responsibility.

I help care for my disabled mum. Parents are in their 80s. They have refused to move house. The first consequence of this is that they must now pay for a gardener to maintain the high-maintenance garden that dad insisted he could maintain only two years ago. The survivor of them will not be able to stay in the house (mum requires 24/7 care and dad will not have sufficient income if mum dies). The survivor will therefore be forced into residential care (mum) or to downsize to a smaller house (dad). They could have moved voluntarily rather than be forced to do so at a vulnerable stage in life. They chose not to do so.

I have tried to learn from experience. Regardless of which of us is the survivor, OH and I will have sufficient capital to finance good quality in-home or residential care. It will be our choice and our responsibility to fund it. OH's children will not carry that burden.

Why do so many people of my parents' generation expect to be supported by their children financially or physically? OH will retire in 18 months and we would like to move area. We currently live apart during the week in order to facilitate my care for parents whilst OH is working. Yet, even in retirement, I cannot abdicate the responsibility I feel for my parents. We will have to maintain a home close to them until I am no longer needed.

God forbid my stepchildren should ever have to make such compromises.

lisyloo

DairyQueen wrote: »

Why do so many people of my parents' generation expect to be supported by their children financially or physically?

To be fair to that generation, it used to be the done thing for elderly to be looked after by families.
There were few care homes or visiting local authority carers.
My husband as a boy lived with elderly grandparents.
On the whole the elderly didn’t last as long and part of the problem is that people are now surviving cancer, heart attacks and strokes but longevity often comes with chronic conditions.
It’s not that many decades ago that the authorities would expect families to care their elderly and offer little or no support.

I do have some sympathy for individuals who’ve spent many years caring for their elderly and won’t get the same in return.

However as we know, women are now expected to be part of the workforce, retire at 67 and grandparents are often involved in providing free childcare for their daughters.

We clearly can’t exoect anyone to care 24/7, work and child care.

Things have changed but there is a generation who gave and aren’t receiving in return.

I agree that people should plan and moving ahead of your needs makes a lot of sense from what I’ve seen.
Our parents found it very difficult to adapt to anything new in their 80s.