Provision for the cost of a care home or support when continuing to live in your own home

SarahB16

I have been reading the various helpful posts on this wonderful forum regarding retirement planning and the costs to budget for but I very rarely see care provision mentioned.  I do know @BarbaraG2000 mentioned it recently though in one of her posts.

I know a lot of people ask how much they would need to live on in retirement and consider energy bills, holidays, etc however what if a person (say a single person) or one person from a couple needed to go into care how is that paid for?  Are we budgeting for this as part of our retirement planning or do we not need to?  What if you wished to continue to live in your own home but needed some help again how would that be paid for?    

I have found the following information: 

Paying for permanent residential care | Paying for a care home | Age UK

I am approximately 10 years away from retirement however nobody knows what the future holds regarding our health and as I own my own home (mortgage free) and would if/when I needed care hope that I would also have a decent pension too. 

I presume my home would be sold and this would pay for care if I needed to go into a home?  If I needed help whilst living in my own home then it is highly likely I will need to fund this myself from my pension or savings.    

I think the Government is hoping to introduce or has introduced a limit in terms of what a person pays in their lifetime for the care they need but I’m not sure if that just relates to certain elements of care home costs?    

I think there are private care homes (which are more expensive) and local authority-run care home (which are generally not as expensive).

As you can see I really do not know much about the care sector in England and if anybody could kindly add to this thread to share what they know that would be appreciated. 

Thank you  

Linton

Basically if people can afford care they pay for it themselves, if they can't then the local authority fills the gap between what can be afforded and the actual cost.  There are rules to determine "what can be afforded" and to prevent blatant cheating like giving away all your assets to get free care.   Clearly the local authority wont pay for an expensive care home if there is a cheaper one that is suitable.

Unlike some scare stories the council do not take your home.  If the value of your your home means that care can be afforded the council simply refuse to pay anything so it is up to you how you finance the costs.

If the care is required for continuous nursing reasons that will be provided free by the NHS but is only available in the more extreme cases.

I believe that care homes are generally private or run by charities or commercial companies.

The government has ideas for limiting care costs but no action has been taken. 

The majority of people don't go into care.  More will get part time care in their own homes eg cleaning, getting dressed in the morning etc.  Again you pay if you can afford to and the local authority assess your needs and pay for what they deem necessary if you cant.  However care provided by  the local authority may be limited  eg very quick visits.

DT2001

The information below regarding the situation from 2023 (unless it gets altered) is from a Govt website so hopefully is up to date.

From October 2023, the government will introduce a new £86,000 cap on the amount anyone in England will need to spend on their personal care over their lifetime.

In addition, the upper capital limit (UCL), the point at which people become eligible to receive some financial support from their local authority, will rise to £100,000 from the current £23,250. As a result, people with less than £100,000 of chargeable assets will never contribute more than 20% of these assets per year. The UCL of £100,000 will apply universally, irrespective of the circumstances or setting in which an individual receives care, making it a much more generous offer than a previous proposal in 2015. The lower capital limit (LCL), the threshold below which people will not have to pay anything for their care from their assets will increase to £20,000 from £14,250.

The cap will not cover the daily living costs (DLCs) for people in care homes, and people will remain responsible for their daily living costs throughout their care journey, including after they reach the cap. For simplicity, these costs will be set at a national, notional amount, the equivalent of £200 per week in 2021 to 2022 prices. DLCs are a notional amount to reflect that a proportion of residential care fees are not directly linked to personal care, like rent, food and utility bills and would have had to be paid wherever someone lives. This is in line with the Commission on Funding of Care and Support’s 2011 recommendation. The £200 level is about £60 less in 2021 to 2022 prices than a proposal set out in 2015, ensuring people get to keep more of their income and assets.

The % that need care is small but the costs are high. My personal experience for my mother was - help at home which increased as her needs did over about 3 years to cost circa £2k p.m. She was then hospitalised and assessed after recovering to see if she was capable of living alone. She wasn’t and the NHS covered the first 6 weeks of fees and we sorted them thereafter. It was a good home but not the cheapest (so not sure if there was any cap on NHS funding). She stayed about 15 months, which I believe is just beyond the average time and the costs towards the end were £4.5k p.m. She had dementia so it was nursing care that she had.

Keep_pedalling

The caps, if they ever come into force, won’t be that helpful if like us you want to have absolute control on the who, where and when aspects of care. Our first choice will be care at home, but live in carers don’t come cheap and as far as I am aware there will be no cap if you chose that route.

cfw1994

Keep_pedalling said:

The caps, if they ever come into force, won’t be that helpful if like us you want to have absolute control on the who, where and when aspects of care. Our first choice will be care at home, but live in carers don’t come cheap and as far as I am aware there will be no cap if you chose that route.

We went through this over the past few years with my wife’s parents living in the East Midlands.
Sadly her father passed away in autumn ‘21.  

Her lovely mum had carers thrice daily to help dress, cook, ensure meds were dispensed and a little bit of cleaning.  They cost between £350 and £500 a week (there were several care company changes to keep one favourite carer engaged - a lot of movement in that industry!).
Care homes ranged from £900 to £1400pw, so enabling her  remain in her own home made sense financially as well as emotionally.
We were investigating live-in care, which looked to be around the upper end of care home costs, but few companies do it.
Sadly she recently passed away peacefully in hospital after a short illness 😔

I feel that planning for care costs is very difficult.  

The reality is that if/when you need carers, you are likely to be spending much less on other things (eg, holiday budget and luxury goods might be zero!).

As mentioned above, the vast majority of elderly do NOT go into care homes, and if/when they do, the vast majority stay less than 2 years before ‘moving on’.   Of course there are exceptions.
A home can potentially be used to help cover those costs, but life can’t be easily planned & enjoyed on the basis of needing expensive long term care, I feel 🤷‍♂️

CarolWHerts

There is an excellent,  detailed, series of articles about this on the Monevator blog site, starting here: https://monevator.com/social-care/

cfw1994

CarolWHerts said:

There is an excellent,  detailed, series of articles about this on the Monevator blog site, starting here: https://monevator.com/social-care/

I speed read the first…..a lot in there.

To save everyone reading those lengthy articles, could you please perhaps summarise a strategy to help plan/pay for care costs?   I assume you have one after following the articles?

Robert_McGeddon

The monevator articles are indeed excellent.

Not all folk end up in care/nursing homes.  If you do the average stay is around 2 years.

As to strategy....

1  If you're rich don't worry. You will be able to afford 3/4/5 years at £70K pa.

2  If you're poor don't worry. The State will provide, albeit at a basic level.

3  If you're between the two you face uncertainty as to what the £86,000 covers and how it and the caps will be indexed. Sorry, but that's how it is. The gov't has headlined £86K and the electorate are generally happy with that without knowing what it will mean in practice. The devil will be in the detail.

lisyloo

cfw1994 said:

CarolWHerts said:

There is an excellent,  detailed, series of articles about this on the Monevator blog site, starting here: https://monevator.com/social-care/

I speed read the first…..a lot in there.

To save everyone reading those lengthy articles, could you please perhaps summarise a strategy to help plan/pay for care costs?   I assume you have one after following the articles?

One option is to purchase an annuity.
It's a bit like life insurance in reverse where you pay premiums and your beneficiaries get a lump sum when you die.
In this case you pay a lump sum up front and the insurers pay out the care fees when you need it.

Not everyone will need care.
There are an increasing range of technology options available for these days - alarms, crash mats, motion detectors, cameras etc. that can help delay entry to a care home.
Visting carers (up to 4 times a day) can also delay full time residential care.
When someone becomes immobile or can't make sensible decisions and is a danger to themselves then there isn't much alternative.

The average stay in a care home is 26 months (most people are frail when they do in) but there can be a few outliers with the odd few people spending 15 years in a home and of course occassionally it might happen to someone a bit younger.

Getting the state to pay is another option.
Sheilding assets from the process can be done legally, but be aware of deliberate deprivation.
My step-mum has just passed her 50% of her home to her children.
As a side effect of her wishes her 50% cannot be used for my father care.
You cannot do this deliberately to avoid care fees, but if it's a side-effect of other plans then it can be done (you need specialist legal advice for this).
Also be aware that local authority provision is pretty poor especially if the person has complex needs.
My MIL was incontinent and had dimensia and that ruled out most of the homes we went to.

Equity release is another option as is savings (but you'd potentially need quite a lot).
Note the cap applies to care only not board and lodging.

Personally I'd use the money tied up in my home, either through downsize, equity release or possibly DPA (loan from the LA), if that's cheaper than equity release.

Albermarle

Personally I'd use the money tied up in my home, either through downsize, equity release or possibly DPA (loan from the LA), if that's cheaper than equity release.

Presumably the DPA ( just googled it - Deferred payment agreement) kicks in when other financial assets fall below £23K, but you are still a self funder as you own the house?

I guess that if it is just you, and you go into a care home permanently the simplest option would be to just sell the house?

lisyloo

Albermarle said:

Personally I'd use the money tied up in my home, either through downsize, equity release or possibly DPA (loan from the LA), if that's cheaper than equity release.

Presumably the DPA ( just googled it - Deferred payment agreement) kicks in when other financial assets fall below £23K, but you are still a self funder as you own the house?

I guess that if it is just you, and you go into a care home permanently the simplest option would be to just sell the house?

It certainly would - what’s the point of having an empty house if you won’t ever need it again? (barring temporary or recovery situations).

My husband might still be living there though.
in that scenario it’s disregarded but I would expect to want to “top up” having found them for both MIL & FIL and the local authority provision being in the “over my dead body” category.
if the costs exceeded my pension (which at around £1k per week they would) then I’d expect him to downsize or do equity release (he’s be quite elderly by then and  probably and not wanting a big house).
DPA might be a cheaper alternative to equity release if it’s available depending on the circs.
I did DPA for my MIL when I was selling her home (as deputy under the court of protection). There were some fees but it was quite reasonable.

I’m not going to get too bogged down in the details as it’s decades off for us, but having a high value home up your sleeve is a good option.
the DPA helps as houses aren’t liquid.

my FIL died in May so MiL became a private payer in July (house disregarded whilst he was alive). We took until sept to sort out the property to a saleable state and get cop and then completed on the sale in Feb, so DPA covered July -> Feb. The LA made sure they got their funds at completion (oh yes, they nailed it down with the solicitor).

as an aside her fees were £100 cheaper PER WEEK whilst the DPA was in force as she was Technically LA funded so there’s another advantage there.