What is the true cost of care?
Provision of care among the older generation has been under the spotlight for a long time, but, as Britain heads to the polls to vote in the upcoming election, some parties are making the subject of care a political hot potato.
In a story printed over the weekend in The Times, there was a real worry over the rising costs of care, which was forcing many to consider selling their homes. The article stated that the care sector costs the Government £21.2bn and that figure continues to grow every year. Plus, with an ageing population on the increase against constant government funding cuts, the growing concerns over the costs of care continue to spiral.
According to research by Age UK, 1.4 million older people in the UK aged are not getting the care they need. To add to that, government spending on care has fallen by 9% since 2010. This could be the reason why in around 30% of areas in England there are no available residential care beds, and in over 60% of areas there are no nursing care beds.
The average cost of living in a care home is £600 a week - £800 if you require nursing as well. However, the real price you pay is a lottery depending on where in the UK you live. It varies in hundreds as those living in Northern Ireland see the lowest rates of around £516 – compared to those in London paying £741.
Many people consider selling their homes to cover the cost, but, what if you plan to return home after a short period of care? What if your spouse or family still lives in the property? The good news is, that you don’t always have to consider selling your home to cover the cost of care in these cases.
If your partner still lives in your home, or you live with a relative who is over 60, or a child who is under 18, your home will not be included in any affordability assessments; these are statutory disregards under The Care Act. If this does not apply to you/your family and you need care in a care home, you can keep your property and defer care home payments in exchange for placing a legal charge on your property under a Deferred Payment Agreement. This is particularly helpful if you want to let the property so you are producing an income to offset the care fees whilst retaining the house. This means that when you pass away and your property is sold, or if your house is sold in your lifetime, the council can recover the cost of your care plus interest out of the proceeds of sale of the property.
Of course, these decisions need to be taken carefully and so that you can consider all options available for you and your family depending on the circumstances. What you cannot do is simply give your property and or/investments away in your lifetime to avoid paying for care. In this instance, the Local Authority will consider this is a deliberate deprivation of assets – which means they could take action against you, or your children. You should be very wary of any schemes or investments promoted to avoid paying for care. If it sounds too good to be true, it usually is.
Whilst the Government continue to use care costs as a political football, some solutions have been put forward. For example, it could be possible to raise the asset threshold at which people have to pay for care, to £100,000 and for lifetime care bills to be capped at £35,000. However, these measures have been proved controversial as a “dementia tax” because it penalised those who wanted to remain in their own homes – they would have to pay for care, whereas others suffering from terminal conditions would not.
Another solution was suggested in the form of a “care pension” that would allow savers to use a lump sum from their pension pot to purchase an insurance policy that would pay out if they needed care.
We will be keeping a close eye on these developments in the law as they happen. In the meantime, if you would like some advice relating to care home funding, contact the Private Client team to see how we can help.