A shocking report published by Age UK – ‘Behind the headlines: ‘Stuck in the middle – self funders in care homes’ – has revealed that those paying for their own residential care are subsidising other residents funded by the Local Authority – by at least £200 a week. This ‘stealth tax’ adds up to more than £10,000 a year for each self-funder.
Around 400,000 elderly people live in care homes across the UK and of these, nearly half pay for the care themselves. People are required to self fund their care if they have assets worth more than £23,250. For those with assets between £14,250 and £23,250, the Local Authority expects a contribution towards care costs. Once the person’s assets reach £14,250, the Local Authority pays for the care in full.
Care fees for those self-funding typically cost between £603 and £867 per week, depending on the location. However, in some areas, it can be over £1,000 a week. These figures are at least £200 more than the amount that Local Councils will pay for exactly the same room and services where they have to fund the care. Subsidising Council-funded residents is nothing new, but the scale of the contribution has soared in recent years. Four years ago, the amount paid per week was around £40.
An ageing population and slashed budgets have driven Councils to reduce what they offer commercial care homes for a place. Councils are the biggest buyer in the market and can negotiate the best rates – which sometimes will be below cost price. Care homes have to make up the deficit by charging self-funding residents extra – or face going bust.
Council budget cuts are not the only reason residential care homes are under pressure. The introduction of the national living wage have sent costs soaring by 30% and the Care Home Regulator is warning that many could go out of business or pull out of the market.
Mid-year fee hikes
Another issue revealed by Age UK’s report is that care homes are raising fees midway through the year arbitrarily – or raising them annually by a substantial amount. These increases are sometimes justified by saying, for example, that the resident’s needs have grown or that they need some other form of care. Some fee hikes were by as much as 50% and these included fees for services that not every resident needs or wants.
The Charity is calling for better protection for those funding care themselves and more transparency as to who is paying for what.
What you can do
If an elderly friend or relative is paying for care themselves, make sure they have had an assessment for NHS Continuing Healthcare funding – this is a little-known source of funding that can sometimes be overlooked by professionals when a care need is established, or misinformation about eligibility can be given. If eligible, their care will be paid for, regardless of their income or assets.
If you have an elderly friend or relative that does not yet need care but care is a possibility in the future, make sure they have a Lasting Power of Attorney (Health and Care Decisions) in place. Should they need care in the future and they get a NHS Continuing Healthcare assessment, you can be part of the process and you can help them appeal if funding is refused.
Consider leaving your share of the family assets in trust to your partner in your Will, allowing them to live in the family home and benefit from your estate during their lifetime. Should they require care after your death, the Local Authority will not be able to take your share of the assets into account when conducting a means test.
Contact our Later Life Planning team for advice about making a Lasting Power of Attorney or changing your Will – call us.