5 tips for planning financially for long term care

Bright Care's info pack and calculator with bill

1. Know the real costs and what you might be able to get local authority help with.

Before you start speaking to providers of elderly care services it is helpful to have a general understanding of what care usually costs and what parts you can sometimes get for free. Check out our home care costs here. Remember the family solicitor or financial adviser will not always know the answers to this question.

The ‘all care is free’ idea is a myth inadvertently perpetrated by the media and the government which is highly misleading to so many families, this is the number one frustration we encounter when working with families.

Generalising to keep things simple:

Care homes

Cost around £1200 to £3000 per week. Care homes vary in price depending on quality and location. At the higher end would typically be a care home which only accepts self-funding clients and does not sell any of its rooms to local authorities.

The costs associated with care home should be split into 3 categories:

  • The hotel costs (around 70% of the costs). These costs are only paid by the local authority if the resident has assets less than £32,750. As such, these days that does not apply to very many people, particularly if they own their own house.
  • The personal care (around 20% of the costs). In Scotland, these costs are always paid for by the local authority regardless of someone’s wealth. These costs are not paid for in England though, hence the political calls for ‘capping care fees’.
  • The nursing care (10% of the costs). This is paid for through the NHS budget and covers the medical components of care like injections, administration of medications and care aspects requiring fully qualified nurses.

If the state is paying for your care, you will have to accept whatever they provide. If you are self-funding then there is a whole world of options out there. Never let anyone tell you what you can and cannot have when you are paying for it yourself.

Care at Home

Cost around £28 – £40 per hour (depending on need)

The costs associated with care at home is also more easily understood if split into two categories:

  • The personal care (around 25% of the costs). The costs connected to this aspect of care at home can sometimes be reclaimed from the local authority in the form of the direct payment or you can opt for the council to deliver this service to you. Personal care includes help getting washed and dressed and basic medication support.
  • The socialisation, getting out and about and household tasks (75% of the costs). Most often this is the part that family and friends take care of, but for someone who does not have loved ones able to assist in these areas, they may need a lot of support. This area is vital when it comes to caring for those with Dementia.

The costs associated with care at home are so variable as you only need to pay for what you need.

Making calculations

2. Consider using a family solicitor to be appointed to take care of your affairs

Given the serious costs associated with good quality care arrangements, money can start driving a wedge between family members and become a motivator in decisions. Disagreements can also occur if one family member feels they are taking on more of the burden or responsibility for the care of a loved one and its impact on them both emotionally and financially much more than others. It has never ceased to amaze us how so often the challenges of caring for older people can be multiplied by families inability to agree on things and how the elderly client’s wishes. Who should be at the centre of all care arrangements can be sidelined.

As such, people should write out a clear will and requests about how they wish to be cared for as early as possible. The responsibility for actioning this should be placed on a neutral and emotionally detached solicitor who will act only on the requests and in the interest of the elderly client.

3. Be wary of care bonds and insurance policies

In our view, the financial services industry has not yet fully understood and looked to build products that can address the financial implications of care fees in later life. There are some products on the market like long term care insurance policies that guarantee a payout after a period of time and effectively limit the amount you would ever have to pay. But as with all insurance policies, getting them to actually pay out can be a mission. It’s like gambling and we all know the casino always wins. Remember lots of older people don’t need any care or support at all ever. You might not quite feel you got your monies worth out of a policy if you were paying into it for 30 years and never got to claim against it.

We would encourage, where possible, families to invest long term in methods which give them full control over funds and how they are used. The watchword here though is ‘long term’.

4. Be wary of ‘Deprivation of Asset’ schemes

Depriving yourself of assets is when you try to gift your estate to your children in order to make yourself appear below the threshold for statutory assistance for care fees. Some may put all their assets into a trust which is protected from a financial assessment. In our view, such moves are a grave mistake, for two main reasons.

Firstly, if you appear to have no money, your care arrangements will be at the mercy of the state. All choice and control are removed and you certainly will not be able to stay in your own home – you will be sent off to a care home of the councils choosing if your needs determine this.

Secondly, local authorities are wise to these actions. If they think they can prove you have deliberately hidden your assets, they will take you to court and sometimes court cases to recoup fees can rumble on even long after someone has died. Expect this to happen a lot more over the next 30 years. Local councils are having their budgets for social care cut all the time and there is more and more elderly people needed cared for. Given the challenges in social care that are upon us for the foreseeable future, one can sympathise with this approach from local authorities.

5. Consult a specialist elderly affairs financial adviser

If you are serious about long term care planning you need to lay out your entire financial situation on the table and analyse how it will shape up over the next 30 years. This includes every need, wish and want you have – even your bucket list.

You’re not obliged to get professional advice when choosing how to finance your long-term care, but in most cases, it’s crucial to do so.

A specialist care fees adviser is recommended. They have a better understanding of the care sector and the associated costs.

A specialist care fees adviser will help you to compare all your options before deciding which one’s right for you. They will also be able to explain all the costs and risks involved with each product. They should be able to help with other things too, like arranging your will or a power of attorney. We have built up very good quality working relationships with a small handful of high-quality local professionals. If you would like a local recommendation on a suitable advisor please get in touch.