The average cost of a care home place
has almost doubled over the past two decades and is now nearing £1,000 a week,
according to the latest data.
A cruel combination of short supply,
care home operators falling into financial difficulty and tightening local
authority budgets means private payers – those who get no assistance with fees
– are especially hard hit.
Research carried out earlier this
year by industry experts LaingBuisson found that the average weekly fee for
residential care with nursing had risen from £445 in 1998 to £845 this year.
For residential care the cost has
risen from £322 to £605. Analysis by Telegraph Money found average
inflation across this period has been 2.7pc per year, while care fees have
risen by roughly 4.4pc a year. Those figures are for care costs as paid both
privately and publicly.
But the gap between the price paid by
state-funded residents and those paying for themselves has continued to widen,
with self-payers thus suffering a higher rate of inflation.
According to statistics released by
NHS Digital last week, local authorities received 1.8 million requests for help
last year. This figure is rising.
As demand for assisted care home
places grows, the prices for those who self-pay rise. This is because the
amount paid by local authorities is artificially low.
Care home providers – facing steep
increases in cost from the introduction of
the national living wage, among other factors – are thus forced to
press the “self-payers” for more, according to Andrew Kaye, policy director at
the charity Independent Age.
Families paying for their own or
others’ care increasingly need to factor in high future inflation – almost
irrespective of wider inflation, financial advisers say.
‘My care
costs rose by 5.4pc a year’
One way of ensuring you have the
money to cope with annual rising care fees is by purchasing a “care annuity”.
One Telegraph Money reader managed to use an annuity to pay for the vast
majority of his wife’s four-year stay in a care home after she was diagnosed
with dementia.
When, at age 75, she first moved in
to the home, located in west London, in 2011, the weekly fee was £715, but by
the time she died in 2015 she was paying £870 – an annual rise of 5.4pc.
The couple had applied to receive
local government support but had been turned away because their assets totalled
far more than £23,250 (the threshold is higher in Wales and in Scotland).
Using their savings, they purchased a
care annuity for £248,000, which covered three-quarters of the fees (so paying
a starting income of about £28,000 per year) and grew at a rate of 4pc. These
annuities are guaranteed to pay out for as long as the person remains in
care.
“We didn’t get our money back,” said
the retired engineer, who is now 85. “Whether you buy an annuity or not is
entirely dependent on the life expectancy, but I felt my wife might live for 10
years.
“The annuity gave us financial
security. It would last for her life, so if I died or anything happened to me I
knew she would be OK.”
An annuity paying £20,000 a year for
care fees, and growing by 5pc a year, would now cost £173,500 according to
Just, the retirement finance specialist firm.
Just calculated quotes for Telegraph Money for an annuity
paying £30,000 a year, with an escalation of 4pc, for hypothetical patients
aged 75, 80 and 85.
For residential care, the policies
would cost £258,900, £226,800 and £187,800 respectively, and for nursing care,
the policies would cost £217,500, £199,700 and £172,000. The company said the
actual cost could vary significantly from client to client.
Nursing care annuities are sometimes
cheaper to reflect the person’s shorter estimated lifespan.
Our reader also expressed concern at
the gap between fees paid by local authorities and self-funders. The
LaingBuisson data suggests self-funders pay a premium of 40pc.
A preliminary report from the Competition and Markets Authority,
published last month, also suggests the real fees paid by local authorities are
lower now than in 2010, hurting private care home operators, which make up the
majority of the sector.
The care home in which our reader’s
wife lived told him it wasn’t viable to take on a resident funded solely by a
local authority. It required their families to top up the fees where assistance
was available.
And the reader warned that the costs
don’t stop with the care home fees, with residents still having to foot many
everyday costs. “Clothes are a problem because you can’t just go to the shop,”
he said. “We had to buy clothes from a mobile shop that came round to the home.
We ended up spending £800-£900 a year on clothes.”
What are
the options?
Mr Kaye said that families often feel
overwhelmed when faced with potential care fees of several hundreds of
thousands of pounds. But there are many ways to get funding or mitigate the
cost.
The NHS can fund care via its
“continuing healthcare” programme, which is available to those forced into a
care home because of medical conditions including strokes, severe arthritis and
some forms of dementia.
Care home residents can be assessed
every year as they may have deteriorated to a level where they become eligible
for state support.
Mr Kaye said: “Make sure to check if
the NHS will pay. The pressures on the service are huge, but if someone has
quite complex needs they might be able to get it paid for.”
Those who have self-funded a stay in
a care home can also claim a refund if their loved one should have been covered
by the NHS. Reader Stan Gibson successfully
reclaimed £226,559 for his father’s five-year stay.
Mr Kaye also said everyone considering a care-home stay should
research whether this is actually the most appropriate option. In-home care
could be a cheaper and more amenable choice.
Age UK and Independent Age have
information online on funding care. The latter has just launched its Paying For
Your Care guide.
SOURCE: The Telegraph, Sam Meadows
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