You may be worried about how you and/or your loved ones could afford the costs if you had to move into residential care in later life, especially as recent news reports have highlighted how not having plans in place for this potential scenario can ruin family relationships, wealth and legacies.

As a SOLLA (Society of Later Life Advisers - SOLLA) Accredited adviser, people contact me (sometimes as a referral from care homes), wondering  about their options for care fees planning. When we consider all of their options together, rarely do they know about all of the options available to them, such as a Care Fees Annuity (CFA). This is concerning, especially given the challenges we, as an ageing population, face.

Why affording care is a bigger problem than ever before

Census 2021 results showed that the number of people aged 65 years and over in England and Wales increased from 9.2 million in 2011 to over 11 million in 2021 and their numbers are rising year on year. Those people aged 85 years and over was estimated to be 1.7 million in 2020 and this is projected to almost double to 3.1 million by 2045. And the demand for care is growing exponentially.

According to the well-respected publication Laing and Buisson’s ‘Care Homes for Older People market report’, there are around 130,000 individuals going into care each year. The fees being paid for this vary from one local authority to another. The average cost in the UK for a residential care home is £800 a week, rising to £1,078 a week if nursing care is required, with the South East often being considerably higher as you might expect. prices tend to increase annually, often well above the level of inflation. Unfortunately, the ‘cost of living’ crisis is hitting care homes too.

Will I get government help to pay my care fees?

Firstly, you need to ensure that you understand the difference between ‘social’ and ‘health’ care. Health care is where your needs are of a medical nature, and this is the responsibility of the NHS. For health-based needs the NHS may arrange and pay for your care under NHS Continuing Healthcare (NHS CHC). If you are eligible for NHS CHC, your care home placement could be free. When assessing your needs, the council must refer you to the NHS if it appears you may be eligible for NHS CHC.

Social care on the other hand, is that needed to help with activities of daily living (washing, eating, mobility etc). This area is the responsibility of your local authority, who will assess the social care needs you have, as well as how much you are able to pay towards it.

If you need care, a Financial Needs Assessment should be carried out which will take in to account your levels of income, savings, investments, rental property and, if you are going in to  a care home, in a lot of circumstances, your main residence (also known as a means test).

Usually, if the value of your assets is over £23,250 in England you will have to pay your own social care needs which is referred to as being a ‘self funder’.

If you run out of liquid funds when you are in a care home, the local authority is not obliged to pay for your care needs if you do not meet their eligibility criteria. Even if you do meet the criteria, you might find that the amount the local authority will pay may be less than the costs of the care home you are currently in. This may lead to  limited or no choice as to where you receive care unless a family member or other benefactor is prepared to pay the difference between what the local authority will pay and the cost of your choice of care provision (this is known as a ‘third party top up’). As a result this may mean that you may need to move to a different care home which the local authority will fund.

The government’s Care Reforms have been put on hold

Unfortunately, there is currently no cap on the amount of money you could be required to pay to fund your care.

You may recall that, in the November 2022 Autumn Statement, the government announced that their proposed cap and means test reforms (which would have made thresholds higher before people would have had to pay for care), have been postponed until October 2025. With a general election looming no later than January 2025, there is no guarantee that these reforms will ever be implemented (although we can only hope that the winning party will address this major problem). 

Despite all this, many people, even with what they deem to be a ‘comfortable’ standard of living and reasonable pension pot for retirement, either do not know about their options for tackling the potential cost of care home fees - or choose to bury their heads in the sand and don’t take action.

What is stopping people planning for care fees? This is what I typically see:

1. Not many people invest in their care in Later Life. Firstly, there always seems to be something more urgent to pay for. Understandably, health issues are a very sensitive and emotive subject. Some individuals prefer to not think about getting older and potentially frail. They choose to ignore it and just ‘live for today’. As I say, this is completely understandable – in times of good health it can be difficult to contemplate your future need for care. . The problem is at some point, a large number of people taking this view and action or lack of it, will likely need some care – be it in their own home or in a residential care home (and bear in mind there could be substantial costs for your care if you stay at home too).
2. You don’t want to talk to your loved ones about the potential for needing care in later life and, perhaps your family don’t invite that conversation either, as it’s too upsetting or worrying. The irony of this is that it prevents people having options later and many families end up having to be the carer/s of their loved one due to lack  of money or knowledge to consider alternative care.
3. You would like to discuss your care in Later Life but don’t know where to start.

Of course, there will be some families for whom being the carer of their relative if they need it in later life is what they expect and want to do. Others may not be in a position to offer this for many different reasons – finances, location, having their own families and jobs being the most obvious.

But even where a person is cared for by a relative or friend, there are some illnesses which may make this arrangement impractical in the longer term. No one has a crystal ball or knows how long they will live.

What you should do about it

Not knowing how you will manage if you need care in later life isn’t a pleasant prospect and, for peace of mind, you should explore the options that are open to you.

It’s so important that you are able to access expert, independent advice to help you navigate the social and health care systems from the start.

Should you need care, for example, did you know that one of the options if you are over 60 is to purchase a Care Fees Annuity, which will give you a guaranteed income for life with which to pay care fees.

See my next blog, where I will explain more about the Care Fees Annuity.

Or you can contact us about your individual situation and have an initial discussion to get the right outcomes for you and your loved ones. Find out more by booking a meeting here.