The Care Bill was announced in the 2013 Queen’s Speech, but had its beginnings in the commission on “Funding of Care and Support” led by Andrew Dilnot – issued in July 2011.
Stage one was introduced in April 2015 where a national minimum financial eligibility criteria which, when met by the individual, will see the Local Authority meeting set care costs. In most cases, the Care Costs set by the local authority falls a long way short of the actual costs of care. In most ‘good’ and ‘well-staffed’ homes, the maximum fee paid by the authority will require significant further top-up of fees, which are normally met by the family.
The costs presented to the family are likely to be in the order of £10,000 to £30,000 per year over what will be an indefinite period! This will come at a time when all the resident’s life savings and investments have been used. Rather than agree to fund the full cost of care, the local authority is likely to offer a significantly slimmed down selection of ‘Local Authority’ approved homes requiring the resident to vacate their existing and first choice of home. This places huge pressures on the family of the resident and the staff and home caring for the resident if they are unable to provide further care without placing the entire home at financial risk of closure.
The Deferred Payment Scheme is another key feature of the Care Act, it requires people who qualify, to use the value of their home to pay for care. The local authorities recoup all their costs of care through a charge on the eventual property sale on the individual resident’s passing.
Supporting new and existing residents at the Hollies; faced with these challenging financial decisions, and a desire to support long term permanent care without further worry, we have been working hard to provide a more creative solution to provide security and peace of mind for all concerned.
This does make a great case study and strikes a chord with many care home residents, both new and existing. What they all have in common is a new threat of hardship after a lifetime of investing, thrifty spending and saving for a ‘Rainy Day’. This comes at a time of life where security and peace of mind should be a ‘given’.
We recently had an enquiry from a resident; let’s call her Agnes. Agnes is aged 80 and is currently in a wheel chair following a stroke that she suffered last year. While Agnes appeared to be very healthy in all other respects, the stroke now means that Agnes is paralysed down one side of her body. Agnes lost her husband 2 years ago and has been living in her house for the last 50 years. Agnes was adamant that she did not want to sell her house, “this is where Ron and I bought up our children,” she told me.
Agnes was quite sprightly when I met her but clearly needed specialised care. Her daughter and son were both struggling to support their Mum, and this was causing a lot of family stress.
We looked at the options for Agnes, and agreed a cost for her care of £60,000 per year. Agnes had a good net income of £21,800 from her and her husband’s pension. Over their lifetime, Agnes and Ron had some significant savings and investments worth £230,000 and a property worth £300,000; even with the proposed increase in capital limits Agnes will not benefit from any financial support for care until most of these assets have been used to pay for her care.
Looking to move to The Hollies, Agnes considered her personal expenses, however there was a shortfall in her income to fund her care of £41,200 per year.
Agnes was worried that she did not want to be a burden on her family; she wanted to be able to choose her own care home and remain financially independent. Agnes was also worried that she would have to sell her house, which she wanted to leave to her 2 children. Agnes’s son and daughter wanted to make sure that she was well looked after as Agnes’s mother and father both lived to over 100 years old. Essentially, the family were very concerned about her savings running out in less than 5 years.
One option for Agnes was to invest her savings, but with minimal risk returns, this was unlikely to provide more than an additional 6 months of care before her entire funds had run out.
One option that had not been considered was the option to take out an annuity, so I recommended that they talk to a local SOLLA member. Advisers who belong to the Society of Later Life Advisors have additional qualifications and are registered, governed, licenced and qualified through the FCA.
The SOLLA advisor arranged an application, Agnes’s medical history was assessed, and a bespoke plan was drawn up. Having dismissed the option initially, the costs and cover available came, as a pleasant surprise to the family who had not appreciated how accessible funding care in this way would be.
The plan required a lump sum payment of about £ 190,000 and this provided £40,000 per year to fund the shortfall in care fees increasing by 5% per year. The scheme left Agnes with a surplus of £40,000, which Agnes has immediate access to, as well as her house, which the family are arranging to let out.
The scheme has enabled Agnes to secure her first choice of care home at The Hollies indefinitely without any future concerns. In addition, the plan has maintained her financial independence without the concern of funds running out or relying on the local authority to fund any future care and above all peace of mind for all concerned.
For more information or questions please contact Peter Gardiner, email@example.com