The financial challenges of care in old age have been confronting successive governments for years, but there’s little sign yet of a solution and new figures confirm that the cost for individuals is still an increasing worry. After the Queen’s Speech offered no prospect of early action along the lines suggested in the Dilnot Report last year – including a cap on an individual’s total contribution to their care costs – healthcare analysts Laing & Buisson painted a bleak picture.
Average annual care home costs, they reckon, have risen to around £27,000, up almost a quarter in five years. Meanwhile, the value of the asset many people rely on to cover these costs – their own home – has typically made no worthwhile gain. The obvious consequence of this is that someone’s total assets will now be depleted more rapidly by care home fees, even if they are able to avoid selling their house during their lifetime by using the secured borrowing sometimes available from local authorities.
Some people may not have to pay, even now, despite having assets well above the modest means-test threshold. Many in Scotland qualify to have care home or nursing home fees paid for them. More widely, some with severe medical conditions may be entitled, via stringent assessment procedures, to NHS Continuing Care covering personal and nursing care. There may otherwise be an NHS contribution just to nursing care.
Against the backdrop of Laing & Buisson’s figures, it is important for an elderly person and their family to know whether pension income and investments will continue to cover residential care fees for their remaining lifetime. Depleted assets could force the family to contribute or arrange a move to a cheaper care home.
One private sector solution to the financial uncertainty of how long someone will live is a care fees annuity bought from an insurance company to pay future fees for life. A care fess annuity, in current circumstances, can be a very effective way to crystallise the cost of impending fees for those with sufficient capital available to purchase one and still have something left over.
Given a care costs cap, or at least greater clarity and consistency of official policy, insurers might be able to develop more products to enable forward-looking individuals to cover themselves at an earlier stage at more moderate cost. A cap would be expensive; maybe the nation just can’t afford it.
