The carefeesadvice.com Blog
The End for the Deferred Payments Scheme?
Last updated 06-Jan-2012 11:27
Is the Deferred Payments Scheme to cease with care providers being asked to pick up the cost of funding those whose property has not yet sold? Rumours about the activities of a local authority in the east of England suggest this may be the case.
We understand that an authority in eastern England has been telephoning care homes stating that the deferred scheme will no longer be offered and asking if they will be prepared to defer their fees until the property is sold.
Clever
The DPS costs councils a lot of money. Although this is a loan and the money is returned, it is interest free and ties up limited resources.
This is a clever arrangement by the authority concerned. They have a legal obligation to consider people for the DPS but would have no reason to do this if care homes did not ask for payment during the period the DPS would otherwise apply.
Risk
Before agreeing to such an arrangement care providers need to think carefully about the risks involved. They could effectively find themselves as unsecured lenders with debts of tens of thousands of pounds. What happens if the property has not sold after 18 months or if the person in care dies and the family refuse to sell the property? Are care providers able to charge interest to at least offset the overdraft costs they are likely to incur and can they charge extra to cover bad debt and legal costs?
Other Solutions
The DPS is ideal when offered because it is relatively low cost to set up and interest free, providing the loan is repaid promptly after the property sale or death. In cases where the DPS is not available we have access to funds that can be lent against a property. These are subject to the property being acceptable and on the market as well as the usual financial checks. Please ask for details.
Request our literature for your care home here
Your experience
We are keen to establish whether the incident above is a one-off or whether other care providers have had similar experiences and with which authorities. Please enter your experiences or comments below.
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Government Must Make Care Funding a Top priority
Last updated 03-Jan-2012 16:55
Failing Social Care Services are robbing the elderly of their dignity according to an open letter to the Prime Minister published in todays (3rd January 2012) Daily Telegraph.
It also points out the economic cost in terms of people who are forced to leave work to provide care for a relative as well as the number of avoidable admissions to NHS hospitals.
The letter urges the Prime Minister to resume all party talks on the future of care funding to consider the future of care funding and how those costs will be met. Especially in light of the promise following the Dilnot report into care funding, to issue a White Paper in the Spring.
The full text of the letter can be read here.
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Care Funding Advice ~ "I learned more about care in the last hour than I have in the past seven months!"
Last updated 08-Nov-2011 10:47
When you need care funding advice what’s it like to have a visit from one of our advisers? Here Kim Hine who provides care funding advice for the Care Fees Advice Agency in Buckinghamshire explains...
I recently met with a lovely couple that wanted to see me about her mother’s situation. Mum had given her permission for them to seek advice on her behalf.
They have access to the internet, had input from Social Services and local surgery but felt they were still floundering with finding out relevant information. As it is normally a one off occasion that families need to help elderly relatives with their care situation, they find it difficult to know where to start.
We had a general chat about mother’s position and they gave me a lot of background information and clarified the family situation. It became clear that Mum’s mental health had deteriorated after a hip replacement early in the year and she had become isolated after friends had found it difficult to deal with her mental health issues. She had been in respite care for a couple of weeks in the summer whilst her daughter and son in law had a holiday and she is coming around to the idea of a permanent move to a care home. Her daughter has had to give up her part-time job as she needs to see Mum every day, providing her with food (although she does have Meals on Wheels), laundry and personal hygiene assistance. Mum has savings in excess of £23,250 having previously sold her home and is now renting, so she would need to fund her own care when required.
I discussed the Lasting Power of Attorney (LPA) with them – most solicitors would be able to deal with this, but in particular members of Solicitors for the Elderly have a great deal of experience in this field. This would be appropriate whilst Mum still had capacity to appoint attorneys and I suggested that this is discussed with Mum urgently and set in place, if at all possible. If Mum does not have sufficient capacity then a Deputy could be appointed by the Court of Protection, but this could mean it may not be who Mum would wish to appoint.
Attendance Allowance had not been applied for and so I provided the contact number for the Benefits Line and recommended that they get the paperwork to apply for the lower rate of £49.30 per week, as Mum required some level of care in the daytime. This is a non-means tested benefit.
We discussed a domiciliary care plan at home, which they did not think would be appropriate. So we talked about finding the right care home, the main criteria being relatively local so that family could visit easily. However, on visiting a number of homes, it was clear how different they are. It really depends what Mum wants; whether that is small or large; lots of activity or quiet; the type of room; old property or modern and of course the cost. It was also necessary to think about the future as Mum may need EMI (elderly mentally infirm) care or possibly nursing care at some point, so if she could stay in the same home, the family thought that this would be preferable. I suggested that Mum considers another few weeks of respite, so that she could get the feel for the selected home and if it was not appropriate they could reconsider another home.
Once the decision has been made for Mum to go into care, I will give the care funding advice options for paying for her care – as we will be in a known position for income and fees. In the meantime I talked the family through the options, in principle – giving advantages and disadvantages of each. They could then broach this with Mum and hopefully answer her questions, although I would be more than happy to meet with her. Their main concern was for Mum to have the care she needed for her lifetime, they were not really worried about their inheritance.
At the end of our meeting they told me that they had learned more in the last hour than they had in the last seven months! They also said that it had been helpful just to unload onto someone who was not directly involved. Of course this is what I deal with day in and day out, but I was delighted to be able to assist with their current needs and to be able to work with them in the future.
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West Sussex Carewise Launch
Last updated 21-Oct-2011 19:18
The scheme backed by Age UK West Sussex, the West Sussex Forum, West Sussex County Council and the Society of Later Life Advisers (SOLLA). It is designed to provide help and advice to those self-funding their care by putting them in touch with relevant advice partners.
The Care Fees Advice Agency is one of the first companies to become an approved Carewise Care Funding Adviser. This means that we have met the following criteria in addition to our normal Financial Services Authority regulation:
- We are members of the Society of Later Life Advisers (SOLLA) through the achievement of the Later Life Adviser Accreditation.
~ We have undergone an enhanced Criminal Records Bureau (CRB) check
~ We have passed a trading standards audit and joined Trading Standards Buy With Confidence Scheme
~ We have completed Safeguarding Adults at Risk training.
These additional requirements are designed to provide confidence in your referrals to Carewise advisers. If you would like to know more please call 01903 550184 or email us here.
For more information about the scheme please see the West Sussex Carewise pages. The Care Fees Advice Agency Carewise pages are here.
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Buy With Confidence
Last updated 11-Oct-2011 08:56
Buy with Confidence is a scheme operated by Trading Standards to approve companies that offer services to the public. Companies that apply have to undergo an audit of their business and allow trading standards to take references from a number of randomly selected customers.
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Positive Care News!
Last updated 08-Aug-2011 08:00
Read "In the end, isn’t home where the heart is" here
Need help with paying for care? Get a copy of our free handbook here.
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Dilnot´s £27.40 a Night Hotel
Last updated 18-Jul-2011 13:23
To get accommodation, three meals a day, laundry and all the other services a care home offers for £27.40 a night seems exceptional value. So we set our minds to thinking about how the government might achieve this?
All of our suggestions would work, but each would cause significant problems for care providers.
1. Cap Charges
The government could cap the amount that care providers can charge residents. Problems:
a) This would effectively be nationalisation of the care industry and many care homes would not be able to cover their costs and would close.
b) This model makes no distinction between the cost of running, for example, a small basic home in a rural town, a home in central London or a luxury country house style home.
2. Pay the Difference
The Government could pay the difference between £27.40 and what the care home charges. For example, a luxury home might charge £100 a night, with the resident contributing £27.40 and the state paying £72.60. This raises some other issues:
a) If the cost to the resident is always £27.40, any business minded care home will increase its fees significantly as they are guaranteed to be paid by the state.
b) Why would anyone choose to move to a more basic care home when a luxury home would cost them exactly the same?
3. Contribute Towards the Cost
The Government could agree to contribute a maximum amount. So, for example, they could offer to pay £50 a night, including the resident’s contribution. This raises other problems:
a) No care provider would ever charge less than £50 a night because the cost to their resident will always remain at £27.50.
b) This is no longer a cap on ‘hotel’ charges, just a contribution of £22.60 a night.
This appears to be another slice of the Fairer Care Funding report that has not been thought through properly. If you can think of ways in which this cap can work, or have other comments, please leave them below.
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Dilnot´s £100,000 Cap Is Not What it Seems
Last updated 07-Jul-2011 08:31
This needs a little more analysis as all is not what it initially seems.
The Current System
Under the current system when your assets drop to £23,250 the state starts to fund your care but they expect you to pay a tariff income which is calculated at £1 a week for every £250 you have over £14,250. At the top of this calculation you would be contributing £36 a week.
Let’s say that the local authority will fund residential care at £420 a week. Mr Jones is a typical person moving into care who has a state pension of £102.15, Attendance Allowance of £73.60, and a private pension of £30.25, giving him a weekly income of £206.
The local authority will top up his income by £274.20 a week to take him to £420 including a contribution of £36 tariff income. Mr Jones will lose his Attendance Allowance and the local authority will allow him to retain £22.60 for personal expenditure.
Dilnot’s System
In future, when Mr Jones’s assets fall to £100,000 he will be entitled to local authority care funding. The lower capital limit of £14,250 remains and so does the current tariff income calculation.
Under the new system, the tariff income is still £1 a week for every £250 you have over £14,250, so for Mr Jones the weekly tariff income is now £343, meaning that he will recieve nothing from his local authority!
Local authority care rates, which have mostly been frozen or reduced for the last 3 years, will need to increase significantly for the £100,000 limit to be anything other than academic.
Tom Scott
Director
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Dilnot Report - We´ve Read It So You Don´t Have To
Last updated 05-Jul-2011 08:58
In a series of blogs I’ll be looking at the report from the Department of Health’s “Commission on Funding of Social Care and Support”, chaired by Andrew Dilnot.
Media reporting has been sketchy and many of the nuances of care funding are often lost in the headlines.
I will be looking at this from an elderly residential care perspective.
Interestingly the report appears to be primarily concerned with the preservation of capital for people moving into care. Little seems to address the main problem that I see daily, which is that the state pays too little for care.
The Cap on Care Costs
The commission suggests that these costs are capped at between £25,000 and £50,000, and prefers a figure of £35,000, which will be increased by £10,000 every ten years.
This is how it would work (taken directly from the report)
- Everyone with a care and support need can ask to be assessed by their local authority.
- If they are assessed by the local authority as having some care needs above a defined, nationally set threshold, the local authority will work out how much it would cost to meet these needs. This would be based on the cost of a typical local authority package for that level of care, in that local area. If the individual’s income and assets are low enough, means-tested support would be given.
- For those not entitled to means-tested support, the local authority would use this assessed care package to determine at what point in time the individual would meet the cap. After this point, the individual would be eligible for free care from the state.
Firstly we appear to be retaining the problem that the local authority set the level of fees payable according to what it feels is reasonable in the local area. Care providers often find that this figure is set too low.
Then we get the paragraph that confirms what may happen in reality, again taken directly from the report:
“The state-funded care element will be based on a local authority care package, but people will be free to top up from their own resources, should they wish.”
This suggests that the new benefit may only be a contribution towards the care costs, rather like the Scottish system, which pays £159 a week towards residential care. You would then be expected to top up to meet the cost of your own care.
In England, the state currently pays for some care immediately without the need to fund in advance through Attendance Allowance or Disability Living Allowance. The report suggests that these benefits could stop and morph into a higher care benefit payable only once your £35,000 has been used.
The key with this section of the report is the level at which the new benefit is set.
I am interested in the commission’s use of a fixed amount rather than a percentage of total assets. The fixed sum is easier to operate but it does mean that the wealthy will do much better out of this proposal whilst those with modest assets will find a comparatively large proportion of their assets used.
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Who´s to Blame for Southern Cross?
Last updated 17-Jun-2011 10:33
This morning I tried to book a room at the Travelodge on Worthing seafront. I could stay in a basic room on Monday night for £57.75. Not bad value.
So, what’s the connection between
Travelodge and Southern Cross?
The press has spent the past few weeks picking over the Southern Cross business model. The idea of selling their homes to landlords and renting them back made the firm profitable and its director’s wealthy in the short term but has now left Southern Cross on the brink of collapse.
The model relied on income increasing each year which it hasn’t for the past few years. Southern Cross is the UK’s largest care provider with around 30,000 residents in its homes and around 70% of those are funded by local authorities.
Here in West Sussex the local authority pays £419 a week for residential care, which is £59.85 a night, or £2.10 more than staying in the Worthing Travelodge.
For that extra £2.10 a week a care home is expected to provide three meals a day, activities, laundry and, most importantly, care.
In West Sussex the rate has been frozen for the past three years but in some areas authorities have actually reduced their rates this year!
Additional taxation such as 2.5% on VAT and 1% on employers National Insurance has hit care providers hard. They are also suffering inflation in fuel and food running at around 6% this year.
Any profitable business that finds itself taxed and regulated more whilst it’s income if frozen or reduced is eventually going to get into trouble.
Unfortunately I do not predict a happy outcome for the residents and their families at Southern Cross. Many care home managers and owners that I speak to now tell me that it costs more to provide care than the local authority pay. They make a loss for every local authority resident they accept and they don’t intend to take any more.
Unless the State pays more, the figures for care no longer add up. Our elderly and vulnerable people deserve rather better than this.
The above is the personal view of Tom Scott.
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The Law Commission Report
Last updated 11-May-2011 10:19
Today’s report from the Law commission is a positive development although unlikely to cause much surprise in the care sector. That the current system is ‘flawed and outdated’ is not news for those of us that work with this legislation.
Law Commissioner Frances Patterson QC said: “Today signals a significant step in moving us closer to a clearer and more coherent framework for adult social care. Our recommendations will bring much needed clarity and accessibility, and have a major, beneficial impact on the lives of many of our most vulnerable citizens.”
Currently one person can have their care needs assessed by three different parts of government for different care and benefits, leading to stress, confusion and inconsistent outcomes.
The confused legislation means that local authorities have effectively set up their own social care systems causing entitlements that are different across the country.
Many people find it difficult to understand what they are entitled to and how to access the help that they need.
What will happen next?
Initially nothing. This report begins a narrative on social care that will be picked up again in July when Andrew Dilnot’s commission on funding social care reports.
This is the important one because the current funding system is broken virtually beyond repair. Local authorities have consistently tightened what they will pay for care on a ‘take it or leave it basis’ and the resulting fee is frequently lower than the cost of providing the care. The UK’s largest care provider is in significant difficulty and many more will follow. More on this in a later blog.
A white paper is planned towards the end of this year with legislation in 2012.
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Would you like financial foresight?
Last updated 06-May-2011 11:47
If you are paying for care and you run out of money, providing you meet the needs assessment, the local authority will pay for your care. There should be no problem, until you learn that most local authorities have frozen or cut the rates they pay this year, having frozen rates, in many cases for the previous two years.
Most care homes can no longer afford to let people remain in their existing accommodation on local authority rates and are forced to offer a series of unpalatable choices. If no one else will top up your fees some homes may move you to a cheaper room or ask you to share. Alternatively you will have to move to a local authority funded home.
It would be better if this didn’t happen and that is why we launched the Foresight report. For £120 this gives you an overview of your financial situation, an indication of the level of fees you can afford or a projection as to how long your money might last if you simply leave it in the bank.
We will also explain some of the options available that might guarantee you an income for life.
Please call us for more details 0800 078 7430
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Local Authority Care Funding to Reduce
Last updated 23-Feb-2011 13:21
We expect that other authorities will follow this lead.
Why this matters?
If you, or someone close to you is considering care, you will appreciate how difficult it is to find quality care at the existing local authority rates. These are usually significantly lower than private funding rates. Going forwards care homes will find themselves under increasing regulatory pressure coupled with rising costs such as fuel, food, employers National Insurance, VAT and wages whilst facing a reduction in their income.
We fear that this proposed reduction in funding will cause many homes to ask local authority residents to leave or pay top ups. The alternative may be to face going out of business.
The cut will make it even harder to find a care home that will accept local authority funding and self-funders who run down to £23,250 will more frequently be expected to top-up or asked to find an alternative home.
Cross Subsidy
Many people who have been forced to sell their homes to fund care will now be effectively subsidising their local authority. This is the equivalent of an additional council tax for those who are paying for their own care.
Many of these people feel that the state should be funding their care anyway; they will be shocked to find that they are now being asked to contribute towards the care of others.
Options
There are many funding options open to self-funders when moving into care and it is often possible to fund care for life and preserve some assets for the next generation. No-one wins when funds run out. Specialist firms such as ours can offer a real benefit in ensuring that the funds available are put to the best possible use.
Please click ’Enquire’ above for more information or telephone us on 0800 078 7430.
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Pay for Care Without Selling Your Home
Last updated 08-Feb-2011 15:31
In the past our clients had to sell their home when the time came to fund care.
Things have now changed since the introduction of a care funding product that mixes an immediate care plan with an equity release mortgage.
A care plan guarantees an income for life that can be used towards meeting care fees in return for a lump sum premium.
Instead of writing a cheque for the premium, it can now be lent as an equity release mortgage against the property. No mortgage repayments are due during the life of the loan and the interest is added to the loan.
Unlike most similar schemes, the property can usually be rented once the plan is set up. This might reduce the income consequently lowering the care plan premium.
Alternatively, the income can be used to pay for a live-in carer.
It’s an interesting option that gives those funding care more choice of how they secure their funding.
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Care Fee Top Ups During the Twelve Week Disregard
Last updated 26-Jan-2011 12:37
This blog has been prompted by yet another call from a potential customer who has been misinformed about the rules regarding fee top-ups for people on the local authority 12-week property disregard!
To recap, when someone is assessed by the social services department at their local authority as needing long term care they also have a financial assessment to see whether the authority should be meeting the cost of care. If the person owns a property but has less than £23,250 in savings (it’s a bit more complex than this in reality) the local authority will fund their care as if the property doesn’t exist for 12 weeks. The idea is that they have time to sell the property to put the finance in place to fund the care.
Many people who will be self funding their care will chose a care home that costs more than the local authority will pay. During this period they can use their own assets to top up the local authority contribution to meet the fee required. This is important because it allows people to access the care home of their choice.
What’s the Confusion?
Many people are told they cannot top up their fees by local authority staff. The reason for the confusion is that if their total funds (including any property) were below £23,250 and the local authority funded their care they are not allowed to top up their contribution from their own funds. Any top up has to come from a third party, such as a relative.
As with all matters to do with funding care, the practice is usually more complex than set out above. Please use the above for general guidance only. We would be pleased to advise on specific cases.
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A Local Authority tax on Self Funders?
Last updated 13-Dec-2010 17:02
Research published this week by the Economic & Social Research Council at the University of East Anglia uncovers a worrying trend in which local authorities may be driving up the cost of care for private ’self-funding’ care home residents.
In effect, ’self-funders’ are being asked to pay more, so that local authorities can pay less. This is effectively a tax on those that are paying for their own care. It is also possibly short sighted in that most self funders have limited assets and will require future local authority funding if their private fees rise too fast.
A copy of the report can be downloaded from UEA here
The report states...
In a paper published by the ESRC Centre for Competition Policy at UEA, Professor Ruth Hancock and Professor Morten Hviid argue that those in the ‘squeezed middle’ - people no longer willing or able to pay the increased price but not eligible for support - will be the big losers. Those who can still afford to self-fund will also have to pay a higher price. The study also suggests policy issues in relation to possible reforms to the care funding system.
"An important lesson from the care home market is that where the public sector purchases alongside private buyers, urging the public sector to use its buying power may lead to unintended consequences for the price that private purchasers pay," added Prof Hviid.
Exercising their buyer power enables local authorities to spend less on care home places, and so more on other services, or to buy more places. The cost of this is borne by self-funding care home residents and the authors question whether they are the appropriate group to be paying for this
The Eastern Daily Press ran this story on Monday and included an interview with Tim Leadbeater, chairman of the Norfolk branch of the Nursing Homes Association. He believes that many care home staff are shouldering the financial burden created by local authority deals which often mean that care is being purchased for below cost price. He believes that the practice is wrong and that charges should rise to reflect the true cost of the care being provided.
Unhappy about this? Contact your MP here
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Even Good Care gets a Bad Press
Last updated 13-Dec-2010 11:00
Trailed on the front of Saturday’s Guardian Weekend magazine was the headline ’No Way Out - Inside a residential care home’. Turning inside, the article was strange and misleading.
The text was positive and thoughtful, written by a lady who has recently placed her mother-in-law into a dementia home. She discusses the dilemma she felt and about whether her mother-in-law was ready for care and about the difficulty of caring for a person suffering dementia at home. She explains why she feels that her mother-in-law is better off in a home rather than at home and how she can invent her own reality there. She describes the home, based in northern Scotland, as caring and comfortable.
The writer of the text even says that she doesn’t think her mother in law would have done so well in the home in the pictures.
So why do this? Here is a positive piece about how good care can improve the quality of life. There is enough stress for families placing a loved one in care so why not show pictures of the Scottish home with its carpets and soft furnishings to give an indication of the type of quality care that is now available? People paying for care have a choice.
The pictures and text are still available at the Guardian website. Search for ’Inside a Dementia Ward’.
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Deputy Orders and Immediate Care Plans
Last updated 09-Dec-2010 09:26
A few days ago I came across a client who was no longer capable of making decisions for himself. As no power of attorney had been set up the Court of Protection had appointed his son as a Deputy under a Deputy Order to manage his affairs.
One of the obvious solutions for funding his care was the purchase of an immediate care plan (sometimes called a care fees payment plan or a care annuity) but both the son and his solicitor were concerned that the Court would not approve of such a plan.
Our experience suggests that these plans are usually accepted by the Court. They are clearly for the benefit of the individual in care in that they provide an income for that persons lifetime. Done properly, that person should never run out of money and so they can keep control of where they receive their care. The fact that they might also protect some of the remaining assets for the beneficiaries is secondary and would usually be in line with the persons wishes anyway.
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20,000 Homes Sold to Pay for Care Part 2
Last updated 11-Nov-2010 08:42
Yesterday we looked at some newly published statistics that showed 20,000 homes are sold each year to pay for care. An article in the Daily Mail on 9th November described this as shocking and compared the plight of those that have worked hard, saved and bought their own home, with those that have nothing and get their care paid for free.
I thought it might be worth explaining what people who receive free care actually get, so that those who are funding their own care can see why it is often worth paying.
Let’s take West Sussex where our head office is based. Here the local authority believe that residential care can be purchased for £419 a week.
To be clear, you don’t receive £419 a week; you actually get your current income topped up to that level so you effectively lose your state pension, pension credit, private pension, attendance allowance and any other income. You are allowed to keep £22.30 for spending money.
£419 a week is just under £60 a night, similar to a ’room only’ rate at a budget hotel. For that a care home is expected to provide you with a bedroom, three meals, personal care, laundry and possibly entertainment.
The list of homes prepared to do this is not long, which means for many people they have no choice over where they live. They may not be close to family and friends.
Paying for your own care gives you choice. Choice over the location you live in. Choice over who you live with. Choice over whether you live in a large corporate or a small family run home.
If you’ve been making your own decisions throughout your lifetime, you are unlikely to want those decisions made by the state in your later years.
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20,000 Home Sold Each Year to Pay for Care
Last updated 10-Nov-2010 14:34
According to the Daily Mail (09/11/2010), who appear to have their information from Lang & Buisson and the House of Commons Library, over the past five years the number of people selling their homes to pay for care has increased by 17% since 2005 to 20,000. That’s 60 a day - a huge number of people.
Whilst this is true, the issues are perhaps a little more complex and are worth investigating further, which I will do over the next few blogs.
Firstly lets have a look at all those people who are getting free care. Are they really scroungers and spongers? Some of them undoubtedly are, but the rules that govern local authority care funding are reasonably well written which means that it is difficult to hide money and get the state to pay when you should be paying yourself.
Most of those that I have seen over the past 8 years are people who have simply not been as fortunate as others. Many have worked hard but never earned enough to buy a home or save money.
The care system is a part of the welfare state. These are exactly the people it is there to protect.
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BBC Survey and cuts in Local Authority Care
Last updated 09-Nov-2010 17:20
They received a response from 87 authorities and the results were enlightening. Over half of those authorities expressed concern about care funding and warned that there would be some tough decisions to make.
Almost all authorities (86/87) were investing in short term intervention services such as intensive tempoary care to help people re-gain independence. To me this is facinating because it is cuts that have caused authorities to look more closely at the way they spend money. Short term intervention may be expensive, but if it can give someone back their independence it will be cheaper over the long term. Better still, it gives someone their quality of life back.
We get very frustrated with Local Authorities. They mostly refuse to refer people to companies such as ours that provide a specialist advice service that can help people funding care avoid running out of money. If we are sucessful not only do the local authority save money but the person concerned retains their indenedence and control over where they live. It can also mean that money is preserved for their family so everyone wins.
Interestingly 72 out of the 87 authorities that responded to the survey said that they were considering changes to the amount that they charge for care.
It would be a shame if people were charged more for care when there is a clear way that money can be saved elsewhere.
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Is a Care Annuity worth having?
Last updated 21-Oct-2010 14:07
Firstly, let’s get our terminology right. Some call these immediate care plans, others use the term Care Annuity. One company even calls them immediate needs care annuities. For the purpose of this blog we’ll use "Care Annuity" although they are all one and the same thing.
A care annuity is a pretty simple product. Here’s an example to bring it to life.
Let’s say that you are moving into a care home and the fees are £3,000 a month. You already have an income of £1,200 so you know that each month you are going to need £1,800 in order to meet your fees. This will increase each year when your fees rise. You have £180,000 from the sale of your home and you have no idea how long you might live.
If you put the money in the bank and live for more than around six and a half years your money will run out. Unless your care home are very generous it is unlikely that they will accept local authority funding so you may have to move home.
Plus you still have £90,000 left over so if you have a family it is likely that you will be able to leave them something.
And this is what is great about care annuities or immediate care plans. They bring a degree of certainty to a very uncertain situation.
For more information have a look at our page on the care annuity/immediate care plan
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Good times for a change - Septembers inflation rate is 3.1%
Last updated 12-Oct-2010 14:27
Septembers index is used to calculate the rate at which benefits increase, so this means that in April 2011, benefits such as Attendance Allowance and Disability Living Allowance should all rise by 3.1%.
The coalition governments decsion to calculate benefit increases on the lower CPI rather than the previous Retail Prices Index (RPI), which includes an allowance for housing costs, has meant people receiving benefits have lost around a third of the increase they would have had under the old system.
We’ve been busy with our calculators today to work out what this would mean in pounds and pence if these increases go through in April. Here are our results.
All of this is still subject to the comprehesive spending review on 20th October and we’ll advise if anything changes.
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Why is the cost of Nursing Homes so High?
Last updated 12-Jul-2010 15:37
Lets look at these figures in more detail. That fee, £540 a week equates to £77.14 a night. I just attempted to book myself into the Premier Inn in Littlehampton tonight and, by co-incidence, the cost came to £77.00. Almost exactly the same price as a care home.
Or is it?
If I'd wanted to have dinner and breakfast the bill rises to £97. I don't want to fast at lunchtime so let's say that's another £5 and then another £3 for a cup of tea and a piece of cake in the afternoon.
I guess I'm going to need my clothes washed from time to time - just for the benefit of other residents - let's say another £10 a week for that.
So I've now found that to stay in a modest hotel and receive similar services to those I might have had in a care home is working out at £747 a week; and that's before I've had any care at all.
When compared to other options suddenly the cost of nursing homes or care homes looks remarkably good value.
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Our Budget Priorities - A Care ISA?
Last updated 21-Jun-2010 13:30
Many 'self-funders' feel that their care should be funded by the state. They see it as a huge injustice that as soon as their home is sold to pay for care and the money invested, the tax-man immediately wants a share.
This reduces the return they receive and means that their money falls in value faster.
It is also counterproductive; without the drag of tax on their investments, many people could fund their care for life and preserve some funds for their family. Instead the treasury get their income and capital gains tax but leave the local authority to pick up the care bill when the money runs out.
Our Solution : The Care ISA
This would work like a regular ISA. When you invest you get your investment income (mostly) tax free and pay no capital gains tax. Our plea to Mr Osbourne would be for an ISA for people buying care services.
Where this would differ from a regular ISA would be in the amount that could be invested. A normal ISA currently allows a maximum investment of £10,200 a year. The Care ISA would allow the entire proceeds of a house sale to be invested, maybe to a maximum of the average house price each year. The ISA could then be used to pay a monthly amount to a bank account to pay the care fees.
People funding their own care would no-longer be forced to pay more tax than those remaining in their own home. It could save the exchequer a few pounds by encouraging investment for care funding and avoiding many running out of funds.
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Free care for the elderly? There´s got to be a better way
Last updated 09-Apr-2010 21:43
The National Care Service White Paper
It has taken me a little while to dissect the latest government white paper on funding care launched by Andy Burnham on 30th March. Now that election campaigning has begun the prospects of some of this ever seeing the light of day may appear slim.
The key pledge is that residents in care homes will receive free care after two years in residential care. This is what the white paper contains on page 131.
Free care for those in residential care for more than two years
In the second stage of reform, we will build on the Personal Care at Home Bill, and introduce a new commitment that anyone staying in residential care for more than two years will receive free care after the second year. This commitment will be introduced from 2014, and will apply to those already in residential care as well as those who may go into residential care in the future.
We want to ensure that people who need care and support are able to stay in their homes and communities for as long as they wish to do so. However, we know that some people will prefer, or may need, to enter residential care - for example, if they are living on their own or their care needs are increasing. The costs of care in a residential setting can be very high. We estimate that, on average, people currently pay around £12,000 per year for their care costs in residential care.7 Around 5 per cent of all those who enter residential care will stay for over 10 years,8 and this could cost them over £120,000 in care costs alone.
In the current system, people in residential care often need to spend down their savings and the value of their home, to the last £23,000, before they receive any support from the state. We think that it is unfair that people can face such catastrophic care costs, without any help from the state. Therefore, in the second stage, anyone staying in residential care will receive free care after the second year.
Local authorities will assess people's needs, and will provide support on the basis of what they would reasonably expect to pay for someone with those needs. If people have chosen to enter a care home where the costs of care are higher than this assessed amount, people may need to make up the difference. People on low incomes will continue to have all their residential care costs paid for them by the state.
Together with the Personal Care at Home Bill, this commitment will mean that the most vulnerable in society, those with the highest needs, are protected from very high care costs, wherever they may need care.
Around 60,000 people, who previously would have faced very high residential care costs on their own, will now benefit from state support for their care costs. This will be a significant step towards a comprehensive National Care Service.
People will ‘benefit from state support for their care costs'; the state is NOT going to pick up the full cost of care. So what is the state going to pay?
The White Paper makes a clear distinction between ‘care costs' and ‘accommodation costs'. Care costs will be paid for up to the level that the local authority ‘would reasonably expect to pay for someone with those needs'.
Currently those with less than £23,250 find that a local authority's opinion on what they might reasonably expect to pay for care bears little relation to what most care homes charge.
Disappointing
Deferred Payments Scheme
Interestingly, the government recognise this and has committed to make the deferred payments scheme an entitlement. This scheme offers an interest free loan to meet care costs secured against a property.
The scheme means that no-one need sell their home to fund care, although, realistically at some point the home will need to be sold.
People who opt for the scheme may find the property value being entirely used up in the event of longevity. If the property were sold, products such as care plans could protect some of the estate.
Is there a better way?
I am puzzled by these proposals, particularly as they come from a Labour government.
Wealthy people will be able to fund their care privately for two years and will be grateful for the protection of their assets that this scheme gives, as will their beneficiaries.
Those with limited means will find their estates decimated by meeting the cost of care for two years.
Currently people in the worst situation are those with between around £30,000 and £130,000. They get little or no help from the local authority in finding care, and no guarantee that the local authority will pay for their care in their chosen home when the money runs out (which in most cases it will - although we can often improve the situation).
They spend their two or three privately funded years worrying about whether they will have to move when their funds expire.
These are the people who taxpayers money should be used to help.
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Failed Again - Unfair to the poorest
Last updated 30-Mar-2010 08:18
We have learned that the Health Secretary, Andy Burnham, will today rule out a 'death tax' to fund long term care.
It will be replaced with new laws to cap the cost of residential care after two years in a home, which will be funded by the freezing of inheritance tax for the lifetime of the next parliament, increasing the state retirement age to 65 for all and by efficiencies in the care system.
What Mr Burnham fails to see is that the people in greatest need are those who have a relatively small amount of assets. They get no help from social services because they are 'privately funded' - despite the fact that they will only be privately funded for a short period of time.
They spend their privately funded time in care worrying about whether they will have to move to a cheaper home when their money runs out - which it will.
We see many people with retirement flats valued at around £70,000 and another £10,000 in savings. Their estates will be continue to be decimated by Andy Burnhams proposals as I understand them.
However, if you are a millionaire, the Government has helped you to protect virtually all of your estate.
Is this what Peter Mandleson meant when he talked about being 'intensely relaxed about people being filthy rich'?
P.S. the Guardian has this piece today from Andy Burnham. If the comments below are a true representation, then I think he might have some trouble selling this policy!
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Actions Speak Louder than Words
Last updated 25-Mar-2010 17:43
I've kept quiet on this blog whilst the polictians have argued over the future funding of care. Sadly I don't believe that the discussion will continue past 6th May.
Recently I've been told by a number of care homes that West Sussex council is not increasing its 'band P' funding at all this year (we're based in West Sussex). This is the rate that the majority of elderly people in the county receive when the local authority is funding their care.
I've not been able to verify this as the new rates are yet to be published on the council website and I'm interested to learn whether this is just something that affects Sussex, or whether all local authorities are at it.
Are our politicians saying they will fund care whilst freezing care funding? Is this a national problem or just a couple of councils?
If you know what your council is doing - enter it in the comments box below. It would be useful to get a national picture of what is going on.
Why is this important?
Costs are rising for care homes. CPI inflation is running at 3.5% currently. If local authority care funding is frozen the only place that care homes can get their money from is by increasing the fees for private residents.
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Free Personal Care and the Law of Unintended Consequences
Last updated 04-Feb-2010 16:01
We were surprised when Gordon Brown announced a package of non-means tested, free personal care for England. Whilst I witnessed no dancing in the street there has for some time been clear resentment that England gets a raw deal on care compared with Scotland. This could begin to redress the balance.
Sadly last weeks survey came as rather less of a surprise. A poll of 61 heads of Social Services by The Association of Directors of Adult Social Services (ADASS) suggests that the government has got its sums wrong and significantly underestimated the amount of care required and hence the cost.
So what impact could this have?
Sadly where money pressures arise, poor practice often follows.
Here's what might happen.
Currently your Social Services department is providing care visits but because you own a nice house and £30,000 in a savings account they ask you to pay.
Now let's imagine how this might play out after Autumn...
Social Services can no longer charge you for the care you receive but they have not been given enough money to fully fund it themselves. They have hundreds of people on their register who are at risk and where their budget should be prioritised.
If Social Services can encourage you to move into a care home your savings and property mean you will be self funding. That is, Social Services will know that you are safe but they won't have to pay a penny towards your care home fees.
Don't blame Social Services. In my experience these are good people who have limited resources with which to help a lot of people. If the government is going to offer free personal care, it needs to make sure that it is funding every penny so that care decisions are based on care needs not money.
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Why the Government will Never Fund Your Care
Last updated 18-Jan-2010 16:42
I am often faced with people who have worked hard all their life, gone without and saved hard and who now believe that their care should be fully funded by the state. They bought into the NHS when it was launched as a cradle to grave free service and feel that now they need it, it should be there.
Before we go further it is important to define what we mean by care. A government minister could claim that care is already funded through the Attendance Allowance benefit, and to a degree, they'd be right. Attendance allowance is £70.35 a week at the higher rate, and as most carers are underpaid, earning around the minimum wage, this would buy you around 10 hours of care a week. The state also funds the care in full for people who meet the NHS continuing healthcare criteria.
However, what most people regard as care is a stay in a care home and this is something rather different. Firstly it's much more expensive. The average cost of a residential care home in England is £475 a week, although many charge significantly more. In addition to your care you are also buying prepared food, accommodation, heating, lighting, laundry, entertainment and a host of other services, all of which you would have to pay for if you lived at home.
So why won't Government fund your care when ministers will talk about elderly care being a priority? It has nothing to do with a lack of money as the position was the same when money was plentiful.
The answer is 'inheritance'.
Funding care is a politically dangerous thing to do. If the state funds care for people who can afford to pay for it themselves, in reality all they are doing is using taxpayers money to fund an inheritance for the next generation.
I am no supporter of the current system. It peanalises those with lower value property disproportionately to those with higher value assets. It is highly regressive and grossly unfair.
Over the next few weeks we'll be looking at some ways that it could be improved but it is unlikely that the state will ever fully fund care, if you own your own property or have substantial savings.
How would you improve the current system. Enter the debate below....
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Introducing....
Last updated 11-Jan-2010 21:13
Hello,
My name is Tom Scott and I'm a director at carefeesadvice.com. This blog is about my experience of the care industry, government and the financial services industry and what happens when the three meet up!
These are my personal opinions and I'd like to hear yours. Please enter your comments or questions below - I will aim to respond to them personally.
Tom
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3 responses to 'The carefeesadvice.com Blog'
Tom at The Care Fees Advice Agency
Added 11-Mar-2011 11:00
Thank you for your comments and question.
You are in what might be termed as a grey area and ultimately this will be decided by your local authority (LA), which possesses a reasonable amount of discretion here.
If you have not already done so, I would recommend downloading a copy of the Charging for Residential Accommodation Guide from the Department of Health website. Section 6.068 says “There may be more than one purpose for disposing of a capital asset only one of which is to avoid a charge for accommodation. Avoiding the charge need not be the resident’s main motive but it must be a significant one.”
Money that was gifted before there was any possible need for care would usually be disregarded. It would be difficult for the LA to argue that the original gifts were made to avoid care costs as this was some five years before the need for care arose. However, they may take a firmer view with the more recent gifts. On this subject CRAG says “The timing of the disposal should be taken into account when considering the purpose of the disposal. It would be unreasonable to decide that a resident had disposed of an asset in order to reduce his charge for accommodation when the disposal took place at a time when he was fit and healthy and could not have foreseen the need for a move to residential accommodation.”
If the gifts had been made within 6 months of the assessment of needing care, the LA could have made the recipient of the gift liable for charges up to the value of that gift under the Health and Social Services and Social Security Adjudications Act 1983. Outside of this timeframe the LA only has the option to refuse funding, but this may be difficult if the person has no other options.
I would be interested to hear how you get on.
Kind regards,
Tom Scott
J Lloyd
Added 06-Jan-2012 10:30
I’m based in Essex and had a call from my council asking if my home would do this. I don’t see how we can - we still have to pay the staff, council tax, heating etc.
They told me that most homes had agreed. Is this true?
Michael White
Added 11-Mar-2011 11:00
Since my father’s death in 2005 until August 2010, my Mother lived with my brother and his wife, following the sale of her house in that year. Following a fall in the home and a short stay in hospital for a fractured shoulder, my mother was admitted to a Nursing Home for an assessment (she is blind, has type 2 diabetes and is unable to walk). It was decided that she would need long term nursing care in the home.
Since my father’s death, my mother has given 3 fairly substantial gifts of money to her 3 sons, their children and grandchildren, in 2005 (following the sale of the house) in March 2008 and March 2010.
She is now being financially assessed by the local social services for her care home fees. Where do we stand for the cash gifts she made and what happens if the money has been spent? We fully expected that she would see out her days at home with my brother and his wife and there was no intention of giving the money away to avoid care home fees.
Best regards,
Mick White