The political debate is encouraging but people need advice now
In an ageing society, the issue of how we pay for the care of our elderly is a key political issue with direct consequences for millions of people. While proposals are debated, there is a need to ensure older people entering into care every day receive the information and guidance they need on how to pay for it.
Local authorities are legally obliged to help with the care fees for people who cannot afford to pay themselves. In England, people with assets valued at over £23,000 have to pay for their own stay in a care home. Those with assets valued at between £14,000 and £23,000 pay a small contribution, while the local authority pays the entire fee for those with assets beneath £14,000.
A year’s stay in a care home costs on average £25,000 - £35,000 depending on whether nursing is required. This cost is not static and is rising on an annual basis at a rate higher than inflation. Partnership’s data shows that the average stay in a care home for self-funders is four years but one in ten people will stay for at least eight years.
There is a chance that someone may start their stay in care a self-funder, but over time their assets will fall beneath the £23,000 threshold and leave them dependent on the state. This can place a heavy financial burden on local authorities which has not been factored into the public debate so far.
There should be no need for this to happen as a number of private providers offer products that ensure that the elderly do not use up all their capital. One such product is the Immediate Care plan offered by Partnership. This can guarantee an income for as long as the person lives, regardless of how long this is, and can ensure their capital need not fall below the £23,000 threshold. As a result, the product clearly has a role to play in ensuring that councils do not end up footing the entire bill in the future for people who can afford their own care now.
As an Immediate Care plan costs on average £85,000 – compared to the average UK house price of £196,510 in August 2009, according to the DCLG’s index – the majority of people who sell their homes to pay for care will still be left with a capital sum. This benefits the individual as well as the local authority, as they will be able to leave an inheritance for their dependents.
Local authorities need to be encouraged to signpost self-funders to financial advisers with a CF8 qualification from the Chartered Insurance Institute or those who are members of the Society of Later Life Advisers, so that they can receive the financial advice that they need.
The political debate over adult social care funding is a welcome sign that the leading parties are waking up to the challenges presented by an ageing society. However, until this debate is resolved, the ageing population will continue to place significant financial pressure on the public purse. Ensuring that people receive adequate financial advice will mean that they have the information to most effectively plan for the future. Not only will this benefit individuals who face difficult decisions at a vulnerable stage of their life, but it can also relieve pressure on hard-pressed local authorities.
Chris Horlick
Managing Director - Care
chris.horlick@partnership.co.uk
