Recent research reveals that the average cost of annual care in a UK care home increased by 9% between 2016 and 2017. For families paying for their loved ones, this means an average total care bill of £84,760 per patient.
It's clear to see that costs like these can have massive implications for the financial wellbeing of the families concerned: ironic, given that the purpose of such homes is to offer support and medical care for those who need it, without the need to place an additional burden on their families.
With this in mind, how can individuals and their families prepare so they are in the best possible place financially should a stay in a care home be needed?
Government and NHS assistance
It is possible to have the cost of care fully paid for by the NHS via the NHS Continuing Healthcare funding scheme. There is little awareness of this non-means tested fund, which requires the individual to be assessed to determine their ongoing care needs. The criteria for acceptance, though, are complex and not readily available, meaning that securing assistance from this source can be a challenge.
An alternative is to apply for government funding to pay care home fees, but this is means-tested. Those who have savings and other assets of below £14,250 may qualify, but they will have to contribute from their own pension pot or another income source. For those with savings of £14,250 to £23,250 help may be available, but the individual will need to contribute an amount that is dependent on a sliding scale. For those with savings and other assets of over £23,250, it is unlikely that funding will be given: instead, the individual and their families will have to pay the cost of care from their own funds, which may involve selling their homes.
Selling property to pay for care
For many, the average sum of £84,760 will not be a figure they have lying around in the bank. While some may be able to cash in investments or a pension lump sum, others may find that selling their property is the only way to cover the fees.
While those with family living in their home will find that it is not included in means-tested allowances, those who live alone may need to sell or re-mortgage their property so that they can afford the cost of care.
Preparing for old age and the possibility of funding long term care are just two of the retirement planning issues we need to consider when building financial plans. Contact us at Fiduciary Wealth to find out how we can help you secure your financial future.