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30th October 2020

Older lady

Covid-19 has made the country’s broken social care system an important political subject, one that urgently needs solving. As with all complex political subjects, the solution will be far from simple.

Most recently, the government has announced that it is considering a new approach to the care funding crisis – they are considering taxing the over 40s more through the National Insurance system.

This is the latest in a long line of solutions suggested by various governments over the years. Some of you might remember the so-called ‘dementia tax’ preceded by the ‘death tax’, solutions that were floated by governments before being gunned down by the opposition.

In 2018-19, local authorities spent over £22bn on social care. While this might sound substantial, it’s actually less than the amount spent a decade ago. And this is against a backdrop of an elderly population with rising care needs.

Many don’t expect to need care, but the costs are real.

Current figures suggest that around 70% of older people receive some sort of care, with more needing it but not receiving the support they require.

Care requirements range from an hour’s assistance at home to full time nursing home care. As a result, the costs vary dramatically.

Estimates place the hourly rate for at-home assistance at around £20. There may also be extra equipment costs depending on individual needs.

At the other end of the scale, those who live in care homes full time without government assistance pay an average of £645 a week for basic residential services. However, specialist care costs more. Dementia care in a specialist home comes to around £900 a week. Costs vary between regions – in the East of England the bill for this kind of care was an average of £1,060 a week.

How is care funded?

There is state support on offer, but only for those with total capital assets worth less than £23,250. Different limits and rules apply in Wales, Scotland and Northern Ireland.

When a person needs care, the local authority will assess them based on the value of their total assets, including property. The authority will then inform the person of the amount they will need to contribute to their care.

At present, less than a third of those who need care are fully funded by their local authority.

Over the years, the cost of long-term care can easily rise into the hundreds of thousands, yet barely a third of over 55s have plans to cover these costs.

Dean Bowen, Independent Financial Adviser at Ascot Lloyd, comments:

"It would therefore be sensible to assume that, should we need care, we will (above certain limits) be expected to contribute at least in part. Although it is difficult if not impossible to plan for this unknown, as the unknown is what care (if any) will actually be required as well as how much will be needed to pay for this, there are steps that should be taken in anticipation of care being needed.

For example, it would be sensible to review all assets at an early stage, ensuring Wills and Lasting Power of Attorney for both Health & Welfare and Property & Financial Affairs are in place, and the whole family and all Attorneys (usually the children) are fully informed about the individuals wishes, needs and finances.

Advice should also be sought at the point of need of an individual entering the care system to ensure that the individual has all the available support he or she needs, and the family (Attorneys) are fully aware of the care procedure and what needs to be done, e.g. Local Authority or possibly NHS assessment, options on how fees can be funded, etc. And then the Attorneys need to be mindful of what is available to the individual while receiving care.

So it’s imperative that professional advice is sought at an early and every stage to ensure that the individual receives the best possible care available, as they or the family may still be paying for at least part of it."

Are you looking for some help?

If you would like to find out more about any of the areas outlined above, or are interested in receiving some advice, please contact your financial adviser and they will be able to prepare you for what lies ahead and help get all of your affairs in order.

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