The number of people living in care homes is steadily increasing, due to an ageing population and longer life expectancy. This can mean you end up facing some hefty bills in later life, with the average care home costing around £30,000 a year, and many people won’t be able to rely on the state to pick up the bill. But if you face the prospect of funding your own care-home costs, there are ways you can keep the bill down.
The first step is to work out exactly how much state support you are entitled to. Unfortunately, this is far from a simple task. Last week the Competition and Markets Authority released damning initial findings from its investigation of financial practices in the care-home industry. It found that it was very difficult to understand how the funding system works, and that steps must be taken to make it simpler.
These criticisms were supported by news from specialist law firm Hugh James Nursing Care, which has said that it has now recovered over £100m for clients who had wrongly paid care-home fees. “All too often, individuals and their families are needlessly forced to sell their homes and other assets or investments to pay for care,” says Lisa Morgan, partner at Hugh James.
Hence it can be wise to get some expert advice when working out whether you will have to pay for your own long-term care, and there are specialist independent financial advisers who focus on care-home fees. These advisers can guide you through the immensely complicated means test, and help figure out if you’re eligible for certain state-funded services.
If you’ve done all your sums and found that you do have to pay for your own care, then there are ways you could significantly cut your costs. The key is not simply to pay the price the care home quotes you. The average self-funder pays £36,000 a year for their care-home place; that’s 43% more than the local authority pays, according to healthcare researcher LaingBuisson. If you’re not sure how to negotiate a better rate, see the column on the right for ideas on organisations that may be able to help.
How to ensure you don’t pay over the odds
“Self-funders’ fees are used as a form of taxation, subsidising the fees paid by local authorities,” Joan Mansfield, a former care-home inspector, tells The Times. “While local authorities, with their purchasing power, can negotiate substantial discounts on the cost of care, the self-funder is on their own in any negotiation and has to pay the full fee.” Mansfield has now launched the Care Co-operative, designed to help people cut the cost of their care.
This co-operative is a network of 50 care homes across the UK that have agreed to offer discounts of up to 25% to self-funders who find a place via the website. The idea is that by uniting through the websites, self-funders can enjoy the bulk discounts usually reserved for local authorities. One user told The Times that they saved £2,000 over six months, after they were able to get a 10% discount on their mother’s care-home fees, taking the weekly cost down from £700 to £630. You can join the Care Co-operative for a one-off fee of £19.50, then search the website for places at care homes in your area.
Another option is to go to a company such as the consultancy Valuing Care, which will assess whether a quote you have received from a care home is fair, based on data it has accumulated.
If it doesn’t think you are getting good value, it will negotiate on your behalf, with the aim of getting a discount. This can be especially useful if you, or a family member, is already in a care home, but you are unsure if the fees accurately reflect the care they are receiving. The cost of this negotiation service from Valuing Care varies depending on whether or not you find a care home yourself. If you do, the service costs £480. If it proposes homes for you, the service costs £660.
In the news this week…
• Don’t assume that you don’t need to worry about your mobile phone because you have insurance, says Rebecca Rutt on ThisIsMoney.co.uk. Policies vary enormously and you may not have the level of cover you expect. Of the 131 mobile-phone policies on the market, 35% won’t pay out if you lose the phone and 37% won’t cover you if calls are made or data is used by the thief. Given that insuring an iPhone for a year is likely to cost over £100 (O2 charges £150) and the average home-insurance policy costs just £120, it may be worth adding cover to your home insurance. Most policies will allow you to add cover for all personal possessions outside the home for around £30, provided no item is worth more than £2,000. Just note that 13% of policies have a limit of £350 if you claim.
• One in four wealthy London property owners is trying to sell their house “off-market” owing to market uncertainty, says James Pickford in the Financial Times. A quarter of estate agent Hamptons International’s £1m-plus sales in London this year weren’t advertised publicly, up from 14% in 2014. The super-rich traditionally like to transact “under the radar” because of security and privacy concerns, but today’s vendors are more concerned with trying to achieve their asking price without any online public record.
This is down to the “glut” of high-end properties for sale in central London, says Oliver Hooper at buying agent Huntly Hooper. Selling privately can backfire, however, he says. If you’re one of a handful of serious potential buyers who have been introduced to a property and after a fortnight no one else has made an offer, “you’ve got a free run at it”. From the seller’s point of view, not testing the market “isn’t always a good thing”.
• Company directors are “twice as likely” to be the victims of identity theft and should therefore take extra care to protect personal information, warns Aime Williams in the Financial Times. Identity fraud reached record highs last year, rising 68% since 2010 to 173,000 cases. A fifth of all victims between 2012 and 2015 were company directors, with criminals using data available from Companies House to “target their victims”.