Around 70,000 family homes have to be sold each year to fund long-term care fees for their elderly owners, says Moira O’Neill in Money Observer. And as the population rises, this number can only rise too: around one in ten 75-year-olds need residential care, and this proportion rises for people in their 80s or older.Yet in recent years, a collapse in supply (74,000 care places have been lost since 1996 as a rising tide of regulations has led to many homes shutting down) and steady demand has pushed up costs. Residential care now costs £465 a week. But don’t expect the state to pick up the tab. Unless you require the highest level of nursing care (in which case you qualify for £125 per week), anyone with more than £20,000 in means-tested assets – including property – must pay the full cost.
So how can you avoid selling your home to pay for care, hence depriving your children of their inheritance? One option, if only for a minority of the population, is to delay drawing your pension for as long as you can. If you are not well when you finally take it, you can buy an ‘impaired life annuity’ that pays out a much higher than normal income. The second option is to take out a ‘pre-funded’, long-term care insurance policy, says Harriet Meyer in The Daily Telegraph. However, this cover is expensive (a woman aged 65 would have to pay £181 a month to receive £1,000 a month towards care fees in the future, should she ever need them), and so is dependent on you having a high-ish income in the first place.
There is also only one provider, Skandia. Another alternative – but one that, again, will only suit the well off – is an “immediate-needs” annuity (on offer from PPP Lifecare and Norwich Union). These high-income annuities are bought with a lump sum once you decide that you or a relative needs residential care, and can be a good way of paying for open-ended care, says Helen Pridham in The Observer. The downside is that if the patient dies promptly, there will be no return of capital to the estate. But if the patient lives for many years, it may turn out to have been a good investment, paying out significantly more than you paid in and letting you keep the house. Immediate-needs annuities are effectively a bet on life expectancy.
If none of the above are any good to you, don’t despair, says James Daley in The Independent. You still may not have to sell. If you and your spouse own your property as tenants in common, for example, or if another family member lives in the house, the council cannot force you to sell up. Equally, the owner’s home must be disregarded from any means test if he intends to return to it after a temporary stay in care.
For more advice, ring 0870-382 4400 for a free copy of The Daily Telegraph guide to Choosing and Funding A Care Home, or visit https://www.careaware.co.uk/.