FOOL'S EYE VIEW
The High Costs of Residential Care

By Jane Mack (TMFJane)
February 17, 2004

Many years ago, I accompanied a friend to visit her rather confused great-grandmother who had recently moved to a residential care home. It was pretty grim - the care home, that is.

Admittedly, it was rather a long time ago and I was too young and uninterested to assess whether it was a good care home or not. The things I noticed were the appalling brown, orange and purple colour scheme, the fact that she was sharing a room with a total stranger and the rows of old people staring at a loudly blaring television set.

The great-grandmother had come from a fairly well-to-do background and, in her less ga-ga days, wouldn't have dreamed of using brown, orange or purple as a colour scheme in her home let alone all them together. Neither would she have had a clue how to play Bingo which was, apparently, a popular form of recreation.

The reason this experience has sprung to mind recently is because, as you may recall, my elderly in-laws have become rather frail recently. Having a carer pop in to help them a couple of times a day is working fine at the moment but my mother-in-law occasionally mentions the idea that the two of them would be better off in one of the local care homes.

The two she's mentioned by name are privately run and rather nice. It's just that for the two of them they'd need an annual income of around £70,000 and, while they're comfortably off, they haven't got anything like that kind of income.

Even the cheaper local authority or charity-run care homes would be beyond their means (£20,000 per person per year is not uncommon) and besides, my mother-in-law knows even less about Bingo than the elderly woman I mentioned earlier. Bridge is more up their street. Either way, because they've got 'too much' money they'd have to pay for the care home themselves.

The rules for working out how much of the care home fees you have to pay yourself are based on your assets and your income. Essentially it boils down to the fact that if you have more than £19,500 in capital you will be charged the full cost of residential care before the local authority will chip in and help. (In Scotland the limit is £18,500 and in Wales it's £20,000).

Naturally, when discussing assets, your home is included. You can't be forced to sell it but if you don't and can't pay the fees otherwise, then the local authority will claim it all back from your estate after your death. However, your share of the family home won't be included if you've got a spouse, partner or a relative over 60 living in it and note that it is only your assets and income that are means-tested - anything your spouse personally owns won't come into the equation. Even if you live with your partner in the same care home you must be assessed separately and the income and savings rules will apply to you as individuals not as a couple.

However, under separate rules, the local authority can approach your husband or wife (called a liable relative) to see if he or she is willing and able to make some payment towards the cost of your care. In theory, this is a voluntary contribution but if your spouse can afford to make a contribution without hardship but doesn't want to, the local authority can take court action to force them to pay up.

Anyway, once you're down to your last £19,500, it then works on a sliding scale of contributions until you're finally left with assets and savings of £12,000 at which point Social Services will pay for the lot. Whatever your financial situation, the idea is that everybody will be left with a minimum amount of income to cover general living allowances –  generally this is the equivalent of the Minimum Income Guarantee plus 25%.

In England and Wales, your obligation to pay the fees yourself if you can afford to generally applies to the residential aspect of your care (i.e. personal care). Nursing fees should be paid by the NHS and the amount they'll pay depends what sort of nursing care you need.

You'll be assessed and 'graded'. If you're in the lowest band, the NHS will contribute £40 a week towards the care home fees, £75 if you're in the medium band and £120 if you're in the highest band. In Wales it's a flat rate of £100 while in Scotland it can be as much £210 a week since they will contribute towards an element of personal care as well.  

As you might imagine the required means-testing makes this whole subject rather complicated and, besides, many people don't like the idea of having to fork out virtually everything they've got on residential care particularly if they want to pass it on as an inheritance. It's not surprising that most opt to stay in their own homes and pay for personal carers to help with their basic needs.

However, these days there are other ways of paying for long term residential care and we'll examine those next week.

The Real Cost Of Caring For Elderly Parents