As a ‘baby boomer’ (born in 1964) I knew that having children late in life meant I had to budget not only for my pension but also for the costs of university fees for my children.
What I suspect many of us born in that era did NOT expect was that the cost of our parents care home fees might also fall to us.
This is not an issue whilst our parents remain well and able to live relatively unassisted in their own home. But, once a care home is needed, the costs involved are significant.
Currently, the average cost of nursing home care in England and Wales is over £800 a week (or over £41,000 a year) per person.
This figure can be even higher in certain parts of the UK or where the elderly person’s needs are particularly severe or they need to go to a specialist Elderly Mentally Infirm home (for example if they have dementia).
According to Age UK, currently, if your capital and income are above £23,250 it is likely that you will have to pay your care fees.
If your capital and income are under £23,250 you may get some help from your local council, but you will still need to contribute towards the fees – and the family home may be included in the calculation of assets depending on your circumstances.
To give you an idea, the value of your home will be included if your relative is going into permanent care – but not if, for example, their partner will remain living there.
And, as above, even if you do get help from the council, you may have to contribute to the cost of care from your capital until your assets fall to £17,000.
Even then, when this level is reached, you may still have to contribute something towards ongoing care costs.
You will, in any case, be subject to a means test to work out what you can afford – and this will depend on any income you currently receive.
The total amount you may have to pay is currently capped at £72,000 for the over 65s, but this amount is based on what your local health authority calculates the care is worth and does not include board and lodging costs.
You can find a good explanation here.
You can see that an individual’s entire life savings and assets can be spent in just a few months.
In the event that a parent suffers from a chronic, or life-threatening illness, funding may be available from the NHS which currently offers Continuing Health Care Funding which will pay the full cost of care
where the person’s need is primarily health-based.
The second type of NHS funding called “funded nursing care” is available where the individual has nursing needs and is looked after in a registered care home that employs registered nurses.
The NHS-funded nursing care rate was increased to £183.92 from 1 April 2020. This is the standard weekly rate per person but this will not cover all of the cost of care.
Care home fees vary depending on the area that you live in, the individual care home itself, plus your own personal financial circumstances. Costs average around £600 a week for a care home place and over £800 a week for a place in a nursing home.
Obtaining funding depends, of course, on meeting stringent NHS criteria.
For most of us, we are looking at the sale of the family property and relying on our parents’ assets to be sufficient to give them the best quality care possible.
Once these assets have been used up, it is likely to be us who bear the financial burden, although some assistance may be available from your local authority.
Does the healthier parent come to live with you with all the extra costs that this would entail – extra heating, lighting and food costs, not to mention the cost involved in adapting parts of the home to make them safer for your mum or dad?
Balancing your monthly outgoings may be much more of a challenge and cutbacks will probably have to be made.
Should you need financial assistance to help you carry out these home improvements and adaptations, you can consider borrowing up to £7,500 with a guarantor loan from a credit company.
A guarantor loan is a type of unsecured personal loan where you get a friend, colleague or family member to back up your application. They must be someone who is willing to step in to pay your monthly repayments if you can’t pay. You may find this additional safety net reassuring with so many demands on your purse from so many different directions!
We never know what is around the corner and I think it is sensible to have a conversation with your parents as early as you can about their wishes and the financial implications of requiring residential care.
Having looked into the funding of care home fees, I am aware that this is something I will need to research in much greater detail so that we can make some sensible financial decisions as a family and consider how this may impact our budget.
The information I have given here is the tip of the iceberg and, as we know from previous UK budgets, schemes such as this are prone to be frequently changed and thresholds altered.
This is a far better approach than having to deal with a sudden illness or even a bereavement whilst trying to decide whether their family home has to be sold or worrying where the extra money for your parents care home fees is going to come from.
As things stand, that anniversary cruise or funding your teen’s gap year may have to be put on ice, if the needs of your parents are greater – unless you prepare for the extra expense right now.