Why is planning for nursing home fees so important?
Many people worry about Inheritance Tax, which is levied at 40% on the dutiable estate, but the cost of residential or nursing home care can be much more damaging to your wealth. In the South East, nursing home fees (net after government contribution) can easily exceed £4,000 per month or £48,000 per annum, and the costs only rise each year. And not just by the government figures for inflation, like the RPI. The key costs running a home are staff, heating lighting and other utilities and the cost of compliance with government red tape, plus medical supplies for a nursing home. These costs always seem to go up by much more than RPI.
The Rules in Scotland, Northern Ireland and Wales are different, so this website deals only with the situation in England. In England, there are 3 ways of funding residential care in old age:
1. Paying yourself;
2. Getting the NHS to pay, or
3. Means tested care from the Local Authority, if your assets are below the upper capital limit. (The measly £23,250 for England fixed in 2011 has not been increased for 2012/13. The Welsh Assembly has adopted £23,250 for Wales for 2012/13. There is now no lower limit in Wales.)
So unless you, or your relative, have planned to fund the cost, selling the house or flat has become the norm. Without expert planning, your money then remorselessly disappears paying nursing home fees until you only have £14,250 left (the lower prescribed limit applying in England, which is also frozen for 2012/13). Hardly a happy outcome if you worked hard to buy your own home and saved for a rainy day after paying taxes all your working life!
As with all financial planning, it’s important not to leave it till the last minute, and to get the advice of experts like Wexdon. At Wexdon, we understand that the whole subject of going into a Home is emotional not only for the person concerned, but also for his or her family. Often it can be a difficult subject for the family to raise. Sometimes it can be raised too late. Using Wexdon’s free initial consultation, you can be sure that the whole subject will be raised in a sympathetic and professional manner, so that the best interests and the wishes of the person needing care are identified and addressed. Although we treat everybody as an individual, most people do not want to pay more tax than they have to and they feel even more strongly that they want to leave the fruits of their savings to their family, friends or charity.
The options will be specific to each client, so there is no substitute for a face to face meeting with a Wexdon IFA. Some general points are made on the following pages, which we hope you will find of interest. The position can be so complex that the website cannot be used as a substitute for specific personal advice. The good news is that our initial consultation is free! We welcome feedback by e-mail whether you find the information on our website easy to understand and useful, and how it can be improved. It is never too soon to consider the impact of needing nursing care in the future, so call Wexdon now to fix your free appointment.
The advantage of being self-funding is that, with your family, you can choose the Home that you want, and you can expect to be given priority if there is a waiting list or if there is a particular room you like. Make a “shopping list” of what you want from “A Home”: high standards, good food, nice staff, where you will be happy, which is near relatives and friends so it is easy for them to visit……..Do make sure that the Home will keep you on if the money runs out, before you sign the contract, as being moved from what has become your home, when you are a number of years older, could be distressing and bad for your wellbeing.
Surely the NHS will pay?
The good news is that if the NHS arranges a place in a care home under a contractual arrangement, you remain an NHS patient and therefore do not have to pay (although state benefits may be reduced or withdrawn).
If your need is primarily health care, you should fall within the local criteria to be fully funded by the NHS. Here theory and the real world part company. There is never enough money in the system. Although it is said that about 10% of places are funded by the NHS, unless you are discharged to a hospice to die within a month or two, don’t count on getting NHS funding.
The NHS uses a decision tool that is frighteningly complex, which HM Government says is designed to ensure correct decisions and consistency no matter where you live, but the effect is to disqualify all but the very worst cases from getting NHS funding. This can lead to the hospital saying a patient is bed-blocking and putting immense pressure on relatives to find a Nursing Home, because the patient’s needs on discharge can only be met by a Nursing Home, and the other arm of the NHS refusing to fund, saying the nursing is incidental to the provision of accommodation and “of a nature social services are expected to provide”. The State may pay a Registered Nursing Care Contribution, but this will be a fraction of the actual weekly cost of the home.
A patient who has been “sectioned” under the Mental Health Act is in a special position. The State provides after-care services free of charge, until the patient no longer needs such services.
So, in practice, if you have not planned to have “the wherewithal” to pay for the Home you want, you are likely to find yourself in the means-tested regime run by the Social Services Department of the Local Authority if you need to go into a Home.
Please remember the Rules in Scotland, Northern Ireland and Wales are different, so this website deals only with the situation in England.