The long-awaited Dilnot Commission has elevated the massive cost of health care in later life in the public consciousness. And its suggested sharing of the costs between the individual and the State have been broadly welcomed. But any outcomes will not come into play for some time to come. Until then, what should those in or near retirement do to plan for paying for care?

By leading 50+ writer Tony Watts.

The cost of healthcare has made a lot of headlines lately. Blame it on the fact that we are all living longer. Health and care professionals talk euphemistically about the ‘morbidity period’ – the length of time we spend between being active and healthy… and actually dying. Better healthcare, new drugs and improved treatments for erstwhile fatal conditions have extended our life expectancy, but ever more of those years are spent being dependent and needing care.

Politicians of all persuasions have long recognised that the State cannot afford to foot the bill for all this care. The concept of a cradle to grave NHS comes from an era when it was rare for anyone to reach 85; today, 1.3 million are that age or older. “The numbers likely to require long-term care,” say industry experts Laing & Buisson, “are projected to increase by 60% across the UK by 2030.”

ARoyal Commissionon the funding of Long Term Care early onin the Blair years called for the State to help share the costs but was deemed financially unpalatable and kicked into the long grass, and there are increasing concerns that the Dilnot Commission will also be watered down.

Who pays for care?

And while Dilnot focussed on the (relatively small) number of people who go into a care home – usually for the last year or two of their lives – there are millions more already paying for someone to provide vital health or care services.

The model that the Government promotes, with good reason, is to receive that care for as long as possible within one’s own home. They support this with a Carers Allowance and two different rates of Attendance Allowances, none of which are means tested.

While paying for care in the home environment is not cheap, the alternative is far less palatable. For those deemed able to pay, Laing & Buisson say the fees for self-funders in a care home now average £631 a week (£32,808 a year).

Anyone in England with assets of around £23,000 and over is considered able to afford to pay for their own care. (There are slight variations elsewhere in the UK.) If you have between £14,250 and £23,250, you pay a contribution.

Furtherfinancial support is (theoretically) available to ease the burden. The problem is that non means-tested support (such as NHS Continuing Care for those with recognised health needs) can be very difficult to obtain from PCTs striving to trim overstretched budgets. Knowing the system and employing a specialist advisor (ideally, a member of the Solicitors for the Elderly network) to appeal your case may be required to win the case.

Non means-tested care support

So, how does someone who is entering, or early on in retirement, plan for these contingencies? While you may be healthy and active now, the statistical chances are that you are going to have to call on some level of care in the years ahead. Agreed, some non means-tested support will be forthcoming; but for those with the means to pay, the chances are that it will not be enough to cover the entire cost.For those living alone, even selling the house can come into the equation.

Get it wrong, and any rosy plans you had for a comfortable retirement may go up in smoke.

Care Fee Plans are available and (for a fixed, lump sum) will allow you to receive care in a chosen establishment for the rest of your life. But these aren’t cheap (how could they be?) and tend only to be worth considering when you are close to having to enter a care home.

So it does make sense to build future care needs into your projections for your future finances. As ever, the earlier you plan, the more control you will have of your situation.

Footnote

RetireEasy is a simple to use, interactive online software programme that allows you to plan your future finances – and scope out what would happen to your assets and future income if you should ever need to pay for care. RetireEasy is the only comprehensive, online tool that empowers users and offers users peace of mind by helping them to prepare for retirement.