Since the economic downturn of 2008, the major parties in government during that time have had to deal with a difficult problem: the cost of elderly care. Somehow, someway, government, the NHS and councils are having to find new ways of meeting these costs. The total cost of elderly care to government (including local authorities) as around £23bn every year. That number is only going to get higher. That’s why various charities, government departments and research organisations have made some suggestions for future funding.
A Large Problem Simplified
Both Labour under Tony Blair and the Conservatives under David Cameron and then Theresa May have promised to look at the issue. Little progress has been made in over 20 years.
Successive governments have tended to group people requiring elderly care into two broad camps: those entitled to assistance from the local authority (a group that is getting smaller), and those who are not. Those who do still get help feel it is not enough and not as much as they used to get, or their elderly parents used to receive. That leaves a big black hole and families are expected to help while the people getting help are expected to use savings and assets to fund it in some cases.
- 21% get help from their local authority
- 5% rely on family and friends for their care needs
- 30% get little or no help
- 5% are paying for professional assistance, either as home helps or in residential care
The figure for those paying for help is around £30,000 on average. Some will even sell their homes or move into smaller accommodation to free equity to pay for it. Age UK has advised many people about their entitlements and what they may need to spend.
What are the Potential Solutions?
Almost nobody is happy. Even those who feel that richer older people should pay for their care realise how problematic the current system presently is. Contrary to popular belief, the National Insurance system is not a pot from which a person will withdraw funds when they need it in the form of sick pay, unemployment benefit, pension and care. People presently working and paying into the system are paying for this generation of retirees. Today’s retirees paid for the last generation and so on.
- The Social Market Foundation recently suggested that wealthier retirees (those with assets over £150,000) should be charged a one-off fee, possibly after their death, to pay for the increasing cost of elderly care
- Health Secretary Matt Hancock has expressed interest in a pension system similar to National Insurance as a pot for funding elderly care, paid for by richer retirees to help poorer older people
- This has also interested cash-strapped NHS chiefs who also feel that those owning high value homes and who can afford to pay for their care, should pay so that others who need it and can’t afford it, are able to enjoy healthcare based on their needs
12 Ways To Pay For Health Care
The UK Care Guide has put together a useful guide for paying for care in 2020. The guide provides information on receiving help from the following sources:
- Local Authority Funding – assessment based funding is available
- Self-Funding – those with savings and capital above the threshold need to self-fund
- Care Annuity – an insurance policy you purchase when needed
- Long Term Care Insurance – a policy you can take out to protect yourself in future
- Rental Income – renting your home to pay for a place in a care home
- Equity Release – you borrow back money from a mortgage against your home
- Deferred Payment Scheme – a loan is secured against your home and paid to the local authority
- Income from Investments – if you are lucky enough to have investments this is a great choice
- Savings – If you have cash savings, this can pay for care
- Pension – Your private pension payment can be used for care if it is sufficient
- NHS Continued Healthcare Funding – access money built up in the value of your home
- Third Party Top-Ups – when somebody else helps with funding
Each methods has its pros and cons, it is advisable to speak to an independent financial adviser and family members before making a decision.