Care home fees: can costs be avoided?
With an ageing population and ever increasing care costs, social care is an issue for a lot of families. Many are looking at how to protect the assets of their elderly relatives whilst trying to make sure that the upmost levels of care are available to them. With increasing pressure on the NHS, the Chancellor of the Exchequer is likely to announce new measures to help fund the social care sector in his Budget statement on 8 March.
This is a frustrating time for both the care providers and recipients. A "care cap" of £72,000 for the over-65s was due to be introduced from April 2016 under the Care Act 2014, to provide a safety net to protect people from losing almost everything they have saved up and worked for. However, this has now been postponed until 2020 and it is likely that the level of the proposed cap will have to be reviewed, leaving those facing self-funded care in an uncertain position.
A report conducted by Disability United last year shows that at least 37 Clinical Commissioning Groups have imposed restrictions for adults with ‘primary health needs’ from accessing NHS continuing healthcare. This has shifted the burden of the costs of care to the social care system by contending that an adult’s needs are not primarily medical. Local authorities are now facing huge amounts of pressure and have warned that a shortfall of £4.3bn has been predicted by the end of the decade – nearly a third of the budget required.
For an individual, the most recent surveys show that the average cost of staying in a care home is roughly £770 per week but some of the most prestigious care homes can cost in excess of £1,500 per week and this is likely to be considerably higher if round the clock nursing is required.
It is of course, very difficult to account for these types of costs because the amount of care required is unknown. Blake Morgan recently assisted in a sad case where a relatively young lady developed young-onset Alzheimer’s and required care for a period of 8 years without access to any NHS funding. This cost her and her family over £400,000 over that period.
What measures can you take if you are facing care costs?
The concern of the government is that many wealthy people hand over their property to their children in advance of their care needs, resulting in the NHS paying for their eventual care, so they are looking at making changes to inheritance tax charges to help plug this shortfall.
If you or a member of your family is in this situation, you may well have considered an "asset protection trust" to transfer the property so that the person requiring care can say that they no longer own the property when it comes to assessment of means related benefit – i.e. for the payment of care fees. These are offered by some solicitors but mostly by unregulated providers and are normally much less attractive options than they first appear.
If you move assets out of the name of the person who requires care, the transfer could potentially be treated as “deliberate deprivation” by the Local Authority. This means that the value of the property will be deemed to still be in the transferor’s estate and the recipient can become liable to repay the difference between what the Local Authority would have charged for the care and what it actually charged, limited to the value of the assets that they received from the transfer.
An outright gift might also result in an immediate inheritance tax charge if the value of the property is over £325,000 and a capital gains tax liability or stamp duty land tax charge, so professional advice should always be sought prior to any movement of assets.
It is also dangerous to think that a one size fits all solution is going to work when actually every individual's access to funding will depend on their personal circumstances. In fact, immediate care annuities, deferred payment agreements or privately funding your care may be a better fit for you.
If you or your family are facing care home costs, Blake Morgan can help by looking at what you should have access to under the Care Act 2014 and helping you fight to get it. Please contact the Succession and tax team for further information.