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22 November 2010

may be up to £111 more per WEEK for the same levels of care as local authority funded residents. Private care fees payers frequently cross subsidise local authority placements, and risk running out of money and falling back on the state themselves because of lack of appropriate financial advice Data shows that self funders pay on average £111 more PER WEEK than their local authority counterparts in care homes. One reason why private pay fees are higher is that they tend to go to care homes which charge premium rates, or occupy the best rooms in any given home. But that is not the only reason.’ (Laing & Buisson)* However “It is common knowledge within the care home business, that private payers usually pay more than state funded residents in the same home for the same type of room and the same level of care.” (Laing & Buisson)* Estimates so far have placed this difference at care homes between £50 and £100 per WEEK or more (Laing & Buisson)* on “a similar service and similar amenity basis” and for some providers between £133-£219 per WEEK (King’s Fund, Securing Good Care for Older People, 2006, p. 98).** Average weekly fees for self funders in care now average £631 compared to £519 for local authority placement – or £32,808 A YEAR for private payers compared to £27,012 a year for average local authority placements Private payers are poorly served. Not only do they frequently subsidise local authority residents they lack proper financial advice and run the risk of depleting their assets and falling back on the state. Many homes with local authority placements would face severe financial difficulties without the cross subsidy from private payers, particulary those in “locations where care home margins continue to be under pressure.” (Laing & Buisson)* A SIGNIFICANT GAP BETWEEN what people who pay privately for care and that paid under local authority arrangements has been revealed by retirement solutions specialist Partnership. (see note 1 below) Those in private, self-funded care are typically paying £631 a WEEK to be looked after, while local authority care works out to £519 a week – a difference of £111 a week, or £5,796 a YEAR. One reason why private pay fees are higher is that ‘self funders’ (those people with over £23,250 in assets in England) tend to go to care homes which charge premium rates, or occupy the best rooms in any given home – but it is not the only reason. Chris Horlick, Managing Director of Care at Partnership said “Self funders are some of the most poorly served people in the care system. It is common knowledge within the care home business, that self funders usually pay more than state funded residents in the same home for the same type of room and the same level of care.” “Many care homes depend on this, particularly in locations where care home margins continue to be under pressure. Proposed local authority budgets cuts can only add to this pressure. “Estimates placed this difference at care homes between £50 and £100 per WEEK, or more (Laing & Buisson) “on a similar service and similar amenity basis” and for some providers between £133 - £219 per WEEK (Kings Fund, Securing Good Care for Older People, 2006*).* This is a substantial amount if one considers that the weekly UK state pension is £97.65. “This is unfair and is a pressing issue for Government particularly as the oldest in our communities, who most need care are growing rapidly ***. This is an issue that we would wish the funding Commission to review as a matter of urgency.” added Horlick “In addition without good financial advice self funders risk running out of funds and falling back on the state themselves. Last year, out of the 53,000 people who had to pay for their own care fees in the UK, only 7,000 people received appropriate financial advice. “If people who pay for their care fees fall back on the state, they will typically have to move to smaller or shared rooms. In extreme cases they will have to move to another care home. This can be extremely traumatic for them. “Many self funders are unaware of the cost of care or financial products that are available to help them meet their care fees. However it is not too late for them to get the necessary financial support they need, even if they are already in care. There are a range of products to help fund the cost of long term care which they can benefit from – core ones being long term care plans, specialist insurance plans which, in return for a one-off lump sum payment, pay a guaranteed income for life which is tax free, provided it is paid directly to the care provider,” he added. Educating these people how to harness professional financial advice must be a priority. Not only will this help self funders meet their care needs now it will help stem the cost to local authorities” said Horlick Partnership estimates that last year (2009) local authorities in England had to pay nearly £1 billion to cover the care costs of people who ran out of money and had to fall back on the State. If unchecked this will nearly treble in 20 years time to £2.75 bn. Note (1), based on independent research by health consultancy Laing & Buisson (2009, latest date for which figures are available) *Laing&Buisson Care of Elderly People UK Market Survey 2009 (p.183 “Private Payers”) **Kings Fund report, Securing Good Care for Older People – Taking a Long Term View Derek Wanless, Published 03.03.2006, reported information from one provider in the South where the difference s between what the Local Authority pays and the fee level for self-funders ranged from £133 to £219 per week. ***With the oldest people in our society due to increase substantially in the next decades this situation can only grow. The oldest people, who are most likely to require long term care, are projected to increase by 60% across the UK by 2030, while people aged over 75 will increase by around 70% during the same period (Laing & Buisson). – Ends –

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