Post No60...What happens if you run out of money to pay for a care home? A 2024 update

Introduction:

This is, and probably always will be, a massive question that families wrestle with when choosing a care home placement. Care fees have increased quite dramatically in 23 / 24, but so too has the cost of care provision (the break even point), largely because of the cost-of-living crisis.

In this post I want to consider the current climate for fund depleters, and how changes in care provision costs are effecting those whose funds are depleting.

How does fund depletion affect me?

Many people who live in care homes fund their care from a depleting pot of money, usually via the proceeds of a house sale. The current threshold for fund depleters is £23,250 before the local authority (LA) begin the process of funding their care, and for some people this presents a concern.

How does the process work?

Most care homes will suggest that families contact the local authority when funds get to around £30k, which is good advice considering the wait times for the assessment process to start, nowadays around 8-12 weeks. At this stage, the LA will complete 2 assessments:

·        A clinical assessment, and

·        A financial assessment

These two assessments are linked; essentially the LA base their financial figures on a person’s care needs, the more complex the needs, the more they will fund.

Will the LA fund a care placement in a purpose-built care home?

It is important to say when discussing fund depletion that every situation is unique and advice cannot be blanket. However, one thing has significantly changed over the past 2 years and that is the cost of the care fees.

As we all have experienced costs have soared in recent times, which include the costs of running a care home. Purpose built homes are often big sites with large teams and high rents, meaning their costs are higher than some of the smaller independent homes.

As a result many purpose-built care homes are seeing increases to the cost of care provision, which has pushed up care fees. Higher care fees mean someone paying from a depleting pot of money will run out sooner, but it can also make it more difficult to retain residents in a purpose-built care home.

And why is that?

 In Hampshire, prior to the cost-of-living crisis, the top value of the LA’s affordability and the cost of care provision were around the same figure. This meant, with good negotiation, care homes could retain residents via LA funding without making the home financially unstable, and in some cases without asking for a Third-Party Top Up.

However, things have started to shift. As the cost of care provision goes up, it increases to a level that is higher than the LA’s cost bracket, making the placement unaffordable to them.

This has echoes of other financial issues we are more familiar with, for example prices going up in the supermarkets but wages staying the same. We have all felt the pinch of increased prices, but for fund depleters and their families, this is quite a scary situation.

What does that mean for my loved one?

When a person runs out of money there a few possible outcomes:

·        The care home can negotiate a rate with the LA and the resident does not need to move, and the family do not need to pay a Third Party Top Up.

·        The person remains in the care home, but the family must pay a Third Party Top Up because the cost of provision is higher than the LA’s highest rate (possibly becoming more likely)

·        The person must leave the care home for alternative accommodation that is within the LA’s cost bracket.

Are all Local Authorities (LA's) the same?

No, all LA's are different, and although many will have the same processes they will all have varying pots of money that effects how they distribute their purse. This means it is not a one size fits all, and people from some counties might not be able to access the same level of funding as those in another.

Are all care homes the same?

Again, this is a no, for example smaller care homes that have lower cost of provision will have lower care fees, and can possibly negotiate with the LA more easily.

Every provider is also different, and each provider will have their own perspective on what rates they would be happy to accept from the LA in a fund depletion case.

Conclusion

To conclude this topic, its worth saying that many people are in a similar position when it comes to funding care. To avoid funding from a depleting pot of money, getting in contact with a SOLLA accredited IFA would be a good start, whether you are old or young.

If you are paying from a depleting pot of money, I would advise speaking with the care home about their policy on fund depletion so you can plan for this, and not be left in the dark if / when this does come to pass.  

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