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A feasible alternative to a residential care home

A massive increase in care home closures, the negative impact of this on the health of residents and continuing slashing of council budgets for care home costs have focussed attention more than ever on feasible means of independent living for the elderly.

Data from accountants Wilkins Kennedy recently shows that the government’s squeeze on social care spending coupled with rising debts and high rents led to 73 care companies entering administration during the year ending September 2011 compared with 35 in the previous 12 months.

The organisation Independent Living has commented on its website:  “Over a period of years, local authorities have been closing down care homes and moving their residents to other accommodation.  Successive government policies have encouraged this, and we have now seen the effect that the economic recession and slump in property prices has had on the private sector companies which have been expected to take over responsibility for the care of frail, dependent people.”

“Counting the financial cost is comparatively easy,” say Independent Living,  “ what has proved more difficult, despite the fact that it is actually the most important factor, is measuring the human cost. Solicitor Yvonne Hossack has obtained data following the closure of homes in Wolverhampton, Hull and Southampton, which shows that approximately half of the residents die within three to eight months of hearing the news of closure or being moved.”

BUPA, Britain’s second-largest care provider, has also warned of the consequences of cutbacks, saying on its website:  “Local authorities have been slashing the fees they pay care home operators for the past few years, reducing their income by millions of pounds and putting them under severe financial pressure.”

“If these cuts continue, by 2021 there will be more than 80,000 fewer places available, the equivalent of more than 2,000 residential care homes across the country.  Last year, a fifth of councils slashed the amount they pay.  For relatives contemplating the care future of a relative, this is all devastating news; what may have been perceived as a safe haven, can no longer perhaps be considered so.”

In any event, the act of moving house is extremely stressful for anyone.  For an elderly person, moving away from friends, the location they know and losing carers they are familiar with, can be devastating.

So, now, options other than residential care are being scrutinised, but what are they and what are the costs?

There is an attractive, but not often considered  alternative – staying in your own home – so how can this be achieved?

For some, there is the option of local authority financing.  Unfortunately, there seem to be major differences in the way in which local authorities apply the regulations about assets and financing; the latest information is available in the Charging for Residential Accommodation Guide (CRAG) published by the Department of Health.

But what about those whose finances and assets take them out of the assistance criteria?  How do the growing number of middle class elderly ensure the level of comfort and security they need while minimising the costs?  For many the answer could lie in employing  a live-in carer.

So how do the costs stack up?  Our research shows that in London and the Home Counties, the cost of a live-in residential care home can be up to £1,500 per week, an annual cost of £78,000.

Of course, these costs will continue and probably rise with each year you stay in residence.  If you are below the local authority threshold for assistance, then the cost or a percentage of it will be re-claimed from your estate, sometimes meaning selling your home or the local authority taking a charge on it and recovering the cost after your death. There are, of course, residual savings levels which are protected, but they are often just a fraction of what the estate was worth at the outset, after perhaps 10 – 15 years of care home costs.

So how can you fund the ‘stay in your home with live in care’ option?

There are several means by which this can be achieved:

Firstly, of course, you may be able to fund the cost out of your own resources, from either savings, income, pensions or life insurance payment following the death of a partner, for instance.

Then there are options available from specialised insurance companies who can offer either a care provision plan for a one-off payment which will give you monthly income, or there is the option of taking out what is effectively a loan with them against the value of your home, while you continue to live in it.

Either way, the dream of being able to stay in your own home, while having the security of live-in support can become a reality.

Knowing the relative costs of residential care in London and the Home Counties, how do the costs of employing suitable live-in care staff compare?

As Diana Graham, principal of The Graham Agency explains:  “Against the substantial costs of residential care, we can provide a skilled carer with experience of meeting the needs of the elderly at an average cost of £950 per week, an annual cost of £49,400. That is a difference of £28,600, compared with an approximate annual
residential care cost of £78,000.”

“These cost differences are huge and residential care eats into estates at an alarming rate, even for those with a sizable estate on which to rely.”

“But it is the emotional aspect of retained independence and the comfort and psychological security of remaining in one’s own home that is beyond price.”

For more information please talk with us; call Diana Graham on 0207 118 0122.

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