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Social care in later life – the financial black hole that isn’t plugged

Social care in later life – the financial black hole that isn’t plugged post image

A big blank on the personal finance map is paying for long-term social care. By that I mean how we’ll fund care for ourselves and loved ones if we need support to cope with serious physical and mental deterioration in later life.

  • Maybe you think it’s taken care of by the NHS? It’s not.
  • You might think: “That’s a bridge I’ll cross when I come to it.”

Yeah, that last one was my approach.

I stuck my worries in a box labelled: Too complicated. Too scary. Too far away.

Then I buried it in the psychological sand.

It could be you

Avoidance is not a strategy, however – especially in the UK.

Increasing need, rising costs, squeezed budgets, and political prevarication means that in Britain the expense of long-term social care falls disproportionately on those unlucky individuals who require the most help.

  • How will we pay for our care if the worst happens? Sell the house? Is there an alternative?
  • How do we hedge against the chance that we may not need long-term care? I don’t want to save huge sums for something that never happens.
  • What State-funded support is actually available?
  • Are there smart ways to deal with means tests when we’re assessed for support?

The answers are out there. And now that I’ve looked inside the box, I think long-term social care can and should be planned for.

At the very least, it seems less scary than when it lurked like a death star on the fringes of my mental and financial map.

Strap in for a bumpy ride

The UK’s patchwork of social care funding options makes for a big topic.

In this post, I’ll explain why you’re likely to pick up the bulk of the tab – regardless of those headline-grabbing social care caps.

In later posts we’ll cover:

  • How does social care means-testing work? Which assets are included and excluded?
  • What care is not means-tested?
  • Can we devise a rule-of-thumb figure for social care to plug the black hole in our financial plans?
  • How do you pay for social care? What are the options – with an emphasis on those that avoid selling the house from under anyone you care about?

Social care funding thresholds

The social care funding thresholds help illustrate why you’ll probably pay for some or all of your care:

The social care funding thesholds in table format

Your financial assets are means-tested when you seek local authority support1 for your care.

If your assets are valued:

Above the upper threshold – You pay for your care. You’re a self-funder in the jargon. At least until your assets are so depleted that you fall under the threshold.

Separately you may be entitled to limited support via the NHS. But don’t count on it.

  • Scotland and Northern Ireland make personal care services universally available. These aren’t means-tested. You may well need to pay for other home care services, though.

Between the thresholds – You’re eligible for some local authority financial help but also need to contribute from your own assets and income. I’ll deal with the impact of that formula later in the series.

(Between the thresholds doesn’t apply in Wales.)

Below the lower threshold – You qualify for more funding but it’s not unconditional. You’re still liable to pay from your income (which includes benefits and the State Pension) above yet another minimum threshold.

Which brings me to the salient point about social care funding.

Nothing is as it seems.

  • Being eligible for care doesn’t mean it will be funded.
  • Funding from your local authority doesn’t mean all your social care bills will be paid.
  • Even if you qualify for financial assistance, there can and likely will be a gap between the care the State will pay for and the care you want.

A maze, hidden in a labyrinth, inside a jungle

Navigating the social care system is like dealing with a second tax code.

Even terms like ‘personal care’ in the table above refer to a defined set of services that don’t encompass everything you may need.

You also have to be assessed as needing specific types of care to stand a chance of receiving a service for free. That’s trickier than it sounds.

Whether your home falls into the means-tested mix depends on other conditions. We’ll explore those later in the series.

The thresholds also have a habit of not moving with inflation. The upper threshold for England hasn’t shifted since 2010/11.

Meanwhile, the real (after-inflation) cost of care in the home has risen by 10.6% since 2015/16 and care home places by 12% over the same period, according to healthcare charity The King’s Fund.

Unlucky for some

The anti-bonus ball in all this is a postcode lottery effect. This sees outcomes vary widely by local authority and region.

Personal funding shortfalls in England can be exacerbated by the North / South divide, for example.

Local authorities in the North tend to pay lower rates for services than those in the South.

Moved south to be closer to family after entering the system? That could make it more difficult to cover social care expenses.

Multiply all this complexity by different systems in each of the home nations and you have a throbbing headache.

No wonder most of us hope the problem just goes away.

The next section illustrates why the new social care cap in England is no wave of a magic wand. While less relevant to readers living in the other home nations, it does reveal some of the traps to be wary of throughout the UK.

The social care cap – why it doesn’t fix the problem

England’s new social care cap comes with more strings than a puppet show.

The centrepiece is an £86,000 lifetime cap on social care costs.

Once your spending hits the cap, the local authority is meant to take over paying for your care. This is a universal benefit. No means-testing required.

But the devil is in the detail and he’s up to no-good.

In reality there’s a range of care expenditures that don’t count towards your cap.

Your spending can shoot far beyond £86,000, yet your metered tally shows you falling short. This forces you to keep spending because you haven’t ‘officially’ reached the cap.

Even if you do hit the cap, the expenditure exclusions can leave with you bills to pay after your local authority steps in.

The impression that your social care expenditure is capped at £86,000 is ‘technically’ the case in the same sense that attending office parties during a pandemic is ‘technically within guidelines’ – if you ignore the real world.

Let’s walk through the main loopholes. (Because they’re that big.)

Daily Living Costs (DLCs)

Firstly, £10,400 per year of care home fees don’t count towards the social care cap. The idea is that an individual remains responsible for their food, board, and utility bills, before and after they’ve hit the cap.

DLCs put a flat rate figure of £200 per week on this responsibility.

Local authority care discounts

Imagine you need to go into a care home. It costs you £700 per week because you don’t qualify for financial support i.e. you’re a self-funder.

But the same care, in the same home, costs your local authority £500 per week – because they negotiate a better deal for residents they’re obligated to support.

Guess which figure counts towards your social care cap?

Did you guess the lower £500 per week – despite the fact the care you’re getting actually costs you 40% more?

Oh, you complete and utter cynic.

Yeah, you’re absolutely right.

But you’re not quite cynical enough! Because you must also deduct the £200 per week from those DLCs.

In this example, only £300 per week counts towards your cap. Your total spending won’t reach the cap for five and a half years.

Care home fees paid by self-funders are 41% higher, on average, than costs paid by local authorities for places in the same care homes. That’s according to figures quoted by The King’s Fund.

Qualify for any State support before you hit the social care cap? That money doesn’t contribute towards your £86,000 total, either.

Only money that you contribute from your own pocket counts. Minus the premium you pay as a self-funder. Minus payments for services your local authority deems unnecessary.

Care needs assessment gaps

Only spending on your eligible care needs counts towards your social care cap.

Only eligible needs will be funded by your local authority once you hit your cap.

Your eligible needs are determined by a care needs assessment. And who runs that? Local authorities.

These are the same local authorities that suffered a 55% cut in government funding between 2010/11 and 2019/20, according to The Kings Fund.

The BBC reports that half of requests for help are turned down.

Budget pressures are one reason why your local authority may think you need less care than you do.

Pay as you go

As a self-funder you can of course pay for all the care you can afford.

After you hit the cap, you can keep paying for care beyond your eligible needs using top-ups. If you have the money.

The bigger the gap between your needs and what’s deemed eligible, the more you’ll pay out-of-pocket.

For example, you may want to pay for additional care services in your home. Or perhaps for more hours of help with cooking meals than your local authority deems necessary.

In a care home, you may want a bigger room with more facilities than the council will stump up for. You may also be charged for extras – anything not covered by your official resident’s care plan.

You may start self-funding a care home place but become eligible for support later. That can leave a funding gap if your local authority will only pay for a cheaper home but you want to stay put.

Or you may wish to move closer to loved ones – who live in a more expensive part of the country – after your needs were assessed in a cheaper region. You’d have to pay the difference if the council refuses to increase your funding.

There are still more exemptions, but you get the point.

The cap doesn’t fit

The reality is you can rack up large social care bills that don’t trigger the cap.

Even if you do qualify for financial support, there can be a gulf between what you need and what the State will pay for.

And I haven’t even covered the inequities of the social care formula that penalise homeowners in areas with low property prices.

This Is Money has an excellent piece on that. It includes a damning verdict from Andrew Dilnot, who chaired an independent commission on social care from 2010 to 2011.

The bottom line is that if your house is your only spare asset, then selling it to fund long-term social care remains a live threat.

The good news is that there’s little chance you or a significant other will end up homeless. There are plenty of deferred payment and equity release options available. We’ll look at those in a later post.

But in part two of the series, I’ll cover how your assets are assessed in the social care means test.

Take it steady,

The Accumulator

  1. Health and Social Care Trust in Northern Ireland []
{ 42 comments… add one }
  • 1 Neverland February 22, 2022, 11:19 am

    I’m not against people paying for their own social care if they can afford it.

    In reality all any social cost care cap means is bigger unearned inheritances for the beneficiaries of the wills of people who benefit from the cap.

    Why should other tax payers step in to pay for other people to receive bigger gifts?

    We have no problem with other people receiving little or nothing from inheritance simply because their relatives chose to leave them nothing or were just poor.

    All the social care cap does is entrench privilege.

  • 2 Jonathan B February 22, 2022, 11:50 am

    I don’t know which part of the country you live in where there are self-funded care home places for £700 a week. I recall Which? quoting an average figure of about that – but that was arrived at taking all the LA-funded £500 places into account, the self-funded places were much higher to balance the books (and pay the dividends). My mother’s very modest care home place three years ago was around £900 a week.

    Your calculation that it takes over 5 years of self-payment to reach the cap when the LA should take over funding is eye-opening – I hadn’t realised that the eligible payments were discounted so heavily. With the average duration of residential care at the end of life being about 2 years, it underlines that Boris Johnson’s claim to have solved the social care problem was pure piffle (or Pfeffel). All he did was devise an alibi for raising taxes.

    As you point out, in theory everyone is entitled to a care needs assessment by a social worker but in practice those aren’t available. But without that advice it is terribly hard for family members to work out how best to organise provision for an elderly relative who can’t manage on their own. I have heard though that a new profession of private social worker is springing up; while they won’t be a route to LA funding it sounds as if they could be filling a much-needed gap.

    I look forwards to reading your research into funding care in old age, both for current elderly relatives and ultimately ourselves. My mother had in fact taken out a single-premium insurance policy for care at a point when those were marketed; it seemed expensive but actually the company must have had good actuaries and she got out roughly what she had paid in.

  • 3 DaveTheHedgehog February 22, 2022, 12:33 pm

    My solution is Dignitas.

  • 4 Faustus February 22, 2022, 1:00 pm

    Great to see this important topic covered – thank you Accumulator.

    Care costs are the great unknown in retirement financial planning so massively helpful to have a guide to the absurdly complex UK system.

  • 5 devitalio February 22, 2022, 2:26 pm

    Simple strategy around 4 pillars:

    Kid #1
    Kid #2
    Kid #3
    and Kid #4

    with four kids you should be pretty covered. Do as our great grand-parents did. 🙂 Unfortunately I have no numbers as to how much it takes to raise 4 brats that are willing to take care of you after.

  • 6 DavidV February 22, 2022, 3:48 pm

    An excellent piece describing the complexities of social care means assessment and why, I imagine, most readers of Monevator will end up being self-funding. My mother needed care in a care home for the last eight months of her life and, even though she had a quite low income and modest non-housing capital, as a home-owner she inevitably was a self-funder. I do not resent this as I agree with Neverland (1) that there is no reason why other taxpayers, particularly those who can’t afford their own home, should subsidise my inheritance.
    The big injustice, in my opinion, is the degree of cross-subsidy that occurs between those who are self-funders and those who are local authority funded. If local authorities were funded to pay the economic rate to care homes, perhaps the fees for self-funders would be marginally less eye-watering. I would regard this as a more significant reform than the proposed social care cap.
    I have to agree also with Jonathan B (2) that £700pw seems an under-estimate of typical rates. My mother was paying £840pw at the end (up from £800pw when she entered) three years ago in West Yorkshire, which you would imagine would be at the cheaper end of the scale. Although it was a very nice home, the fees were fairly typical of all the homes we looked at.

  • 7 Chiny February 22, 2022, 5:14 pm

    Superb investigation; I’m surprised TA hasn’t been snapped up by a national newspaper for occasional columns. I look_forward/dread Part 2.

    Critical stuff though, better informed than ignorant.

  • 8 JP February 22, 2022, 6:54 pm

    Thank you for tackling this minefield of a topic. We are all benefitting from your reasearch and hard work looking into this. Look foward to next installment!

  • 9 The Accumulator February 22, 2022, 7:38 pm

    I don’t have any ideological objection to people paying their own way either. But this is a problem that’s crying out for a social safety net that stops the risk of a catastrophic outcome falling on the shoulders of a very few.

    My real objection is to us not having a honest political conversation about social care as a society.

    For years, both parties have attacked each other’s proposals – frightening the horses with talk of a “dementia tax”. They’ve avoided the hard work of building a consensus that could deliver a well-funded system of care.

    Jonathan B – you clearly knew all about the self-funder subsidy – I was blissfully unaware of it until I dug into the topic. It’s a stealth tax. Again, I’ve nothing against taxes being used to fund social care. But I do want us to be transparent about it.

    The current system seems fundamentally dishonest to me. Assessments that squeeze out genuine need because funding isn’t available. Self-funders having their pockets picked because we haven’t been brave enough as a society to grasp the nettle.

    Re: UK average price of a care home for a self-funder. I’ve used the benchmark data later in the series and it works out about £784 a week. That’s 2019-20. It’s hugely variable though. Dementia care in the south-west of England clocks in at £1321 per week.

    The example in the piece was just meant to show the mechanism at work.

  • 10 Jonathan B February 22, 2022, 9:44 pm

    @TA, no I hadn’t appreciated that self-funder issue until this article. Thanks.

    My frustration is with the Conservatives saying they had a “plan” to solve the social care question (not sure whether it was world-beating or oven-ready, but full of hyperbole) and then offering nothing at all except another tax.

    The big problem is the NHS not being able to discharge patients no longer able to cope at home to somewhere else – because the system isn’t joined up and a huge funding bureaucracy needs getting through. (Plus similar for those at home but losing the ability to cope, e.g. after a fall). Essentially it needs a way in which every vulnerable person can readily get care regardless of their means or the efficiency of their LA, with personal contributions (if required) being something that can be resolved equitably later. That in turn needs a coordinated care home sector with predictable pricing and an emphasis on care not profit.

    Despite saying they would, Johnson and co did nothing about creating that joined up system which is what would make the biggest difference.

    The political issue is around personal contributions to care costs. If it is a fixed threshold then it inevitably has a much bigger impact on those of less means. On the other hand a contribution proportionate to wealth is impractical due to wealth being poorly defined, particularly when in most cases it is largely illiquid and only established at a point of sale (property). Like others here I personally have no problem with contributions deferred to be recovered as part of inheritance tax – but that gets the Daily Mail very excited which the government don’t want.

  • 11 TahiPanasDua February 23, 2022, 9:26 am

    Well done The Accumulator!!!

    I agree totally with your general sentiment and look forward eagerly to your future instalments. I have tried in the past to get my head around the ridiculous complexities of the payment system but my limited brain power always failed me in the end. I am sure you will be able to simplify it sufficiently (and good luck with that!) to allow idiots like me to get a handle on the situation.

    Irrespective of people’s views on the topic, including the degree of care that should be provided, we all need a social care system that is readily understandable by the average person. Even reasonably financially adept readers of this blog (OK, well me at least!) find the provisions mind-boggling.

    Personally, I am happy to pay extra taxes to fund a social care system broadly similar to the NHS. I am no socialist or superglued liberal but believe a modern, affluent and progressive society has an obligation to provide a decent, affordable and understandable care system.


  • 12 Nebilon February 23, 2022, 11:23 am

    Does anyone have any idea of what the costs of care in one’s own home would be? On a private/self funded basis
    It was something my father always said he would prefer if and when it came to it (it did not, he died last year only weeks after cancer diagnosis) but that was in part because a large part of the cost would have been covered by health insurance linked to his pension from a large international organisation in Geneva

  • 13 The Accumulator February 23, 2022, 12:57 pm

    @ Tahi – The complexity is mind-boggling. The last thing I’d want to do is deal with it when I was struggling to cope. Many Monevator readers have mentioned trying to help their own parents through the system. I completely empathise with how difficult that must be. It was hard enough trying to unravel it without being under any pressure whatsoever.

    @ Nebilon – You can estimate care at home costs using the UK Homecare Association’s hourly rates:

    @ Jonathan – that’s a good point about joining up the system. The complexity is symptomatic of the current sticking-plaster solution.

    Still, it’s completely out of character for the government to make a grand announcement about their cunning plan to fix things which proves to be nothing of the kind 😉

    I’m starting to wonder if the country is run by Baldrick.

  • 14 Scrooge February 23, 2022, 1:05 pm

    @ Nebilon. “Live in” care here in rural Worcs “starts at” c. £1400 p,w. for one and c. £1700 p.w. for a couple. If “nursing care” is needed than (obviously) the cost goes up. A further complication is even if it can be afforded it may not be readily available as providers have difficulties recruiting.

    @ TA. Thank you for tackling this complex issue, it really is a minefield. I too look forward to the subsequent instalments.

  • 15 Neverland February 23, 2022, 1:56 pm


    You write about a “catastrophic outcome” but I don’t see one here.

    You run out of money the state picks up the tab for you.

    Whether you heirs get an inheritance or not idk.

  • 16 FI-FireFighter February 23, 2022, 4:32 pm

    Great article.
    My parents are late 80’s and need support, we are currently managing to keep them in their home, but you have to battle for any support you can get.
    Slightly off topic, but relevant to helping elderly parents are LPA’s (lasting power of attorney).
    These are crucial in my view to help you get over the many barriers faced when trying help your parents. They help a bit but don’t solve the many challenges you will face with banks and utility companies etc.
    To get all 4 LPA’s for my parents (1 for health and 1 for financial each), we were quoted nearly £1200 by the family solicitor.
    There is another way, you can set them up yourself and get all 4 for under £400.
    It’s a bit of a faff and takes some time but you do it all online here –


    Print them, get them signed by witness’s etc, send them off.
    It can take 20 weeks for them to get registered, so be prepared to not hear anything for ages.

  • 17 Ducknald Don February 23, 2022, 4:57 pm

    At least Baldrick would have a cunning plan.

    When it comes to funding, a land value tax would have made much more sense than increasing NI. My children’s generation is getting squeezed to fund their grandparents whilst they have to service student loans and housing which is in short supply. It feels like we are in a gerontocracy and I say that as someone nearing retirement. Throw in Brexit which was largely an old persons thing and you can see why they are dismissive of boomers.

  • 18 The Accumulator February 23, 2022, 5:23 pm

    @ Neverland – for me the prospect of catastrophic outcome lies within the gap between what the system says you need and what you actually need.

    I know people whose parents are supposedly getting help to stay in their home. But they discover the care to be inadequate. Shopping left on the floor because the care worker didn’t have time to put it away. Parents going hungry because they weren’t able to make their own meals. No assistance forthcoming because it wasn’t in the care plan.

    If you’ve got money (or willing friends and family nearby) you can make up that gap with your own resources. If you don’t have the money or your own support network then you’re reliant on state provision. If that fails you, there’s little you can do about it.

    Scale that by however many years you need care. In some instances that could be many, many years. That won’t be the average outcome but it will happen to some. That’s what I have in mind as a catastrophic outcome. It’s less the financial fallout, more the agony of fending for yourself in a failing system.

    I don’t much touch upon the human element in this series as Monevator is a financial blog. But the thought that kept coming to mind throughout my research was: “We must be able to do better than this.”

    I thought TP2 put it well in a comment above:
    “a modern, affluent and progressive society has an obligation to provide a decent, affordable and understandable care system.”

  • 19 Neverland February 23, 2022, 7:14 pm


    So you write an article that starts “England’s new social care cap comes with more strings than a puppet show.”

    But in fact your beef is with the threadbare state of the local authority care system?

    Maybe you should be advocating not putting in any care cost cap and instead putting the funding allocated to it into the care itself.

    Everyone wants free stuff from billionaires to binmen and no one wants to pay for it.

  • 20 David February 23, 2022, 10:03 pm

    Is there any reason to save for your care needs, when entombed in the care home as a S/F your sat next to a gov sponsored person at the table with a same sized plate

  • 21 Jonathan B February 23, 2022, 10:21 pm

    @Neverland, clearly if your aim is avoiding tax at all costs then you oppose provision of care for the elderly.

    But I think @TP2 made the important point, echoed by @TA. Before thinking about tax, you need to think about what sort of civilised society (or uncivilised) you want to live in and the implications. For me it includes decent education regardless of background, and healthcare, and infrastructure, and with increased life expectancy needs to include a way of providing dignified care when we get old.

    Cutting corners is not necessarily cheaper. Healthcare costs in the USA are some of the most expensive in the world because people have to pay for it individually – but healthcare outcomes as a country are some of the worst. There are better ways.

    Having said that, elderly care is a tough problem to solve. The “threadbare state of local authority care” is because that provision was de-funded forty-odd years ago. Any replacement can’t replicate what existed before that, and demands are in any case very different now. But I am not convinced “Baldrick Johnson” has a cunning plan.

  • 22 Neverland February 24, 2022, 9:17 am


    The trouble with the UK is the public want European levels of public spending with Texas style levels of taxes. Its just not possible.

    The support bases of both parties fundamentally want more public spending so taxes will inevitably go up. Just read today we now have an official graduate tax with the student loan repayment period being extended to 40 years – ten years longer than my working life.

  • 23 159F February 24, 2022, 10:08 am

    Dilnot (economist) had a plan. It made a lot of sense. Political short-termism and cowardice (red and then blue) shelved it.

  • 24 JohnN February 24, 2022, 10:29 am

    I have no issue with people having to fund their own care – an inheritance is not a right and limiting personal costs for care is regressive.

    Having said that, anyone requiring care should expect a good standard of care covering all reasonable requirements and the cost of that should be standard whether local authority or personally funded.

    For this to work, ownership of care homes must be transparent – the BBC recently reported that they’re mostly owned by venture capital companies who have loaded the businesses with debt and move profits offshore out of reach of taxation.

    On student loans, the government has noted “The interest rate will be cut to the Retail Price Index (RPI) only”.
    Interesting that at a time when the government is phasing out the RPI measure and fighting against RPI linking of existing pensions, they continue to use RPI as the measure when they will make money out of it. CPI for everyone else.

  • 25 The Investor February 24, 2022, 10:31 am

    The big problem is really the randomness of who needs social care, rather than the potentially high sums involved. (Allied with the clash with the average parental Briton’s desire not to see their home raided for funds in their lifetime. An antipathy I don’t share, being in favour of 90%+ inheritance tax, but clearly I’m in a minority).

    We can reasonably plan for everyday retirement spending, plus or minus a few thousand, and we can devise workarounds in advance if our returns a little lower than expected or our spending needs slightly higher.

    That’s very different from discovering you can no longer care for yourself and need constant medical attention, perhaps in residence, for the rest of your life, which itself could now be very short or very long, and with potentially a partner in the mix, too.

    Our future self is just us in the future. It’s reasonable to presume we still want agency and some comfort and ideally pleasure in life. Ignoring the problem by saying “oh I’ll be too far gone by then” is pretty nihilistic compared to the usual attitude of FI-pursuing folks, who will happily put off spending today to fund other spending in several decades time.

    This ‘lower probability but high and highly disruptive consequences’ scenario is crying out to be solved by insurance.

    You’d need it to be universal, because at the end of the day most people won’t sanction leaving uninsured pensioners in need of care stranded if they hadn’t taken it out. It should be low cost, to maximize the cost-to-benefits ratio obviously. Maybe you could have two levels, with a big jump between them, and similarly two different levels of outcome, as a nod to progressive pseudo-taxation for the ‘cheap’ end and an incentive for the ‘expensive’ end to support the system politically.

    I suppose this all points to it being collected via taxation, but if done via a new insurance levy on a per-person basis it might stand a better chance of being politically acceptable, and defendable from raids by other claims on taxpayer cash.

    We’d want it to be clearly and honestly hypothecated and managed by a new and transparently separate entity from the NHS and existing welfare functions of state.

    And you’d have to delineate very clearly that this was for care for those who truly need it, not for bus trips to Burton on the Water etc. So the eligibility testing apparatus and so on would have to remain.

    This is pretty obvious stuff, so presumably it’s been considered and set aside as an option by governments. But as the population ages out old age care will only go up the agenda, and it’s obviously better started sooner rather than later.

    And yes I am aware we have ‘national insurance’ in theory. 😉 But that does not work at all as I’m describing. (Something that should be explained more clearly to taxpayers IMHO).

    Of course fanciful speculation doesn’t help those of us planning today. In fact, feeling such insurance was on the way could be a disincentive to save, because a late middle-aged person might feel bailed out by only have to pay a few years of insurance versus a 20-something facing an additional higher lifetime cost.

    Although that would be very on-brand for the inter-generational outcomes of the past 20-30 years… 😐

  • 26 The Accumulator February 24, 2022, 11:09 am

    @ TI – agreed, it looks like a problem crying out for insurance. It’d be interesting to dig into how other countries are solving the problem. Health-related insurance tends to make us think of the US. But we could look to European healthcare systems that combine insurance with state funding. I have previously read that Germany and Japan have both successfully introduced new taxes to pay for social care by building broad political consensus.

    @ Jonathan B – Exactly. The place to start is what are our values? What kind of society do we want to be?

  • 27 JohnN February 24, 2022, 11:21 am

    @The Accumulator, you could do worse than look at Australia for a good model of social care provision. Way better than we have.

  • 28 Dean February 24, 2022, 3:10 pm

    Very good article. I’m sure you’ll cover NHS continuing care in future articles, albeit very hard to be awarded. NB one person above observes: “You run out of money the state picks up the tab for you.” What happens more often first is the person dies- the average stay is a nursing home is a few years. So a material proportion of self-funders die before hitting the cap, and not just because in no sense is it a genuine cap as noted in the article. However, also worth remembering about half of social care funding is for those of working age, in their own home (most being learning disability support). The government will continue to kick this can down the road and not have the honest conversation the writer seeks. Far too difficult politically and economically. Paying for Covid, Brexit, UK impacts of Russia’s war etc, the NHS….social care will remain right down the list.

  • 29 Dave S February 24, 2022, 8:26 pm

    I agree with others that it’s the anti-lottery aspect of care funding that feels all wrong. Surely everyone would be happier paying a relatively small amount to avoid the burden falling on the unlucky few.

    I would have thought the most obvious answer was to pay for it through a flat rate inheritance tax. That way, the cost is deferred, is shared by everyone, and is done in a progressive way (assuming that avoidance measures by the wealthy can be stopped).

    Having said that, what about any income the individuals are getting whilst in care? If someone had a big final salary pension, or a big SIPP, and was just handing income to their family whilst receiving free care, that would seem wrong. Same with even the state pension, I guess. It’s no doubt no more complicated than I’m making out.

    Incidentally, does anyone have any concept of what level of inheritance tax would be needed to pay for social care?

  • 30 momac February 24, 2022, 8:41 pm

    Hi, the other gotcha in the current system is that you can be assessed by the LA and qualify for the care bit of funding for a care home place, find a place in your local home, move your elderly parent from hospital to care home only for the LA to add you to the end of the funding queue as they can only afford a finite number of residents. Only way you move up the queue is one out one in.

    Mum ended up self funding the care and the “hotel” charges throughout her stay. It was still the best decision the family made to sell house to get the care she needed and deserved.

    Great article as always.

  • 31 CP February 24, 2022, 10:16 pm


    Yes, an important topic to explore.

    As we all know it dwarfs many other financial planning decisions – for the individual concerned and their family members.

    It’s also fiddly and not much fun. So all power to your elbow over at Monevator Towers. Thanks as ever.

    Topics worth covering:
    – Attendance allowance applications (day time / 24 hour care)
    – Care annuities: yes/no/what if…
    – Renting not selling a property to part-pay for care
    – Home care vs residential care
    – Transitioning from home care to residential care

    I’ve had responsibility for three elderly relatives’ later life and end of life care. Just completing my second consecutive year of probate.

    You’re right to say there’s no easy source of advice when it’s need most. Let alone a finance-focused discussion point like this.

    Many thanks for launching such a place.

    On a lighter note, my mum’s care home had a whole social space dedicated to Dad’s Army which always provided good value on visiting trips.

  • 32 Erico1875 February 25, 2022, 8:10 am

    Of course, the home doesn’t have to be sold to pay for the care. It could be rented out, with the income going towards the care cost.
    A friend’s mother is in this situation. State pension,,private pension, rental income topped up by £50 per month each by the 3 children and the house remains protected.
    I also worked for someone who sold the substantial family home, set up a BTL Ltd company and ran a portfolio of flats to cover care costs. I imagine this 2nd option may require Power of Attorney planning etc but shows what is ossible

  • 33 The Accumulator February 25, 2022, 9:48 am

    @ Momac – Did I read your comment correctly? Your mum qualified for funding but was denied it on the grounds her local authority had run out of money?

    Thank you to everyone who is adding their personal experience to this thread. The numbers don’t really mean much without the human side of the story and that’s best told by those who’ve been through it.

    @ John N – thank you for that tip. Will take a look.

    @ Dean – yes, adult social care for those of working age is another dimension of difficulty which I don’t even touch in this series.

  • 34 momac February 25, 2022, 12:44 pm

    hi TA, yes you read the comment correctly. I just pulled out the file to relive the kafkaesque nightmare of trying to navigate a set of competing systems where the rules are opaque, constantly changing.

    Should clarify, our experience was a few years ago under the Scottish system when free nursing and personal care had been recently been introduced. Great in theory, except there was a push by NHS to free up beds especially those who were dementia patients but otherwise not sick.

    Also came at a time when the power of attorney changes were being changed for both care and financial responsibilities. Designed to protect against fraud and abuse but in practice used by banks, solicitors, nhs, social services, hmrc, and so on, to make your life difficult at the worst possible time even if you have assets and can pay your way.

    Mum’s LA funding did eventually start but after we had sold her house to expedite her care needs. We funded 9 years in a wonderful care home. Not every family has that choice.

  • 35 Gentleman's Family Finances February 25, 2022, 5:55 pm

    The conundrum of how to pay for end of life or life long care isn’t new – this has been on the horizon for decades – totally foreseeable.
    What is disappointing with the current government is that they have either bottled-it and won’t tax those that are the beneficiaries through higher taxes on unearned income, or on house values, or on inheritances. Instead, they pass the cost onto workers (mostly) through 2.5% on national insurance.
    Bottled-it or they actually think that it’s better to have the young pay for the old – it’s an intergenerational wealth transfer that is blatantly unfair.

    then again, the idea of there being a cap on care fees doesn’t make that much sense to me – I think that having a free amount of £100,000 or so and then you pay for yourself until you’ve nothing left is equally sensible?

  • 36 The Accumulator February 25, 2022, 6:58 pm

    @ Momac – I’m very sorry to hear how difficult it was. You can hear the system creaking on paper never mind in reality. I didn’t realise though that a council could just say, “Bad luck, we’re fresh out of funds” when you actually qualify.

    The Scottish system does look better than the English system but I have wondered how it holds up in reality. Relatedly, a friend from Northern Ireland has told me harrowing tales of the inadequacy of the ‘free personal care’ her mum received.

  • 37 Peter February 25, 2022, 11:49 pm

    Not much into this subject at my age, but that is just me. Pleasure to read. Thinking of next article title: “True bogglehead”, “Dj JackB”, “Hold or die”.

  • 38 Warren February 26, 2022, 9:21 am

    My mother paid £160,000 for carers in her home before we secured NHS funding (non means tested) because she was so ill. The cost of care is a form of inheritance tax.
    I think we should have basic care homes available for free for those who need it.

  • 39 Boltt February 26, 2022, 12:18 pm

    I’m beginning to feel a bit like another regulate commenter..

    When only 43% of adults pay income tax, large national debt, poor productivity v peers and rest of world. It’s hard to be positive that we can continue with the current living standards in the uk.

    More free stuff just doesn’t seem sensible, but I appreciate it’s desirable.

    I can’t think of any easy solutions but smaller state rather than larger would be my preference


  • 40 HariSeldon February 26, 2022, 1:07 pm

    @TheInvestor, very well put, should be insurance but doubt people want to pay. A charge on homes etc made sense but antipathy to inheritance taxes makes that politically unworkable. ( No objection to current system of inheritance tax, preferable to pay tax when dead rather than alive, inheritances are not very equitable..but my viewpoint is clearly not universal)

    Rationally I will take no action. I can afford to make provision but may not need it, what is the point of saving outside my investment pot ? It’s the Catch 22, if you can afford the cost now, you can afford the cost later.

    As an aside care home costs are around £1200 a week locally in southern England but visited father in law yesterday, in pleasant care home, about £600 per week, in Cornwall… Shop around ?

  • 41 Haphazard February 26, 2022, 9:54 pm

    So glad to see this important topic being covered. It is hard to know where to start – with your parents or yourself.
    Wanting a system in place is not just about trying to preserve an inheritance for the kids. It’s also about the fear of running out of money (houses where I live don’t cost that much) if you face catastrophic costs. Yes, then you get local authority care, but run on a shoestring.
    Another pitfall upon the way is the need to take time off work to look after your own elderly parents, thus being unable to save towards your own retirement and care costs… Again, if you have assets you won’t get much by way of benefits in this scenario.

  • 42 MrOptimistic February 28, 2022, 12:30 pm

    There is a hit and miss angle to local authority support. An elderly solitary neighbour died last year after spending a tidy sum (north of 500k) paying for 24hr care at home. The local authority had to step in 3 years ago and they paid for the live-in care and for any essential costs, eg new washing machine. She still had her pension and ownership of the house (currently under offer at 575k). Turns out the local authority put no charge on the house and there is no bill for the estate to settle. So 3 years of 24hr care at no charge to the beneficiaries. Go figure.

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