Care home fees are a gamble, aren't they?

[whatproblem]

I'm sitting here looking at a spreadsheet that I've just compiled. I'm trying to work out if Mum (PWD) has enough money to self-fund in a decent care home near me. She has got to the point of admitting that she can't cope with living alone any more. (She was in denial, hence my username, but we've moved on since then.)

I've worked out that she could afford about 10 years in this care home before her money runs out, so she's luckier than most. This does depend on a lot of unknowns, however. I don't know what the fees will be in 10 years' time, if she's still around. My spreadsheet assumes that last year's increase (6%, eek!) will be repeated every year.

I also don't know what her pension income will do over that period, so I've made a conservative guess (2.5%, which is the state pension's triple-lock minimum). What I do know is that any level-benefit annuity that she buys today will look like peanuts in ten years' time, and she probably can't afford an escalating one.

My feeling is that she should go for the good care home and the affordable annuity, and if things get sticky later on she will have to move to a cheaper home. At least she will have the benefit of a nice home in the early years while she can still appreciate it. I hate to think what the future holds but with any luck she won't know what's going on.

Anybody else here in the same boat?

 

[Distressed55]

I'm sitting here looking at a spreadsheet that I've just compiled. I'm trying to work out if Mum (PWD) has enough money to self-fund in a decent care home near me. She has got to the point of admitting that she can't cope with living alone any more. (She was in denial, hence my username, but we've moved on since then.)

I've worked out that she could afford about 10 years in this care home before her money runs out, so she's luckier than most. This does depend on a lot of unknowns, however. I don't know what the fees will be in 10 years' time, if she's still around. My spreadsheet assumes that last year's increase (6%, eek!) will be repeated every year.

I also don't know what her pension income will do over that period, so I've made a conservative guess (2.5%, which is the state pension's triple-lock minimum). What I do know is that any level-benefit annuity that she buys today will look like peanuts in ten years' time, and she probably can't afford an escalating one.

My feeling is that she should go for the good care home and the affordable annuity, and if things get sticky later on she will have to move to a cheaper home. At least she will have the benefit of a nice home in the early years while she can still appreciate it. I hate to think what the future holds but with any luck she won't know what's going on.

Anybody else here in the same boat?

Hi

A 6% increase is a reasonable start, although some TP'ers will be able to tell you that they've had increases far in excess of that. I tend to agree with you, though, that you should make your mums life now as good as possible and as enjoyable. All that any of us can do is to make decisions for the short term - maybe two or three years - as long term we have no idea where this hideous disease is going to take us,

 

[Beate]

Funds for 10 years are brillant - that's a long time in dementia. You should be fine.

 

[nitram]

If you find that your Mum has to be moved from residential to nursing or EMI the 6% could become 20% or more. Several members have posted having met this problem.

Also bear in mind that self funders have to make up for any deficit caused by the failure of LAs to sufficiently increase funding for assisted placements.

All you can realistically do is choose a suitable home, pay up, and keep your fingers crossed.

 

[Sirena]

My feeling is that she should go for the good care home and the affordable annuity, and if things get sticky later on she will have to move to a cheaper home. At least she will have the benefit of a nice home in the early years while she can still appreciate it. I hate to think what the future holds but with any luck she won't know what's going on.

Anybody else here in the same boat?

I made the same decision earlier this year. My mother moved to a care home in February with nearly 5 years' worth of funds at current rates. It is a really good (and relatively inexpensive) CH and even if she does have to move at the end of that time I figured she would have had good care at a time she could appreciate it. I can't control what type of care she will need or how long she will live, so I just do my best with the things I can control. As you say, my hope is that if she has to move somewhere considerably less pleasant she will not know much about it.

 

[Kevinl]

I think you've underestimated the possible care home fees increase in cost people on here have posted of a 20% increase in one year, the other thing is that if her needs increase and you need to move to an EMI or nursing home that could cost considerably more than a care home.
If the "nice home in the early years" is seen as being overly nice by the LA then they could treat this as a deprivation of assets and refuse to fund, alternately some homes will agree that if you self fund for a certain period of time then they will keep her at the LA rate.
I don't know why people bother with annuities, they guarantee all the money will go when someone passes away, if you can self fund for 10 years and then say "if she's still around" might mean you're chucking away and inheritance she might have left to family, friends, charities or whoever she's left it to.
Sadly people can and do pass away sometimes quite suddenly, I've seen that happen so often in the nursing home where my wife lives now, out of the 30 residents only 2 have been there longer than her, some have moved to the high dependency unit and some to other homes but in just over 2 years quite a few have passed away.
K

 

[Sirena]

If the "nice home in the early years" is seen as being overly nice by the LA then they could treat this as a deprivation of assets and refuse to fund

Yes, it makes sense to choose somewhere which is nice but has reasonable fees so the self-funding lasts as long as possible.

some homes will agree that if you self fund for a certain period of time then they will keep her at the LA rate.
K

That's what I'm hoping, it's a possibility for my mother but not guaranteed. And she may need nursing care in future, which her current home doesn't provide.

 

[whatproblem]

It's great to hear from you all. Thanks for sharing your experiences. Most of it is reassuring but I appreciate the negative views too - good for keeping things in perspective.

I forgot to mention that my budget was based on the dementia care rate, even though I've been told that Mum can start off in the residential section which is slightly cheaper. My chosen care home has res, dem and nursing sections.

I'm hoping that the 20% increase that some people have referred to is a one-off jump when you start needing nursing care, not a repeated event. Theoretically there's a thing called NHS-funded nursing care that might help with that. Has anyone here succeeded in obtaining it?

As for the annuity, I know it's not a magic money tree, but according to my calculations it stretches the funds by a couple of years. I guess that the benefit, if you live long enough to receive it, is funded by the customers who die early. I don't propose to spend 100% of Mum's money on it - I will get a level annuity, which is cheaper, and fund the shortfall from what's left. This is a sort of DIY capital protection - if Mum doesn't last out the annuity period, there will be some cash left.

 

[nitram]

FNC (funded nursing care) can only be paid to a nursing home, it is a contribution from the NHS to providing the necessary 24/7 availability of a nurse.
Some homes discount their fees by the FNC, some don't meaning you can reduce the amount a resident pays by the FNC.

Most residents in nursing care receive FNC which is why several homes apply the discount when quoting.

 

[Kevinl]

As Nitram says FNC is only available to people in a nursing home, not a care home or a residential home, it has to be a nursing home, currently the rate is £155 per week and nursing homes may quote their full rate and give a discount if FNC is given, some do, some don't.
FNC is paid to the home so they don't have to send the district nurse round every 5 minutes, we have 2 residents given insulin as needed, a couple with leg ulcers that need dressing twice daily and a whole host of other medical conditions, not to mention the 3 on end of life care.
My wife gets FNC as her condition means she has to be given medications as needed (PRM) and so it needs a qualified member of staff to make that decision not an unqualified carer.
I don't know if the "negative views too" meant me, probably it did but I've no problem with that, my daughter once told me that the only way I could live in this "hell" (her words not mine) was that I thrived on chaos and up to a point she's right, you can't "spreadsheet" for AZ, you can't plan for the unexpected, you can't know the unknowns or plan for them, people who like to be "in control" (not meant in a disrespectful way) sometimes struggle the most when chaos rules and in the case of people with AZ it can go either way.
If your mum's just a little bit forgetful and is happy to go into a residential home then that's fine but if you want to carve in stone what happens next then with AZ forget it, while she's amenable and is happy to go into a residential home then do it, but things can change and so you have to be fluid too and adapt as they do, spreadsheets and annuities are fine but don't allow for the unexpected and be flexible.
K

 

[2jays]

Mum had, after selling her house, approx 8 years fees, taking into account fee increases etc

I decided, whilst she could appreciate things, I was prepared to reduce the money towards future years fees by spending it so she had a quality of life

Mum was in a residential place biased towards dementia care rather than purely residential

I think we may have been very fortunate, but it may also be relevant now in certain homes, as once mum had been in this care home 3 years, I was able to negotiate the fee increases to an acceptable and affordable amount, can’t clearly remember the percentage, but 2% comes to mind, much less than the figure I was informed would be the yearly increase

 

[whatproblem]

As Nitram says FNC is only available to people in a nursing home, not a care home or a residential home, it has to be a nursing home, currently the rate is £155 per week and nursing homes may quote their full rate and give a discount if FNC is given, some do, some don't.
FNC is paid to the home so they don't have to send the district nurse round every 5 minutes, we have 2 residents given insulin as needed, a couple with leg ulcers that need dressing twice daily and a whole host of other medical conditions, not to mention the 3 on end of life care.
My wife gets FNC as her condition means she has to be given medications as needed (PRM) and so it needs a qualified member of staff to make that decision not an unqualified carer.
I don't know if the "negative views too" meant me, probably it did but I've no problem with that, my daughter once told me that the only way I could live in this "hell" (her words not mine) was that I thrived on chaos and up to a point she's right, you can't "spreadsheet" for AZ, you can't plan for the unexpected, you can't know the unknowns or plan for them, people who like to be "in control" (not meant in a disrespectful way) sometimes struggle the most when chaos rules and in the case of people with AZ it can go either way.
If your mum's just a little bit forgetful and is happy to go into a residential home then that's fine but if you want to carve in stone what happens next then with AZ forget it, while she's amenable and is happy to go into a residential home then do it, but things can change and so you have to be fluid too and adapt as they do, spreadsheets and annuities are fine but don't allow for the unexpected and be flexible.
K

Hi Kevinl, yes I did mean you (and Nitram) but I didn't mean to be offensive. Perhaps I should have said "cautionary" instead of "negative". I appreciate your advice. I am thinking hard about the balance between flexibility (pay as you go funding) and commitment (an annuity). Neither of them guarantees that we won't run out of money. The annuity is clearly better value if she lives longer than 8 years or so.

I didn't paint a picture of Mum's condition. She is more than a little bit forgetful. The psychiatrist we saw last week said that she needs to be in a care home, and I agree. She lives alone, is very vulnerable and has terrible short-term memory. She remembers my name most days but is a bit hazy about whether she used to be married (she was for 49 years) and to whom. She wouldn't know whether or not she had eaten on each day if she didn't have twice-daily care visitors. So I'm in no doubt about what care she needs, but I guess I still have a choice about the level of comfort that we buy. She is used to quite a comfortable lifestyle and I don't want to put her somewhere that she will hate.

 

[canary]

You can never tell how long someone with dementia is going to live, but statistically the average length of time once someone moves into a care home is either 2 or 3 years, depending on where you look.

Obviously, someone can live for longer than 8 years in a care/nursing home (and some do), but statistically is not very likely, so if your mum has to live this long to make the annuity worth while it doesnt strike me as a good bet.

 

[Kevinl]

As Canary says 2 or 3 years is an average but I've seen people walk in vertically and go out horizontally in a box in as little as 2 months. My wife went into this home in June 2016 and of the 30 residents only 2 have been there longer than her now.
That's not as bad as it sounds as several have been moved to the high dependency unit and some are still there but at a much higher cost, and some have been moved as after a fall the home asked for one to one funding which can add about £1,000 per week to the bill which the families can't afford.
We've lost a few residents after falls, the home reassesses them in the hospital, decides they need one to one or they won't take them back, I'm not saying it's a strategy they use, just something that happens, that's how nice homes stay nice, they kick out the problem ones.
If something changes and you have an annuity then the ability to react to the change is taken away, one to one may double the bill in a heartbeat or a change in behaviour could mean you have to find another home at short notice.
I wish we all had a crystal ball and could see the future but we don't and so it's just best guess, sadly I'm at a funeral for a lady on Thursday, two years ago I wouldn't have given her two weeks, likewise I had Friday fish and chips lunch with my wife another lady and her husband, something happened and 10 days later she's coming back from hospital into the end of life care unit at the home, unbelievable, we all sat round eating fish and chips (with mushy peas) and she's now 10 days later in EOL care.
Once you lose control of the money you lose control to be able to respond to what can be a rapidly changing set of circumstances and the decision to but an annuity is pretty final, not for me I've been round the block too many times.
First line of the post is how you've "spreadsheeted" AZ, sorry but for me it doesn't work that way, you have to be adaptable and losing control over the money makes adapting very difficult.
K

 

[whatproblem]

Thanks, Kevinl and Canary. You have given me food for thought. I can see the benefit of remaining flexible and I am a handle-my-own-finances kind of person at heart, so keeping control of the cash appeals to me. Luckily I don't need to rush into anything, so I will probably get a second financial opinion from an advisor who doesn't live by selling annuities. Mum can afford to pay direct to the care home for a few years while I explore all the options. Also, once she's in there, the home may be able to give me a better prediction of her future needs.

 

[Cazzita]

Very interesting reading these thoughts and makes me realise what lies ahead! Thanks x

 

[whatproblem]

As I suggested earlier, I did get a second opinion on funding. The second adviser told me that an annuity was a possibility but it would be best not to rush into it. It might be better to self-fund for a year or two to see what annuity rates do, and watch investment rates too in case I decide to keep the money and invest it. It would also (this time it's just my opinion) give me a chance to see how Mum gets on in the care home before committing to a big expenditure.

In Mum's case the finance is particularly difficult because she is only 78 and in good physical health. Therefore I don't know what her future will be like - will she stay confused but healthy for many years, or will the dementia accelerate downhill? The doctors don't make make predictions except to say that it won't get any better. The annuity rates I've been quoted work out to an expectancy of just under 8 years, but that's an actuarial figure and not a prediction.

The good news is that our preferred care home has just found me a room for Mum (subject to medical reports) so at least she'll be in a safe environment while I play with my spreadsheet.

 

[Bod]

What is your chosen Homes, policy regarding those who's money has run out?
I know of one, where the person has to come in (as a self funder) with so much funds available, 3-5 years min. Should the money run out, then LA funding is accepted, topped up by a form of reserve fund. Needless to say the home is not at the cheap end of the market, but residents do have a home for life.

Bod

 

[VerityH]

We've just had to put both parents into dementia units. Total £1800 pw! With their savings and the money from when we sell the house, we reckon we've got about 2.5 years, which may or may not be enough. It's a horrible situation to find yourself hoping your parents die before the money runs out. Both homes (they're having to be separated - long story) have said (not in writing, mind) that if they've been resident for over 2 years and they run out of money, they would put them on to CHC (didn't know what this was - had to look it up) for the rest of their lives and not chuck them out.

I don't think mum will last very long as she is deteriorating at warp speed, but dad hasn't deteriorated for about 4 years now, is 83 and in rude health …

 

[canary]

I hate to rain on your parade @VerityH but its not not up to the care homes who gets CHC and who doesnt. I think they probably mean that they will accept LA funding so that you dont have to pay top-ups