Why are care home fees rising so quickly?

Why are care home fees rising so quickly?One of the biggest concerns we hear from clients with relatives moving into residential care homes is the rate of future fee rises.

New figures from Valuing Care show care home fees have risen by an average of 6% to 10% over the past year.

According to their report, some care homes have hiked their fees by as much as 13% in the past twelve months.

With average fees of £37,500 a year for residential care with nursing, these fee rises could mean an extra £93 each week for some care home residents to pay.

Why are these care home fees rising so quickly?

Some of the increase is linked to rising staff costs, with a higher minimum wage introduced last October, and the introduction of the new National Living Wage earlier this month.

The National Living Wage was introduced at a rate of at least £7.20 an hour for people 25 years old and over.

The Government is committed to increasing this each year, with the goal it is rising to £9 an hour by 2020.

This means rising staff costs are likely to continue contributing to higher care home fees over the coming years.

Another factor seems to be cross subsidy, with self-funders picking up some of the cost for local authority funded places in privately owned residential care homes.

With many local authorities facing a social care funding deficit, this cross subsidy is becoming more widespread and certainly contributing towards care home fees rising so quickly.

With a delay in the introduction of the lifetime cap in care fees, which was promised as part of the Care Act, individuals and families funding residential care home fees currently face an uncapped exposure to higher fees.

It is sometimes possible to limit rising fees through negotiation with a care home, especially where fees are secured using an immediate care annuity, which guarantees the payment of fees for life.

These products can include an annual increase in payments, which residential care home operators seem to like because of the certainty they offer.

No care home in our experience likes to have to address the situation when a resident runs out of money and the funding on offer by the local authority is insufficient to cover their costs.

Where a resident in a care home is forced to move to another, usually cheaper home, mortality rates linked to the move are reported to be as high as 43%.

Avoiding the negative outcomes associated with a care home move is important, as is avoiding the stress and worry of being unable to afford constantly rising costs.

When choosing a care home and deciding on the best way to pay for residential care, it is essential to consider carefully how fees might increase in the future and ensure these are factored into your plan for payment.

email

Keep reading

Join over 2,500 satisfied subscribers
Get the Informed Choice weekly update email

Straight to your inbox at the end of each week, our weekly update email shares the best of our content from the past seven days, so you don't miss a single thing.

About Martin Bamford

Martin Bamford is a Chartered Financial Planner, Certified Financial Planner (CFP) professional and published personal finance author. He works with elderly clients to provide advice on funding residential care fees, hosts the Informed Choice Podcast and is a keen ultra runner.
This entry was posted in Care Fees, News. Bookmark the permalink.

Comments are closed.