The Demand for Long-Term Care
As the UK population ages, the demand for long-term care services continues to rise. Understanding the associated costs and exploring viable financial solutions is crucial for individuals and families planning for the future.
In Portsmouth, the percentage of people over the age of 75 years is expected to rise by 3% in 2025, to 30% by 2030. This is expected to increase demand for domiciliary care in the city by 20,000 per annum (Portsmouth City Council, February 2025).
The Rising Cost of Long-Term Care
Long-term care encompasses a range of services that meet the personal and medical needs of individuals who require assistance over an extended period. These services can be provided in various settings, including residential care homes, nursing homes, and through domiciliary (in-home) care. The following statistics are taken from the Age UK website and serve as average costs:
- Residential Care Homes: These facilities offer accommodation and personal care, such as assistance with dressing and bathing. As of 2025, the average cost for residential care in the UK is approximately £949 per week, equating to around £49,348 annually.
- Nursing Homes: In addition to personal care, nursing homes provide 24/7 medical care from qualified nurses. The average cost stands at £1267 per week, or about £65,884 per year.
Domiciliary Care: Home care services offer flexibility, allowing individuals to receive assistance in the comfort of their own homes. While often more affordable than residential options, costs can vary widely based on the level and frequency of care require, but can see rates around £25 or more per hour.
NB: The actual cost will depend on which local authority you live in across the UK, as they set the initial rates. Care providers, residential and nursing homes can then set their own rates, generally above what the local authority pay.
the benefits of financial planning for long-term care
The substantial cost of long-term care can significantly impact personal finances. However, proactive planning can offer several benefits:
Asset Protection: Early financial planning can ensure that savings and property are preserved for future generations.
Peace of Mind: A clear plan alleviates the stress and uncertainty for loved ones associated with potential long-term care needs.
Access to Preferred Care: Financial readiness allows individuals to choose their preferred care setting, be it at home or in a specialised facility.
The Role of Insurance in Long Term Care
Historically, long-term care insurance was available in the UK to help cover these expenses. However, the landscape has changed.
Decline of Traditional Policies: Long-term care insurance is no longer commonly sold in the UK. The lack of a cap on care costs made premiums increasingly unaffordable, leading insurers to withdraw these products from the market.
Alternative Financial Products: While traditional long-term care insurance policies are scarce, other financial products can assist:
- Immediate Care Plans: These involve a lump-sum payment in exchange for a guaranteed income to cover care fees for life.
- Equity Release: Homeowners can access the equity tied up in their property to fund care costs, allowing them to receive care at home without the need to sell their residence.
- Life Insurance Policies: Some policies offer critical illness cover or accelerated death benefits, which can provide funds if long-term care is needed.
Government Support and Means Testing
In the UK, eligibility for state-funded care is means-tested. Individuals with assets above a certain threshold are required to contribute to or fully cover their care costs. As of recent guidelines:
- Upper Capital Limit: Individuals with assets above £23,250 are typically expected to fund their own care.
- Lower Capital Limit: Those with assets below £14,250 may receive maximum support, with contributions based on income.
It’s important to note that these thresholds can change, and seeking current information from local authorities or financial advisors is advisable.
Conclusion
Planning for long-term care is a complex but essential aspect of financial preparedness. While traditional insurance options have diminished in the UK, alternative financial products and proactive planning can help manage potential care costs. Consulting with financial advisors and exploring all available options can ensure that individuals are well-prepared for the future, securing both their well-being and financial stability for themselves and loved ones.
