As families turn to domiciliary care in the wake of COVID-19 outbreaks across care homes, Emily Perryman speaks to former Health Insurance & Protection Intermediary of the Year Nicky Cave of Eldercare Solutions and two other long-term care (LTC) sector experts to find out what the financial services industry can do to help.
- COVID-19 hitting care homes and care advisers
- Residential or domiciliary care still needs to be funded
- Need for advice widespread
- Referrals to care specialists a good option for advisers
The crisis engulfing Britain’s elderly care homes and continued confusion around what type of funding individuals have access to have made the need for specialist advice greater than ever before.
Investigations into COVID-19’s rapid spread in care homes have been truly shocking. The Public Accounts Committee recently gave a damning assessment of the government’s approach to social care during the pandemic, describing it as slow, inconsistent, sometimes reckless and even negligent.
Latest figures from the Office for National Statistics show there were almost 30,000 ‘excess’ deaths between March and June, of which two-thirds were directly attributable to COVID-19.
Understandably, relatives have become extremely wary of sending their loved ones to a care home and are turning to alternative forms of care instead, such as domiciliary care or becoming a carer themselves. In May, a report by the Guardian revealed growing numbers of families were seeking legal advice about removing their relatives from a care home, with one law firm receiving at least 10 such phone calls a week.
Eldercare Group’s experience
Although the worst of the pandemic has passed, there is still a great deal of concern about the safety of care homes – and this is having a knock-on effect on business at some specialist care fees advisory firms.
Nicky Cave, Managing Director of Eldercare Group, says enquiries to the firm are currently around 50% lower than pre-pandemic levels, although this is still a big uptick from when coronavirus cases were at their peak.
“In March and April everyone was terrified of moving mum or dad into a care home, so calls were down and occupancy levels were down. However, moving into a care home normally isn’t aspirational – most people go there because it isn’t feasible to stay at home, and COVID or no COVID won’t change that,” says Cave. “Families who put off care decisions for a couple of months are now starting to move forward again, although for some people care at home might be more appealing than before.”
Cave says she has seen adverts from some domiciliary care agencies that are almost trying to trade off the misfortune of care homes and promoting themselves as a safer option. She has also seen some families take their mum or dad out of a care home with the intention of providing care themselves until they deem the care home safe again.
“I do worry there will be a fallout from this – where some elderly people have stayed at home when they shouldn’t have. When they do go into a care home, they won’t be in as good a condition as they should have been. It is a real concern,” says Cave.
Impact on the market
If there is a trend of falling care home occupancy and rising domiciliary care, this could have implications for the later life advice market. For individuals who need a 24-hour live-in carer, care bills average between £800 and £1,800 a week, depending on where they live.
Since most people won’t have that amount of money at their disposal, Cave thinks we could see greater use of equity release solutions. Equity release can be a useful way of funding care at home, but is isn’t usually available for people moving permanently into residential care.
“My concern is whether clients will be getting the right type of equity release advice because the adviser does need to fully understand the implications of care,” says Cave. “It isn’t a prerequisite for an adviser doing equity release to have a care qualification and so I hope these advisers would work alongside a specialist care adviser.”
Indeed, Cave strongly advises that any intermediary who is approached by someone looking for advice on care funding refers the client to a specialist.
“I am really anti dabbling in other markets – for example I would never advise on pensions even though I have various qualifications,” she says.
‘Moving into a care home normally isn’t aspirational – most people go there because it isn’t feasible to stay at home, and COVID or no COVID won’t change that’Nicky Cave, Eldercare Group
“Advisers either need to get accredited, build a robust network of professionals and really learn the trade; or they need to partner with someone who has already done this. Some advisers might feel they are helping their client by trying to offer care funding advice, but they aren’t serving anyone very well. It is a truly specialist area.”
Care funding solutions
For clients who want to plan ahead for their care, funding solutions remain few and far between.
National Friendly provides an Assisted Living Insurance product, which pays out a lump sum of £20,000 or £30,000 if the policyholder is unable to perform two or more activities of daily living or has severe cognitive impairment. “The payout won’t cover the cost of a care home, but it could cover a stair-lift or other adaptations to help you stay in your own home a bit longer,” says Cave.
AIG and Vitality enable customers to add long-term care cover to certain policies. For instance, clients can add LifestyleCare Cover to Vitality’s whole of life policy and get a severity-based payout if they can no longer look after themselves due to degenerative illnesses like dementia and Parkinson’s. This type of cover is only really useful is someone actually needs to buy whole of life cover; it’s not available as a standalone policy.
When it comes to funding care at the point of need, there are now four providers – Just, Aviva, National Friendly and Legal & General – who offer care fees annuities. Like pensions annuities, they enable the client to swap a lump sum of money for a guaranteed monthly income. Care fees annuities differ in that they are all individually underwritten, there is no maximum age and the income is paid directly to the care provider with no tax deducted. Returns also tend to be much better because the person is older and in poorer health, and 100% of the income is protected by the Financial Services Compensation Scheme.
Cave says the lack of solutions means later life advice is not a product-driven industry, and so any adviser thinking of getting involved needs to dedicate themselves to the market, understand the system, have the ability to challenge funding decisions, and have the patience to wait around five months for transactions to complete. Or, they can simply leave it to the specialists.
THE EQUITY RELEASE SPECIALIST’S VIEW
‘Advisers must work collaboratively‘
Advisers across the equity release and later life advice markets should work with one another to better serve their clients, writes Emily Perryman.
Will Hale, Chief Executive of equity release specialist Key, argues that because markets outside of the pure care space often work in siloes, advisers aren’t necessarily delivering the best advice to clients.
“I would argue that even among later life advisers, their appreciation of the nuances of equity release means they aren’t necessarily best placed to advise specifically on equity release solutions. Equally, equity release advisers don’t necessarily know about all the nuances of the care sector,” says Hale. “The relationships that work well are those where advisers refer business both ways – and that requires advisers to work collaboratively to ensure both areas of specialism are appropriately covered. At Key we have a number of relationships of that ilk, but they are not as widespread as they should be. The industry needs to work on establishing closer, customer-centric links.”
Overall, Hale believes more people will use equity release in the future because, he says, the regular income provided aligns itself well with care costs provision.
“There are societal benefits of people living in their homes for longer and it releases pressure on the care home sector,” he adds. “If people are able to adapt their property and have care at home that is generally a good thing.”
THE INDUSTRY BODY VIEW
‘Media focus on care homes is an opportunity for advisers‘
Widespread media focus on the care homes sector could offer a great opportunity for advisers to connect with clients, writes Emily Perryman.
Tish Hanifan, founder and joint chair of the Society of Later Life Advisers (SOLLA) says advisers should be proactive and talk to their clients about planning ahead for the future so as to avoid decisions being made in crisis. She argues that referring business to specialist advisers shouldn’t always be the default position and that all advisers should build up a degree of knowledge about later life planning.
“It’s a good idea for advisers to look at what they want their business to be,” she says. “If they are not going to do much care advice, they should refer business to specialist advisers and those advisers should be SOLLA advisers who are the gold standard. However, I don’t think advisers should just work in siloes. They should have some understanding of the sector, for example by doing equity release exams or watching SOLLA webinars, so they can see at what point they should hand over the business to someone else.”
Hanifan says there is a particular need for advice on domiciliary care funding, which isn’t as widely talked about as residential care funding.
“A lot of people have low level care needs, but if they decide they want to stay at home it’s important the adviser can say, ‘that’s a great option, but we need to look realistically at what your needs will be in the long term’. If advisers understand how much it costs for domiciliary care in their area, they could provide a really good service to their clients.”