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Calculating costs

Comparison of costs of care

People with dementia (PWD) need help with personal care to help them to live independently in their own homes.

Personal care, also called Social care, means care and assistance with the activities required for normal daily life, such as washing, dressing, eating and drinking, that a PWD is no longer able to do unaided because of his declining health, cognition or functional ability. Personal care is needed when a person is unable to function independently. Personal care is different from health care because the need for care is not the result of poor health.

If personal care needs cannot be met by the family or other informal carers, it will be provided by the Local Authority (LA) often called the Council. This service is means tested, so that those receiving care may be required to contribute to the cost. Health care is provided by the NHS, free at the point of delivery.

Care will be provided based on assessment of need, expressed as a Care Plan. The assessment is the responsibility of the Social Care department of the Local Authority, and members of the multi-disciplinary team will take part in the assessment. The outcome of the assessment will be set out in a Care Plan. The LA is responsible to provide the care and also the equipment and resources necessary to implement the Care Plan, for example moving and handling equipment.

The Care Plan is implemented by the Social Care team from the local authority with what is referred to as the Care Package. Care may be given by LA care workers, or the LA may pay a private agency to provide the care.

Care package

"A care package is a combination of services put together to meet a person's assessed needs as part of the care plan arising from an assessment or a review. It defines exactly what that person needs in the way of care, services or equipment to live their life in a dignified and comfortable manner."

Personal care costs are shared between the local authority and the PWD and family. A financial assessment will determine the contribution required from the PWD and/ or family. If the PWD has more than £23,500 in assets they will have to contribute to the cost of care. The actual contribution will be decided at a financial assessment. Many local authorities subsidise the cost of care even for people who have financial assets, so that charges for services do not reflect the whole cost of what is accessed. Assets include an owner occupied house, unless it is shared with a partner, a family member over the age of 60, a disabled family member or a child of the resident, under the age of 18 . If the house is to finance care, payment can be deferred until after the death of the PWD. Assets of a spouse do not form part of the assessment, Page 6 - 7 of link document. Pension and Attendance Allowance do form part of the assessment, and can be the source of the contribution made by the PWD. When the level of contribution from the LA is agreed, there is sometimes an option that money be paid quarterly to the PWD and family as a Direct Payment, and they then arrange care directly. If this option is not appropriate or is not taken up, the LA will provide the care either using their own team or by arranging care provision from a private agency.

FirstStop provides a help line and publications to give advice to older people about finances, care and housing.

Informal care

Much of the care that enables PWD to stay at home is given informally by family members or friends or neighbours. It is designated informal because it is not officially recognized or paid, although the PWD’s assessment allowance or a Direct Payment can be used to pay for informal care. Often a PWD is able to stay at home because a carer lives with him/ her or because family and friends support the individual. The carer will not be directly involved in care giving at all times, but takes overall responsibility for the safety of the PWD. The nature of informal care makes it difficult to quantify or cost. If the time given informally were given a cost value equivalent to the rate for personal care, it would change the calculation of the cost of care completely. There are also costs associated with maintaining a house and providing a warm and safe environment which may be hidden from a calculation of the total cost of care.

Some of the costs are met from allowances, benefits and concessions available to PWD, for example Attendance Allowance and reduced Council tax.

There are different ways to calculate the costs of Personal care and of Informal care which adds to the difficulty of definitively costing the care of PWD.

For example, the Personal Social Services Research Unit, calculated the cost the cost of providing personal care by local authorities in 2011, to be an average of £32 per hour; and the cost for independently provided private home care to be £16 per hour. But when Direct Payments are made to individuals to buy care, payment is calcluated at the rate of £11.56 per hour . The actual pay of a care worker is close to the minimum wage of £6.08, in 2012, with starting rates of pay of around £6.20 per hour or £15,400 pa for unqualified care workers in 2011.

Personal Care can be costed:

  • Cost per hour of working time of care worker
  • Costs of care worker time and travel costs and travel time
  • Cost charged by private care provider, to include all costs of running an organization to provide care
  • Cost calculated by the Local Authority to include work of the purchaser as well as the provider of care
  • Costs including costs per hour of time of informal carer (difficult to be precise as not all time has been directly used by or with PWD)

Informal care can be costed in different ways

  • Calculating the cost of replacing informal care with personal care, using any of the rates above
  • Including cost to the family of loss of income and pension earnings by reducing working hours in order to give care
  • Including cost to the country of loss of taxes and of making additional pension and benfit payments as a result of reduced working

Tables have been produced on our other web pages, to show for each of the PWD described how care costs change when the different values described above are used. We also show the effect of using these values to cost informal care.