Paying for care
The cost of care can be a stressful issue at a sensitive time. Funding care is an important consideration when planning your income in retirement and long term care.
Not everyone will receive support from the local council. There are many different ways of paying for elderly care that require long-term planning.
Topics you will find in this article
Care services can end up costing hundreds of pounds a week, however, there are ways that the NHS and council can support you.
The amount of financial support depends on your medical and financial need and whether you are in a care home. There are also entitlements available for older people who are paying for homecare.
This article will provide advice and guidance for you and your family on the differences between options for funding elderly care in the UK. It is important that you seek advice and support from as wide a range of people as possible when considering funding options.
Here is a short video from UK Care Guide on the different ways to pay for care.
How much savings can you have before you have to pay for care?
The threshold for receiving the maximum financial assistance for social care in England is £14,250.
This means that if you have finances below this value, you don’t need to pay. The local authority will pay for your care in full.
The local council will pay for part of your social care if your assets are worth between £14,250 and £23,250. You will finance the rest with your savings and income.
If you have more than £23,250 in assets, you will be eligible for no local council support with the cost of your care and you will need to pay the full amount. This is called ‘self-funding’.
If you are going into permanent residential care, the value of your property will be included in the calculation of your finances. If you are paying for care at home, the value of your property will not be included.
Some forms of capital including certain disability benefits are not used towards the cost of care.
How you will pay for your care is determined by a means test that is carried out by the local council. This financial assessment will assess how much capital you have in the form of savings, assets, pensions and so on.
Do you have to sell your home if you are a self-funder?
The value of your property is not always included in your financial assessment when you are self-funding. It would not be put towards the cost of care home fees if it is occupied by:
- Your partner, unless they are estranged from you
- your estranged partner if they are also a lone parent
- a relative who is over 60
- a child of yours who is under 18
The value of your property is also exempt from paying towards your care for the first 12 weeks of needing care. This is so that you have options regarding what to do with your estate.
Be aware that any capital you try to give away to the family will be considered by the local council as ‘deprivation of assets’. It is not within your rights to give away this money and they would have to return it to pay towards care costs.
Options on paying for care
We have set out different ways you can pay for your care below.
You may also want to consider equity release as a way of meeting care costs.
Equity release involves borrowing a lump sum of cash against the mortgage on your property. The loan is repayable when your home is sold, upon the death of the living borrower or when the borrowers move into permanent care.
Equity release is a suitable option for funding care at home, especially as it can be used to fund home adaptations. Adaptations such as building a wet room can enable care in a home setting.
It is less appropriate for paying for long-term care in a care home as the loan is designed to be repaid once you are no longer living at home.
It is important to seek expert advice when taking out a loan and planning your retirement. Financial advisers can help you decide which product is best for your personal finances.
Deferred Payment AgreementsYou can also use the value of your home to pay for care fees using a deferred payment agreement. Under this option, the local council would pay for your care. They would be repaid upon your death or the sale of your house using the value of your property. This is a suitable choice for those who are paying care home fees on a permanent basis and do not want to sell their home. The local council will pay your home fees up to around 70% to 80% of the value of your home, although this varies between councils.
Care AnnuityAn Immediate Care Annuity is one type of insurance product you can use to provide funding for elderly care. A Care Annuity is a service whereby you pay a lump sum to an insurance provider. In return, they provide a policy that covers care home fees for the rest of your life with a regular income. It can be used to pay care fees immediately or deferred to meet a future care need. Therefore it could form part of your retirement planning. Again, it is important that you seek the services of financial advisers when considering a Care Annuity. These products can impact your finances negatively. For example, they could reduce the amount of means-tested benefits you receive.
NHS-funded continuing healthcareIf you are not eligible for NHS continuing care but are assessed as needing care in a nursing home, then you may be eligible for NHS-funded continued healthcare. NHS-funded nursing care provides part of your care home costs. The rate of NHS funding in England is £158.16 per week.
Can I take out insurance to pay for care?
Be sure to look into insurance services designed for older people to fund care in the future.
An insurance service may be subject to interest fees, but they can be a sensible way to plan ahead. Make sure you seek financial advice before purchasing a financial service as all investments have risks.
Long-term care insurance
As of a few years ago, insurance providers in the UK no longer provide long-term care insurance. This is because the escalating costs of care and increasing life expectancy have meant that many policies are no longer viable.
However, many people consider critical illness insurance to cover the cost of care if they become ill and need to go into a care home.
It is important that you seek expert financial advice when considering an insurance policy. Advisers will be able to ensure that the policy covers all of the criteria that you expect it to cover.
Furthermore, you should be wary of offers of care insurance. Long-term care insurance that is meant to cover care for your whole life is no longer offered in the UK.
Do you have to pay for care if you have dementia?
Some, but not all, people with dementia will qualify for free care provided by the NHS. Funding is subject to a needs assessment.
If the assessment determines that a person has “long-term, complex health needs,” then the NHS will provide financial support. This could include the costs of care at home, a hospice or a care home.
Continuing Healthcare Assessments are usually carried out when you go from the hospital into a care setting.
However, not all dementia patients will receive help with the costs of care because it is dependent on the severity of patient need. The assessment will look at how complex, intense and unpredictable a patient’s care needs are in making a decision.
It is important to be aware of your rights in this process. Local authorities have a complaints procedure so that you can appeal the decision of a needs assessment if you are unhappy with it.
What other forms of financial support might I be eligible for?
Those who need personal care on a regular basis could be eligible for Attendance Allowance, provided they are of state pension age.
This allowance is paid at two funding rates based on the severity of your need: either £59.70 or £89.15 a week. It is not means-tested, meaning that the amount you receive does not depend on your savings or income.
Attendance allowance can not be claimed if the local authority help with the cost of your care. It is only available to self-funders.
Carer’s Allowance can be claimed by a carer who provides at least 35 hours of care per week and is in receipt of certain benefits. They do not need to be a relative or live with you.
Pension Credit Guarantee Credit
If your income is below £173.75 as a single person or £265.20 as a couple, you will be eligible for Pension Credit Guarantee Credit. This payment will top up your income to the minimum.
If you are contributing towards care at home and eligible for Pension Credit Guarantee Credit, you should also be eligible for Council Tax Reduction. Council Tax Reduction is an entitlement whereby the council will reduce the cost of your council tax.
You might want to contact the Citizens Advice Bureau for advice about your entitlements.
What is the cost of care?
Care at home
Paying for care in your own home is generally cheaper than the that of care homes. The average in the UK for care at home is £15 per hour, so care in your own home will vary in price based on how much assistance you need.
If you choose care at home you could also be eligible for help from your local council, which will be assessed by a means test. This takes into account your income and pension but not your property.
The means test will ensure that you have an income of £189.00 per week if you’re single and above the Pension Credit qualifying age.
Long-term residential care
The cost of care homes varies by provider, with residential care service costing £600 per week on average. A nursing care service costs an average of £800 a week.
If the local council is contributing towards some or all of your care in a care home, they will produce a budget based on your means test and care needs. The council has a responsibility to provide at least one example of accommodation that fits within this budget.
If you wish to move to a care home which charges more than the budget set by your local council, you can fund the excess with third party top-up fees. This a contribution paid by others; for example, a family member or charity.
I am worried about paying for my care needs as I get older. What can I do now?
It is normal to feel concerned about getting older and the financial implications of ageing. Government spending on adult social care in the UK has fallen by 9.9% between 2010 and 2017 and more people than ever are falling through gaps in the system.
However, there is advice and support out there for you. Charities, financial service providers and government agencies who can help you make a decision about your care.
It is important to think about how your savings and investments could support your care needs in later life. Careful planning and consideration could allow you to retire in comfort in the future.
Other articles related to paying for care you will find useful
Paying for Care
The cost of care can be a stressful issue at a sensitive time. Funding care is an important consideration when planning your income in retirement and long term care. This article looks at the different options available.
Care Home Costs
If you are looking for a care home in the UK for yourself or a loved one, you may feel concerned or confused about care home prices. The content in this article will answer the most frequently asked questions about the UK’s care home fees.
Home Care Costs
The cost of home care packages in the UK will depend on the number of hours that homecare services are required. This article will help you work out what your home care costs could be if you are looking for care.
Immediate Care Annuity
An immediate needs annuity, known also as an immediate care annuity, is a contract between an insurance company (or care provider) and a person who would like a regular income that is paid directly to cover their care fees.
How Does Equity Release Work?
Equity release generally involves stumping up the entirety or a portion of the value of your property in return for cash. The cash can be spent however you wish. This article looks at how it works in more detail.
Equity Release Calculator
An equity release calculator allows you to effectively ‘try before you buy’ and plan ahead. It’s a great way to see how much capital you can (and should) release from your home. This articles explains how they work.