How to fund residential care?

How to pay for care is a major cause of concern for many families facing an uncertain future when a loved one is diagnosed with Alzheimer’s or one of the other form of dementia. Help towards funding for residential care may be available, but it is means tested and the qualifying criteria can be complex.

This article, published on the Money tips section of BT’s website, opened up a lively debate on the fairness (or lack of it) in the funding system which caught our eye here at Compassionate Care. The article provides some straightforward helpful advice on this tricky subject so we’ve decided to share it here.

Older woman with a nurse

Article originally published 17/11/14 

As life expectancy rises, fears increase about how we will fund our twilight years. One of the main concerns many of us have is what will happen if we need to go into a care home and who will pay for it?

The good news is very few people do end up in care homes – only 16% of over 85-year-olds are in residential care, according to Age UK. The not so good news is if you or a relative need to go into a care home, how it is paid for is incredibly complicated.

How much do care homes cost?

If you or a family member needs to move into a care home then you can expect to pay around £28,000 a year, according to website PayingForCare, but that cost will vary depending on where you live. If you need nursing then the cost rises to an average of £37,500 a year.

Do I have to pay all of that?

Not necessarily. Government assistance is available but it is means tested, and you only need a relatively small amount of assets to be viewed as being able to pay for your own care.

How will the government help?

At present if you have assets of more than £23,250 in England and Northern Ireland, £23,750 in Wales and £25,250 in Scotland you have to pay your own care home fees in most cases. Those assets include the value of your home if you own it.

If your assets are worth less than those amounts you are entitled to some state support.

If your assets are worth under £14,250 then you are entitled to maximum government support – but you still have to contribute. You will be expected to put any income you receive towards the cost of your care home, minus £23.90 a week that you can keep for personal expenses.

In England, anyone with capital worth between £14,250 and £23,250 will get government support like those people with assets worth less than £14,250. But you will be expected to contribute an extra pound per week towards your care home fees for every £250 extra that you are worth above that £14,250.

This is where it gets complicated and you may need to contact your local authority.

Will I have to sell my home?

Not necessarily. If your assets are tied up in your home Social Services may lend you the money to pay for your care home.

They will then place a charge against your property so they get their money back when it is sold in the future.

If you do decide to sell your home then Social Services may help you with care home fees for up to 12 weeks while your home is being sold.

What about my partner?

When your assets are being assessed your partner’s will not be included. This means only 50% of joint savings or private pensions will be taken into account and your home will not be included in the calculations if your partner also lives there.

Is there any other help available?

If you are having to pay your own care home fees then you can also claim Attendance Allowance. This amounts to £53 a week if you need care only during the day or the night, rising to £79.15 a week if you need looking after 24 hours a day.

Anyone receiving nursing assistance in a care home may also be able to claim NHS Funding Nursing Care. With this £109.79 a week is paid by the NHS straight to the nursing home to help cover your fees.

What if I run out of cash?

If you have been paying your own care fees but your assets fall below £23,250 then you can seek state help with your fees just as you would if you had started out with less than £23,250. But you may hit problems if your care home fees are higher than the local authority normally pays.

You could need to find the extra yourself or face having to move to a cheaper care home.

What is happening in April 2016?

The government is making some changes to the way we pay for long-term care that will come in from April 2016.

1. Lifetime Cap on Care Costs

Firstly, a cap on how much you pay for care over your lifetime is being introduced. The cap is very high though – £72,000 – and does not include the cost of board and lodging if you are living in a care home, only the cost of your actual care.

As a result Saga estimates that someone self-funding would have to be in care for three years and four months before they hit the cap. At present the average length of stay in a care home is 15 months.

2. Cap on Board Costs

The government is also introducing a limit on how much you pay for your bed and board if you are in a care home. From April 2016 these costs will be limited to £12,000 a year for everyone.

3. Increase in Means Testing Upper Limit

From April 2016 you will be entitled to state assistance with your care costs if you have assets worth under £118,000, a huge increase from the current limit of £23,250. To get financial assistance you will have to be assessed by your local council who will decide if you meet the criteria for needing care, it will then assess how much assistance you get.

The amount of money you will receive to help with your care costs will not take into account how much your care is actually costing. Instead it will be based on what the local authority estimates it would have to spend on your care.

So you may still have to make up a shortfall, and that extra spending won’t be counted in the lifetime cap either.

Where can I get free advice?

If you or a family member needs residential care then it is a good idea to get some expert advice on what benefits and financial assistance you can claim. You can go to Age UK and Citizens Advice for help.