Many people, as they grow older, worry about where they will live if they are no longer able to manage in their own home. For some, the need will arise for nursing home or residential care.
The cost of care varies greatly, depending on the kind of care needed and the facilities the home offers. Care homes with nursing available usually cost more and you will be charged a higher fee if you are seeking more than the basic minimum standards, such as a room of your own.
In 2011, the Coalition Government announced a further review of the subject, and commissioned a report. This proposes to limit the maximum payable for all people who need to go into a care home (£35,000 is the suggested figure), proposes an increase to the 'means test' limit (see below) - to £100,000 and proposes an annual cap for payment between £7,000 and £10,000.
Rates and allowances quoted below were current at the time of writing. To check these, look at the Age UK (formerly Help the Aged) website.
Will I Have to Pay the Full Cost?
If you have to go into a residential care or nursing home for health reasons, or because of a disability, then the local authority will assess your financial circumstances to see whether you qualify for help with the fees, depending on your individual circumstances. Under the national charging system the local authority takes into account income and savings held by the person entering the home. This may include Income Support or Minimum Income Guarantee.
If you are assessed as needing permanent care in a care home you will be expected to pay the full cost of the care if you have capital of more than £23,250 in England. This includes savings and investments and the value of your home can also be counted as a capital asset. The amount of savings you have will affect how much Income Support or Pension Credit you can get.
The local authority must disregard the value of your property for the first twelve weeks after the date on which permanent admission starts. During this period, they must assist with your fees if your remaining capital is below the upper limit. After this they can make a claim on the value of your home and recover the nursing home fees once the property has been sold. Social Security does not have these powers. If you are taking reasonable steps to sell your property, Income Support or Minimum Income Guarantee can be paid for up to six months and longer if reasonable.
If you are paying for your own care you may be entitled to claim Attendance Allowance. This is a non-means-tested, non-taxable benefit paid by the Department for Work and Pensions.
Free Nursing Care
People who are paying the full cost of their care are entitled to have the nursing element of that care paid for them by the National Health Service (NHS). This relates to care provided by a registered nurse as distinct from help with daily activities. The NHS pays a set amount according to the level of nursing care provided. This is paid directly to the care home.
If you and your partner own your home jointly and your partner needs permanent residential care, consider changing the ownership of the property from a joint tenancy to ‘tenants in common’. This will enable you to bequeath your half to your children should you die before your partner.
When one of a couple goes into a care home and they share a joint account, it may be worth dividing this if the fees are to be paid from the account. This will make it clear how much of the resident’s share has been used and avoid the possibility of their spouse incurring unnecessary expenditure. As the resident’s share of the capital is depleted, it may be necessary to seek help from the local authority. Do this early enough to allow time for any necessary care or financial assessments to be carried out by the time the capital reaches £21,500. If the home you have chosen costs more than the local authority will pay and does not meet their terms and conditions, this could mean having to find a new home or having the fees topped up by a third party. You are not normally allowed to pay the difference yourself.
Selling Your Home to Meet the Costs
Where people do not meet the criteria for financial assistance from the local authority, they may consider selling their home to meet the cost. Before doing this, consider the financial products available designed to provide a regular care fee income with a degree of flexibility built in to meet any future changes in your care needs. These may require you to invest only part of the capital released, rather than investing the entire proceeds of your sale at a low rate of interest.
Giving Away Assets
If someone gives away assets such as income or savings in order to avoid having to use them for care home fees, they may be deemed to have deliberately deprived themselves of money which would otherwise have been used to help pay for their care. In this case, the local authority may assess them as if they still possess those assets. The timing of the disposal is in point and whether or not the disposal took place at a time when the giver was fit and healthy and could not have known that they would require residential care.
We can help you plan for the future and help with Inheritance Tax planning whilst making sure you have the funds you require for your future needs.
When you are looking for a care home place, where possible, consider all your options carefully. Make sure you get the place that is right for you and that you fund it in the most efficient way possible. The need for such care often arises when it is least expected, but our experience in helping clients organise their affairs for the best, whatever the circumstances, will provide you with valuable support.
There is further information on the Age UK website.
The funding of care of the elderly is coming under increasing attention as the cost to the state rises. There are likely to be substantial changes to the system of funding care over the next several years.