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Mar 21

How will you pay for long-term care?

Reading Time: 7 mins

According to the non-profit company Paying For Care, long-term care cost a mammoth £33,852 every year. A figure that rises even further when nursing and specialist care is throw into the mix.

As an ageing population, more and more people will be in need of care later in their lives for longer. Therefore, it’s crucial that you find out what financial aid is available for yourself and your loved ones now, so you can be protected against mounting costs.

You may be wondering where the financial aid begins and ends. Here at Moneymagpie, we’ve done the heavy work for you and made this handy guide all about paying for long-term care.

 

How much will the government help?

In England and Wales you’re expected to pay all or part of your fees for your long-term care whether you’re in your own home or in a care environment.

The amount you pay will depend on your income and capital. Your local council will assess your finances before you move into a care home. Factors like interest on your property, savings, investments, pensions and benefits will all affect this assessment, or means testing.

How will my capital be treated in the means test?

Your regular income includes things like your pension, benefits and earnings and you’ll normally be expected to use part of your income to help pay for your care. While your capital describes the total amount of your cash savings, investments, land, property and any business assets. If your capital exceeds a certain threshold, then you’ll have to pay for the cost of your care in full.

For example means testing in England:

Amount of your capital
How they will look at your capital
Over £23,250 You must pay full fees (self-funding)
Between £14,250 and £23,250 The local authority will assume that this generates an income and this will be taken into account for your care home fee contributions.
Less than £14,250 This will be ignored and won’t be included in the means test

There are some national differences to means testing. For example, in Wales the savings threshold for £24,000 for care at home, and £50,000 for care in a home. In Scotland, the upper threshold sits at £28,500 and over in Northern Ireland, the figure is the same as England.

Your local authority should publish their charging polices for home care. They’ll also publish information on how they work out what they charge, and what money you can keep for yourself.

Affordability

If those means testing thresholds have got you all flustered, try not to worry as there are lots of caveats to the above.

It’s important to know that you’re allowed to keep some savings and assets (such as your home). If any of the following apply to you, then your home cannot be used in means testing:

  • Your spouse, partner or civil-partner still lives at your home
  • Your ex-partner, spouse or civil partner still lives in the home and they’re a lone parent
  • You’re recovering from surgery
  • A close relative aged 60 and over lives in your home
  • Or, a close relative who’s under 16, and you’re legally responsible fro lives there.

Remember! If you’re a widow or widower, your property will be means tested after the first 12 weeks of care. This is to give your family time to work out a long term care plan. However, this also includes anyone who originally goes into care and their spouse is alive, but then they spouse dies while they’re in care.

If your partner needs care, then your personal savings and assets won’t be taken into account. However, if you have joint assets, then these will be taken into account. For example, you might have a joint savings account. Local authorities will treat these savings as equal, unless you can prove otherwise.

Remember! If you start transferring assets into the name of another family, this will count as a deprivation of assets. This means that the local authority may still treat those assets as being owed by you.

The best way of working out which savings and assets will pay for your care is to contact a financial advisor.

Will I lose my home?

You may be worried about losing your home, but that won’t happen straight away if it’s included in your long-term care plan. More often than not, however, you’ll usually have to put your house up for sale to cover the costs of your care.

But there are things that can be done to avoid losing your home provided that you don’t already know that you need nursing care. This won’t work if you haven’t already been diagnosed with a degenerative illness that you will need care for later on. If you get rid of your assets after you’ve been told that you are ill then you will be treated by the authorities as having made a ‘deprivation’ and your family or your estate will have to pay.

You can raise the money with an equity release plan, with relatives receiving what’s left of the value of the house. Some advisers recommend putting the house in trust for the benefit of beneficiaries before the problem arises. However, this may not be watertight.

You can also get insurance to pay for nursing care but policies can be expensive and it may be too late for you to start one now. It’s a good idea to get independent financial advice about your specific situation.

There are many ways to increase the value of your home before you sell it. This includes basic renovation and maintenance. This will help when it comes to selling it for your care.

Other things which will affect your claim:

  • It is essential to bear in mind that each case will be different and assessed accordingly. The Department of Health has released the Charging for Residential Accommodation guide for information.
  • Remember! Anyone who is self-funding their long-term care can claim Attendance Allowance, which is not means tested. It’s paid at two different rates (£59.70 or £89.15), which help towards your personal support. If you receive care in a nursing home you can claim for the registered nursing care contribution, paid at £183.92 a week in England, £179.97 in Wales and £81 per week in Scotland.

 

Types of care

CARE AT HOME

long-term care

Most people will want their care provided at home, if they need it, for as long as possible. Care is provided by the social services department. Separately, you can go direct to private agencies, for example The Wealth Care Partnership. Whichever one you go to you can have some help from the Government. But that’s the case only if you have practically no savings or assets.

For those that don’t want leave familiar surroundings, they can receive live-in care. This is where a carer lives in the home with the person in care. This not only ensures that appropriate health checks are constantly taken, but that the person in care continues to receive advice and gets a constant companion.

CARE IN a residential or nursing home

long-term care

Here, the patient lives full-time in a facility specifically designed for the ill or elderly, and if the family and friends are unable or unwilling to look after them. However, it also offers the chance to socialise, which would have been difficult if the patient had been at home – especially with impaired mobility.

HOUSING SHELTERS / Care villages

This is generally housing that is in a group, such as a block or flats. Usually, they are run and funded by the local council.

Recovering from Covid-19 in a care home

When the coronavirus pandemic placed continued pressure on the NHS, the Government launched the Covid Discharge Funding Scheme on the 1 September 2020.

If you’ve been hospitalised by Covid-19 and need intermediary care before you return home, it’s important to know that you could be you could be entitled to six weeks’ free care. This care isn’t means-tested and is available for those who need to use a care home to get back on their feet.

If you find yourself needing more than six weeks in a care home, then you may be charged for the extra care you receive. However, you won’t be charged for this care until you can be means-tested. But don’t worry, your care won’t end just because the free funding has needed, local Clinical Commissioning Group is obliged to care for you until a means-test can take place. In this time you and your loved ones, shouldn’t be asked for a penny towards your care.

Here at Moneymagpie, we hope no one is hospitalised or left with mounting long-term care because of covid-19, but we also know it’s important to be prepared.

If you’re worried about the costs of covid-care recovery, give Care to be Different a call on: 0161 979 0430. Their advisers will give you the help, support and advice that you need to ensure those six weeks of care are paid for by your local Clinical Commissioning Group.

 

ways to pay for care

long-term care

If you have property, you can sell the property. You can then use the proceeds to fund care. Separately, you might be able to use the property to bring in income. Here are the options:

The Deferred Payment Scheme

This keeps property in your estate – meaning you could rent it out and make more income. It’s also interest-free and, if houses prices increase, you will be set to make money in the long run. However, you’ll need the agreement of the local council. It may also be more hassle than it’s worth if you have tenants and constantly need to keep the building well-maintained and occupied.

Equity Release

Check whether you can get equity release – it may not be if the owner is in care – it will make capital readily available. It also means that you will make extra money if the property price increases.

Assets into Cash

In other words, you sell assets that you have (car, home, caravan, paintings etc) and keep the cash in a savings account to live off. This is a low-risk option but it also gives a low return. Money becomes more accessible but also more susceptible to depreciation and it probably won’t keep in line with inflation.

Invest

If you know what you’re doing, you could get a much better return for long-term care. One way is by investing your money into share-based products. That will give you good dividends.

As with most matters, you should assess the investment on its own. The returns may be less known and harder to judge than cashing in on your assets. The risk is also more. However it could quite easily provide more income in the long run if you invest appropriately.  See our Investing section for more ideas.

In all cases, it is important to remember that whatever worked may not work or even be relevant for you. Get someone to assess your case on its individual merits. Some of the people below will be able to help.

Further reading

If this article has got you thinking about future long-term care, then you may also want to read:

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