Does my mum have to sell her house to pay for care?
Paying for long-term care
One of the most worrying things about ageing is the cost of long-term care and support if you need it. You may also want to protect your estate so you can leave an inheritance for your family.
Unfortunately, the system is complex. The information you need is not accessible from one defined place, so it is difficult to know if you have found the correct or best advice. Using a care broker like Care Captains gives you a single point of contact throughout the process of arranging and paying for your care, as well as advice tailored to your circumstances.
Social care is very different to health care which is free at the point of use under the NHS. Most people have to pay towards their care, and the amount is worked out based on personal finances.
In this blog post, we will give you an insight into how care for the elderly is funded and how much you might have to pay. We will also explore ways to plan for your future care costs and address one of the most common questions, “Do I have to sell my home to pay for care?”
When it comes to paying for care, where do I start?
When the time comes to access care, speaking to a care broker first allows you to design an affordable care plan in line with you and your family’s situation. We can oversee the process on your behalf from start to finish and refer you to the relevant organisations along the way.
Next you will require a needs assessment from your local council, which has two uses:
- To understand what your care needs are, and
- To determine whether the council can provide the care you need.
Even if you intend to make arrangements yourself, a needs assessment gives everyone involved a better idea of the type of care you need.
To be eligible for services the assessment must conclude that you have difficulty with certain things in your daily life or cannot achieve them, and this has a significant impact on your wellbeing.
If your needs are assessed as eligible, the council has a legal duty to ensure those needs are met, but this duty does not automatically extend to paying for your care. The council will complete a means assessment based on your financial position to decide the amount of your contribution. We cover this in more detail below.
If your needs are mainly health based, the NHS can arrange and pay for your care under NHS continuing healthcare (NHS CHC). In these circumstances, the council must refer you to the NHS for further assessment. If you don’t meet the criteria for NHS CHC but you do need nursing care, the NHS will contribute towards your nursing care costs. This is called NHS-funded nursing care (NHS-FNC) and is paid directly to the nursing home.
Are there any benefits available to help with the cost of care?
Certain state benefits may be available to help meet your homecare costs. Attendance Allowance (for those over State Pension age) and Personal Independence Payments (for under 65s) are not means-tested. They are paid based on the amount of personal care you need.
If you become a carer, for example by caring for a spouse who has long-term care needs, you should request a carers assessment to find out if you are eligible for any financial support from your local council. You should also check if you can claim any carers’ benefits such as Carers Allowance.
How much money can you have before you pay for care?
The amount you will pay for your care depends on your financial assets and whether you need in-home care or residential care.
Homecare
The cost of homecare varies but the average cost in the UK for those self-funding their care is £25 per hour.
If you are assessed as needing in-home care the means test includes all your eligible income and capital.
Certain disability benefits are discounted in the income section of the assessment, and your partner’s income and capital are excluded.
Minimum Income Guarantee
The Minimum Income Guarantee (MIG) ensures that your income does not fall below a minimum level after your contribution to your care has been deducted. The purpose of MIG is to give you enough money to cover your basic needs, such as food shopping and paying your bills and insurance, whilst promoting your independence and social inclusion. It should only be applied to your income once your housing costs (mortgage repayments, rent or ground rent, council tax, and certain service charges) have been deducted.
The MIG amounts change, but for 2021/22 they are as follows:
£189 per week if you are single and above State Pension age.
£144.30 per week if you are part of a couple and one or both of you has reached State Pension age. If you both receive care and support services, you should each have this amount.
An extra £43.25 is included in your MIG if you are a carer.
If you are single, over State Pension age, and receive disability benefits (Attendance Allowance, Disability Living Allowance care component (high or middle rate) or Personal Independence Payment daily living component) you can ask for a disability addition of £40.35 a week to be added to your MIG.
Capital assessment
Your house is not included in the assessment if you are going to receive care at home.
If you and your partner have joint savings, the total value is divided equally between you unless there is evidence that one of you owns an unequal share. However, if one of you dies, your joint assets are treated as owned in full by the surviving partner.
If your capital is over £23,250, you must pay your care fees in full. This is known as being self-funded.
If your capital is between £14,250 and £23,250, your contribution will come from your income. Your eligible income is the income included in the means test, such as your pension, plus an assumed, or ‘tariff’ income, based on your capital between £14,250 and £23,250. The council pays the remaining cost of your care.
If your capital is less than £14,250, you pay from your income, as included in the means test, but you don’t have to pay a ‘tariff’ income based on your capital. The council pays the remaining cost of your care.
If you are self-funded and your capital falls below £23,250, the council might assist with funding the rest of your care. You should request an assessment a few months before your capital falls below the threshold so that there is plenty of time to make alternative arrangements. We can support you through this process.
Residential care
The cost of residential care varies substantially depending on where you live in the UK and whether you also need nursing care. However, the average cost of living in a residential care home is £704 per week, and of living in a nursing home, £888 per week.
If you need residential care, the value of your home is included in the means assessment unless certain criteria are met. We explore these in further detail below.
Will I have to sell my home to pay for care?
The value of your home is excluded from the means assessment if you receive care at home or if your move into a care home is temporary.
If your move into a care home is permanent, the value of your home will be included except in certain circumstances, such as if your partner, or a relative who meets specified criteria, still lives there.
The council has to ignore the value of your property for the first 12 weeks of your care. This gives you time to decide what to do with it and work out how to pay the fees.
Your property will be valued at its current market value, with deductions for any outstanding mortgage or loans secured against it. A further 10% of the value is excluded to allow for sale expenses.
Even though the value of your home is considered, you will not necessarily have to sell it straight away.
Deferred Payment Agreement
You may be able to delay selling your home by entering into a ‘deferred payment agreement’ (DPA) with your local council. This involves entering into a legally binding agreement whereby the council provides financial support for your residential care costs on the condition that they are repaid at a later date when your property is sold. This type of agreement is secured by way of a charge on the property that is registered at the Land Registry.
How do I plan for future care costs?
If your capital is likely to exceed the assessment thresholds, particularly if you own your own home, it is a good idea to talk to a financial adviser who specialises in elderly care funding.
A financial adviser can help you work out the best way to fund your care and how much money you might need to pay for it. They can also suggest whether you are eligible to claim benefits to contribute towards the cost of your care.
Good financial advice should ensure that your future care needs, and those of your dependents, are also provided for. It should make the best use of your income, savings and other financial assets, particularly if you own your home. You should expect to receive information about a greater choice of care funding options than you might otherwise be aware of.
It’s important to remember that the care system is complex and difficult to navigate, which means that your financial options are not always clear or easy to research by yourself. We can help you access independent financial advice by referring you to an adviser who is accredited by the Society of Later Life Advisers (SOLLA). The accreditation means that they have additional training and experience specific to giving advice on later life issues, which is regularly reviewed and updated to ensure that you receive the best possible guidance. We then build the advice you receive into plans for your care.
How do I protect my estate from care costs?
The idea of selling your home, which is in most cases your biggest asset and is likely to be your family’s inheritance, can be hard to come to terms with. It’s normal to want to protect your assets and reduce the risk of your entire estate being consumed by the cost of your care.
Giving your home away
You might have thought about giving your home away to stop it from being counted. However, the rules surrounding this are complex. If your actions were found to be a deliberate deprivation of assets, your care fees would be calculated as if you still owned your home. There are only limited circumstances where your home is excluded from the calculation, even if you have given it away. If you wish to explore them, you should take specialist advice.
Asset Protection Trusts
Instead, you could consider an asset protection trust, which can protect your assets from care home fees and preserve your loved ones’ inheritance. You would need to appoint trustees, usually members of your family, to manage the trust, and any arrangement you set up should be tailored to your circumstances.
The main types of trust available are Protective Property Trusts, Life Interest Trusts and Interest in Possession Trusts. They work by protecting half your home from care fees by placing it in trust. When one partner dies, the value of your home is ring-fenced by the trust, which means that it does not count as capital belonging to the surviving partner. The surviving partner can continue to live in the house if they are able to do so or they can choose to sell it.
Life Interest Trusts and Interest in Possession Trusts also allow you to put part or the whole of your estate into trust as well as your property. With these trusts, you can choose someone, usually the surviving partner, to receive income from the trust while they are alive.
If you want to explore any of these options, you should seek legal advice to make sure they are right for you. As with financial advice, we can refer you to a solicitor who has experience in planning for care.
How can Care Captains help?
Care Captains is experienced in arranging care for the elderly. As a care broker, we are independent and not tied to recommending one course of action over another, which means our advice is bespoke to you.
We will oversee the organisation and funding of your care, acting as a single contact point to save you from having to coordinate lots of different people by yourself. We will also put you in touch with specialist financial advice from an SOLLA adviser, or legal advice if you need it, then incorporate that advice into your care plan.
We could even save you money by exploring less well known options and by finding you the right level of care for your needs.
Call us for a no-obligation chat today on 0345 340 5065 or email us at [email protected]
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