How to prepare for care home funding
9th June 2020 by Deborah Pearce
The issue of care home funding is not simple – you need to consider not only the financial implications or entering care, but also what happens long term should your health deteriorate and the loss of one’s independence.
In Dorset and the South, we see a higher percentage of people entering permanent residential care purely because we have a significant number of individuals who have chosen to retire here.
How much are Care Home fees?
As a guide, the average weekly fee, without nursing care in the South West is around £655 a week, £34,060 a year.*
Homes that provide nursing care can run upwards to £60,000 plus per year.
Both are huge outgoings to sustain.
If you need full time nursing care then the Government will make a funded nursing contribution (FNC) which is paid directly to the Home to assist with the cost of that care. This is currently £183.92 per week (as of 1st April 2020).
How much will I have to pay towards care?
Care homes are paid for in the following ways in the UK:
Self-funding: the person being cared for (or their family or a friend) pays all the costs of their care;
Local authority funding: the local authority funds some or all of the care;
Top Up Fee: A relative or friend of a resident can contribute an additional voluntary payment, known as a top-up fee;
NHS funding: in some circumstances the NHS will cover the cost of all or some of the care.
Currently, if you have more than £23,250 you must pay for yourself.
That amount includes all your assets; savings, shares, jewellery, art work, foreign property and your home. If you enter permanent residential care, for the first 12 weeks the value of your home is disregarded but after that its value is included with your other assets, which inevitably will take you over the £23,250 limit.
Unfortunately this leads to the family home being sold in many cases to fund the care, hugely reducing relatives or other beneficiaries intended inheritance.
Local authority funding
The Local Authority will only assist you with funding if;
- You have a real care need – this will be assessed;
- Your capital is below £23,250. They will review your income to see what you can contribute and then make a contribution for the shortfall.
However, their contribution is not limitless, with maximum levels of contribution depending upon what level of care you need, ranging from Level 1 for minimal care to Level 4 for more complex nursing/dementia needs.
Unfortunately, these do not tally with the fees that the Home would normally charge for self-funding or private fee paying clients, which means often people find themselves faced with leaving the expensive Care Home they really love and moving to a cheaper Home which is within the Local Authority’s financial limits.
Top Up Fee
If you want to remain in the more expensive Care Home, then a third party can agree to pay a “top up” from their own funds to enable you to stay. This is an expensive option and not one that is commonly available to most people or their families.
If your situation requires serious nursing care due to the intensity, complexity or unpredictability of your condition, then you may, after due assessment, be entitled to fully funded NHS Continuing Care where all of your care costs are funded.
However, in truth, this is incredibly difficult to obtain, with the number of eligible cases continually falling. Even if someone is initially assessed as being entitled, there are constant reviews – and when it is established that those care needs have “stabilised”, perhaps after admission to a Home, the NHSCC funding is then withdrawn.
How Attendance Allowance can help
Attendance Allowance is a tax free no means tested benefit for people aged 65 or over who have experienced care needs for over 6 months.
You are entitled to claim for Attendance Allowance for a number of reasons, for example;
- You need help with your personal care or tasks in your own home (even (even if you don’t currently get that help)
- You are partially sighted or hard of hearing
- You have suffered falls and need to stay safe
- You have signs of dementia
Attendance Allowance is not well publicised and the form is daunting to complete, but it is well worth the effort of pursuing.
Laceys have had a 100% success rate in claiming this benefit for clients who were entitled (but either had no knowledge of it or did not believe they were entitled). You can receive from £ £59.70 to £89.15 per week to spend however you like. If Laceys assist, it will normally cost about £300 plus VAT but the benefits of receiving either £3000 or £4000 per annum tax free makes it all worthwhile.
If you are a self-funder for care, then an additional £4000 per annum could make a significant contribution towards your care – if however you become dependent upon Local Authority funding Attendance Allowance will cease as the Government will not provide you with two sources of funding.
Without over complicating matters, there are also investment products known as long term care annuity plans where you can pay a lump sum over to an insurance company who in turn will then provide your care home with a guaranteed level of income to help sustain your fees. These are specialist products and require specific advice and quotations tailored to your needs and health issues.
As you can see, this subject can be quite complex.
If you see yourself or a relative requiring care in the future, we would advise you to seek advice on both the financial aspects of care funding as well as reviewing your Will which may enable you to protect or ring fence your share of the family home for your children if the survivor ends up in permanent care.
Laceys can advise on all these aspects so please contact Kate Mansfield at email@example.com or 01202 755981 today.
Figures from research by LaingBuisson for their Care of older people UK market report, 28th edition, published May 2017).