Once you’ve decided that a loved one needs to move into a care home, there can be the equally difficult consideration of how to pay for it. Many people worry about running out of money or being forced to sell a family home, but there are several different options to help fund residential care.
Understanding which one is right for you is a key part of the process. Take some time to find out about different benefits and their criteria, the help available from your local council or NHS, and the ongoing cost of the care, before you move your relative into a home. Then all you’ll need to think about is making sure you’ve packed their favourite slippers.
There are several factors that affect care home fees, such as the area you live in, the care home itself, and your financial circumstances. On average, it can cost around £600 a week for a residential care home place and more than £800 a week for a care home with nursing, according to Age UK. You may even find homes that charge up to £1,500 a week, and that specialised care, such as dementia services, will cost more than standard residential.
Your local council will carry out a care needs assessment, part of which is a means test that works out how much your relative can afford, or if they’re eligible for financial help from the council (it provides partial help if capital is between £14,250 and £23,250 or covers the whole cost if below £14,250). In England, anyone with capital of more than £23,250 must pay the full fees (£24,000 in Wales). This is known as self-funding.
If your relative has a significant healthcare issue, the NHS may contribute towards the cost (Funded Nursing Care). It may even be free if you qualify for continuous NHS treatment (Continuing Health Care), so check with a healthcare or social care professional.
Residential care is a large financial commitment and in many cases a property sale will be required, but this may not need to happen for months or even years. ‘There are no real shortcuts or cheaper ways of paying for care,’ explains Geraint Williams, director of business development rel="noopener noreferrer" at Greensleeves Care. ‘It costs a lot because it is expensive to provide. However, there are a number of ways that care can be funded. These include selling your home, renting out your home, utilising equity release or purchasing a care fees annuity. You can also combine these.’
If your relative is deemed to be self-funding (see above) but it’s based on the value of their home, rather than liquidate assets, the local council may be able to fund the care home fees in the short term. This is known as a 12-week property disregard, and means you intend to sell the house to cover the fees but for now, they’re disregarding the property’s value.
After 12 weeks, the council can lend money to pay for care based on the property eventually selling. However, before agreeing to this, it’s vital that you get independent legal advice from a care fees planning specialist.
To prevent having to sell their home, your relative may consider gifting it to a family member – however, this comes with pitfalls. ‘Receivers may need to pay tax or interest that they receive from the property,’ says Tristan Lewis, business rel="noopener noreferrer" development manager at Howells Solicitors. ‘There are risks too; they may die, divorce or get into serious debt, in which case the home could be involved in legal proceedings.’
There could also be implications if they have no other reason for gifting the property except to avoid it being counted in the care needs assessment. ‘If it can be proved that the only reason that they gifted the property is to avoid paying care home fees, then they’ll be treated in the same way as if they owned the asset,’ continues Tristan Lewis. ‘If the transfer was made less than six months before moving to a care home, then the Local Authority can recover the property without having to prove a reason for the gift.’
It’s worth noting that their home won’t be counted as part of the means assessment if the care required is only short-term or if it’s still occupied by a relative aged over 60, a child, a disabled relative, or a spouse or civil partner.
Before you start to pay for long-term care, seek expert financial advice. ‘The industry rel="noopener noreferrer" benchmark for such advisors is SOLLA (the Society for Later Life Advisers) where you can find your nearest advisor,’ says Geraint Williams. ‘The other thing that you should do is to ensure you are in receipt of any allowances to which you are entitled, such as Attendance Allowance, Funded Nursing Care and Continuing Health Care funding (see NHS section above).’
Attendance Allowance is non-means tested and is for people who have care needs (such as help getting dressed, during an illness or disability) and are aged over 65. The allowance can be kept if they move to a care home.
By seeking advice ahead of time and working out what they might be entitled to, financing a relative’s move to a care home can be cost-effective and as stress-free as possible. All of which means you can concentrate on finding the best place for them and making sure they, and you, can embrace their new chapter.