If you or someone you care about is beginning to show signs that they require extra care due to old age, you could both be left worrying about how you are going to finance the additional support they need to continue to lead a happy and healthy life.
In the UK, social care is available for the ageing population, but financing this care very much depends upon the needs of the individual and their personal circumstances. Read on to discover what options are available to you, the cost and how you can finance this care to ensure a positive outcome.
Care Planning Crisis
“Most people are at crisis point when they start looking for full time care.”
There are now 9 million people aged 70 or over in the UK, meaning later life care is something more and more families are having to consider.
If you are ready to start planning for care for your future needs, you might feel overwhelmed at the task. In fact, that is the reason so many people put off planning at all, because, where do you start? It can also be a little daunting thinking about yourself in later years, but your later stages of life can be just as enjoyable as your life is now, just in a different way. This is especially true if you plan well.
It’s crucial that you keep your options open, especially if you choose to go into care early, or you need extra care because you find yourself struggling. When people think of care, the first thing that usually pops into their minds is a residential care home.
We know that 97 per cent of people don’t want to go into a residential care home if they become ill or less able to cope; it can be unsettling to move away from friends, a partner or pets. Ageing in our own home – in a safe and therapeutic environment – is the oldest and most respected form of social care.
Although this is one avenue available to you if you are seeking elderly care, residential care homes do tend to be expensive.
Nursing care often carries a higher fee due to the specialist nature of the services, with many of the staff trained in areas such as dementia.
Research conducted earlier this year by the live-in care hub confirms that the cost of live-in care is on a par with many care and nursing home fees, especially in the South East and London, and is broadly equivalent to the price of the top half of care homes in the south of England.
In the South East of England, over half of all nursing homes cost in excess of £1,000 per week. The price of live-in care ranges from between £800-£1,500, making it a far more affordable alternative in many cases.
If these figures are a worry, then the option of care in your own home is a popular choice. It can not only reduce the cost of care but allow the individual to remain living in a familiar place that may have occupied independently for many years.
Elderly care is means-tested
In the UK, elderly care is means-tested. If you have savings or assets over £23,250, you will be expected to finance your own care.
Any amount under this and your care will be funded by the government.
For the government means test, assets that are taken into consideration are as follows:
- Bank and building society accounts
- Investments and savings
- ISAs, stocks and shares, dividends
- Properties you own that are not your primary residence
In England and Northern Ireland, the value of your home over £23,250 is also taken into account and seen as an asset. That is unless you wish to receive your care at home, making it another benefit of live-in and at-home care. If you remain in your own home you will not have to sell it to pay for your care.
Care Needs assessments
If you or a loved one has made the decision to remain at home and receive care, you can expect social services to visit the property to assess care needs and determine if there are any aids or adaptations required to make the home more comfortable and safer for those with specific care needs.
These aids often including things like grab rails, ramps and implements to help with bathing as well as home adaptations in certain circumstances.
During the visit, the person requiring care will be asked how they go about their daily routine, such as cooking and bathing, to assess what level and type of care an external care company would need to provide.
Depending on circumstances, a budget will be assigned following the assessment. This will detail the level of care to be received, the cost of that care and how much (if anything) the government will contribute towards this care in the way of benefits.
If you require help with care costs, a number of benefits are available.
Disability Living Allowance (DLA) is slowly being replaced by Personal Independence Payment (PIP), a non-means-tested benefit with an award that is calculated based on how any medical conditions you may have affect you.
The amount of PIP awarded will depend on your health and ability to care for yourself independently. As a general rule of thumb, award rates vary from £60 to £89.60 for the daily living component and £23.70 to £62.55 for the mobility component per week (rates correct as of July 2021).
Should you be assessed and found to be entitled to PIP, this money will be paid into your bank every four weeks and can be used to fund any care cost shortfall.
If you are over the age of 65, you will be advised to apply for Attendance Allowance. If you are assessed as being able to do certain things for yourself and only require care for a part of the day, you may be entitled to the lower rate of £60 per week.
Should you need more care, then you may receive the higher rate of £89.60 per week which you can then use to pay for any care cost shortfall.
NHS continuing healthcare
If you have very severe or complex health needs, you may qualify for NHS continuing healthcare. This is an ongoing package of care that’s fully funded by the NHS depending on the individual’s needs. NHS continuing healthcare can also be arranged using a personal health budget, but only in some areas of England.
Paying for care
How you pay for your care very much depends on your individual circumstances, your assets, the social care assessment and any pensions or benefits you receive. Many people agree that the cost of live-in and at-home care is far outweighed by the peace of mind and comfort of remaining in your own home.
There are four main ways to finance care needs:
1- Savings or cash in the bank
Many people choose to use some of their savings or cash in the bank that they have accumulated during the years to finance their live-in care. If there are cash reserves to draw on, this is a straight forward solution.
For those looking to maximise any cash in the bank, some people choose to make investments in the stock market to help pay for their live-in care and enjoy a return on their money. This can be risky and requires the services of a trusted financial advisor.
3- Care fee annuity
Designed for those with long-term care needs, care fee annuity products can be purchased using available capital in a similar way that you would buy an insurance policy.
For an initial upfront fee, an annuity will allow for the care you require for the rest of your life. With this option, it’s important to read the small print and be confident that care needs are long term as you could lose out if you don’t do your homework first.
4- Equity Release
One of the more common ways of paying for live-in care is equity release.
By releasing some of the equity in your property to pay for the care you need, you could stay in the property you are currently in (or downsize to a cheaper one) and have easy access to the required funds.
No, You Don’t Need to Sell Your Home to Pay for Care.
While your home is counted towards your capital assets, you don’t always have to sell your home to receive care. Read on to learn about the exceptions.
You can get advice from several places. As mentioned before, your local council is a very good source for not only advice, but also for needs assessments. There are also specialised financial advisors that can offer advice when you find yourself in a position where you’re unsure of who to turn to or where to go next. Your first port of call, however, should always be your local council, so make this your first port of call when considering your next move.
Every year thousands of families run out of money when paying for care. Our job at Ashridge Home Care is to do everything we can to stop that happening. Mainly that means making sure our clients are well informed and make good decisions. Understanding how to finance care can be difficult and feel overwhelming. What we think you’ll find really useful is to call us and speak to one of our team about your own particular circumstances and have them give you some useful guidance and direction. 01494 917344