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Home Care
Paying for care can be confusing
When considering how to fund your care it can all feel a bit overwhelming. For this reason we have tried to outline the key points to consider when working out how to fund your care.
Do I have to pay for my care?
State funding of care, residential or home care, is means tested and the present means test level is £23,250. When you reckon most residential care home charge between £1,200 – £1,500 per week (£62,400-£78,000 per annum) shows there is a major shortfall that you will need to fund. However, it is not quite as simple as that as different assets may or may not be included in the means testing.
In addition, you need to take into account other state benefits you may be entitled to. If you are funding your own care there are two main state benefits to be aware of:
- Attendance Allowance
- Nursing Contribution
State Benefits
Attendance Allowance
Nursing Contribution
This is probably one of the easiest state benefits to be entitled to. If you are over 65 and can show that you need some support and assistance on a daily basis then you will probably be eligible for attendance allowance.
There are two amounts payable – £57.30 per week if you need support during the day and £85.60 per week if you need support during the night as well as the day.
It is payable to the person who requires care, it’s not means tested and it’s paid tax-free.
If you need nursing care as well as personal care at home, then the cost of your nursing care will be met by the NHS. You don’t have to pay anything.
If you need nursing care in a Nursing Home then the manager of the nursing home should arrange for an assessment to take place and, if it is agreed that you do indeed need nursing care, then the NHS will pay the nursing contribution to your nursing home.
Funding your home care
Self funding home care
The most straight forward way of funding home care is to ‘self-fund’ it by purchasing private care through a home care provider.
Local authority funding assistance
You may be eligible for Local Authority assistance and they may fund all or part of the home care provision required. Any local authority funding is means tested.
6 ways to pay for you care
Keeping your property
Some of these ways to pay for care may not be relevant if you are having in-home care.
The Deferred Payment Scheme
With this scheme your local authority may pay for your care and they put a charge on your property. Then when you die the loan and interest will be repaid out of your estate.
Local authorities are required to offer the scheme but they are not required to accept your application.
With this scheme your local authority may pay for your care and they put a charge on your property. Then when you die the loan and interest will be repaid out of your estate.
Local authorities are required to offer the scheme but they are not required to accept your application.
Renting your property out
If you wish to keep your property then it would be neccessary to rent the property out to generate an income to put towards funding your care.
If you wish to keep your property then it would be neccessary to rent the property out to generate an income to put towards funding your care.
It is important that you are aware all costs and that tax may need to be paid on any rental income. In addition, please be aware care costs may go up quicker than your rental income.
Equity Release
This can often be an expensive way of raising capital for care as you are in essence taking a mortgage out on the property and mortgages are expensive.
Repayment of the equity release amount and interest are paid out of the estate when you die.
This can often be an expensive way of raising capital for care as you are in essence taking a mortgage out on the property and mortgages are expensive.
Repayment of the equity release amount and interest are paid out of the estate when you die.
Selling your property
Some of these ways to pay for care may not be relevant if you are having in-home care.
Cash
Selling you property will release a capital to pay for your care costs.
Selling you property will release a capital to pay for your care costs.
However, with interest rates very low you will in essence be spending the capital to pay for your care costs.
Purchasing an annuity
When purchasing an annuity you are purchasing a fixed monthly payment which you can use to pay for your care costs. However, with interest rates very low you will need a lot of capital to generate enough monthly income to cover your care costs.
When purchasing an annuity you are purchasing a fixed monthly payment which you can use to pay for your care costs. However, with interest rates very low you will need a lot of capital to generate enough monthly income to cover your care costs.
Investments
Investing the capital from your home may give you a greater return than using the cash or purchasing an annuity but the value of investments (and the income earned from them) can go down.
