A Comprehensive Guide to Funding for Care Homes

Funding for care homes can be a sensitive issue.

While many people dream of a wonderful retirement on the high-seas as the cruise liner sails into the setting sun, spending their time sunbathing on a Mediterranean beach, or playing as many rounds of golf as they can cram into the day, the unfortunate truth is that for those retiring now, many will experience at least a decade of poor health and infirmity.

As life expectancy increases, which few would deny is a good thing, our longer lives bring with them chronic conditions that we might not otherwise have lived to endure. Some are lucky, but the ageing process is a reality for which we should all be prepared.

Read on for our guide to funding for care homes and other long-term care you might one day find yourself needing.

Funding for care homes

1. Paying for care

Going into a care home is something that few will view with relish, but for many it’s an unfortunate necessity. Sadly, the financial cost of care can be significant and with retirement incomes. This often leaves little to play with. The idea of paying for care, which could run into tens of thousands each year, is a daunting thought.

2. Care through the local authority

It may be that your care is organised through the local authority. If that’s the case they’ll do a care assessment to find out your exact needs. Once they’ve done this, they’ll make their recommendations in the form of a care plan.

This costs money, and such care provided by the state will always be means-tested. That is, they’ll assess your financial status before deciding how much you need to pay towards your care.

The means-test will consider your income, savings, and capital, including your property, in order to establish whether you’ll have to pay for your ongoing care yourself.

If any of these assets are held jointly with someone else they’ll treat your share as being a half of the total. If your partner still needs your home, this will be excluded from your means-test, and any rental property may be valued for its income generation capability, rather than resale value.

3. How much is too much?

For many, the state’s definition of wealth doesn’t leave much to work with. Essentially, your first £14,250 of assets will be ignored by the means-test. Anything beyond that up to £23,250 will be taken into account, and if you have more than £23,250 of assets you’ll be paying your own care fees in full.

Your income is also factored into the calculations. While some disability benefits and pensions are exempt, the rest go into your care pot. Once they’ve considered everything, they give you a written breakdown of what you need to pay, though they make sure you’re never left with less than £24.90 a week as your personal expenses allowance.

This means-testing is a great concern for many older people. After all, most of us would rather our wealth was passed on to family or friends.

Can I give my money away?

In theory you can give anything you have to whomever you want to, but if the council thinks you’ve done this deliberately to avoid paying care fees, they may still consider those assets as part of your means-test. This situation is classed as deprivation of assets, and can cause complications in funding your care.

What can you do next?

The local authority will allocate you a care place based on what they would be prepared to pay. If you want a more expensive care home that can be arranged, as long as someone else covers the difference.

Beyond that, the local authority will pay your fees, then collect the amount you need to pay. If the cost of your care reduces your capital to the figure of £23,250, you’ll be given a means-test re-assessment to decide the way forward.

Download your guide to funding for care homes and long-term care

If you want to know more, either for yourself or a loved-one, download our guide to long-term care. If you’d like to discuss any aspects concerning funding for care homes, contact us today. We’re always happy to help.

Dominic

About the Author

Dom is a qualified and experienced Chartered Financial Planner (CII) and Chartered Wealth Manager CFP (CISI) and a Registered Life Planner (Kinder Institute) with over 30 years experience. His work primarily focuses on retirement income planning, helping clients to maintain financial dignity and independence in retirement. Read more from Dominic...
This article is distributed for educational purposes and should not be considered investment advice or an offer of any product for sale. This article contains the opinions of the author but not necessarily the Firm and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. Past performance is not indicative of future results and no representation is made that the stated results will be replicated.
Jonathan - I would like to say how much TB and I appreciated the time we spent with you yesterday. It was helpful, constructive and informative. You have a very real talent to summarise and deliver complex messages in a meaningful empathetic way. We very much look forward to taking the next steps. MB & TB (Oxfordshire)

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