Social care in the UK isn’t free, and as such, unless your capital is worth less than £23,250, you will need to make some contribution towards your care. However, depending on your circumstance, some financial help will be available. Understanding the funding landscape in England can be tricky, so if you are exploring how to finance your care, knowing what your options are is important.
If you have savings of more than £23,250 (called the upper capital limit or UCL) you are not currently eligible for local authority help with the cost of care and you will have to cover it yourself. From October 2023, the upper capital limit is rising to £100,000. Should your capital fall below the limit, the council will conduct another review and reassess your contribution based on your income.
It’s worth noting that a new cap of £86,000 on the amount anyone has to spend on their personal care over their lifetime, will also be introduced in October 2023.
If you’re fortunate enough to have a significant amount of savings that you can draw on to cover your care fees, this is ideal. Not only are savings an easy, hassle-free way to pay for care, depending on the amount you have, but using them to pay for your care could help you avoid taking out loans or selling property and can therefore offer you some degree of stability for the future.
If you have a substantial amount of private income, such as income generated from a rental property, shares or other investments, this could be used to fund your care.
Although a very simple approach to paying for care, it has its risks. The way you invest your money will impact how much you have and as such you may only be able to cover care fees using private income for a short time.
All investments carry an element of risk and it’s therefore important to seek sound financial advice before considering investments as a means of funding your care.
Paying for care using your pension could be an option if you have other sources of income or assets that can fund your retirement and you aren’t reliant on your pension to provide you with an income or cover any other living expenses.
If you think you own any high value items such as pieces of art, antiques or vintage collectibles, it may be worth getting them valued to see if they could contribute towards or potentially cover your care fees.
If you urgently need income to pay for either care at home or care in a residential home, an immediate needs annuity may be worth considering. An immediate needs annuity works by providing a lump sum investment upfront in return for a regular income. Income from such an annuity is tax free, can be paid directly to your care provider and can provide you with guaranteed income with which you can cover your care costs for life.
However, it’s important to do your research when it comes to selecting an annuity provider, as you risk losing money if you opt for a provider with poor rates. A financial adviser should be able to guide you through the selection process.
An immediate needs annuity could be right for you if you:
It may not be right for you, if you:
Check whether your insurance policies could cover care costs.
Although long-term care policies are no longer sold, you may have life insurance with a cash-in value, or life assurance with critical illness or terminal illness policy that will cover the condition you have and can help fund your care.
You may even have an income protection policy that pays out a regular income if you’re unable to work due to poor health. This income may however stop upon retirement.
If your home is bigger than you need, it could be worth considering downsizing. Selling your existing home and buying a less expensive property could free up money to fund your care. You may find a smaller home better suits your needs now and further down the line.
Rather than using the money raised from downsizing your home to pay for your care fees directly, you may consider using it to buy an immediate needs annuity, make investments which you can then draw on to pay for your care, or to fund an equity release scheme.
Although a last resort for many, selling your home may be an option you’re prepared to consider, if you’re planning on moving into residential care. It’s likely to be your biggest financial asset and as such best able to fund your long-term care.
If you want to avoid selling your home, there are other ways of self-funding care.
If you need to move into permanent residential care, the 12 week property disregard may give you some much needed breathing room to work out what longer-term options may be viable or how to pay for your care, before you have to sell your home.
During this 12 week period, the local authority will not include the value of your property in their financial assessment and will contribute to your care home fees.
To qualify for it your savings (capital excluding the value of your home) need to fall under the savings threshold, which is currently £23,250.
This is a legal arrangement with your local council that allows you to use up to 70% to 80 % of the value of your home to pay for your care home costs. It’s essentially a long-term loan from your local council, only repayable if you sell your home, or you pass away. Short term care home stays aren’t covered under this arrangement.
If you want to keep your home and pass it on to beneficiaries upon your death, another option to help fund your care is renting out your home. Although the rental income may not cover all your long-term care fees, it can contribute to them.
Equity release is a way of utilising the value of your home by accessing some of the money from it, without having to move out.
There are two main types of equity release schemes.
A lifetime mortgage is a lump sum loan secured against your house. It doesn’t need to be repaid until the end of the mortgage term (when the property is sold, the borrower dies or moves into a care home.)
If you’re looking to fund long-term care at home, you may want to explore home reversion plans. With this scheme, you can sell part or all of your home at less than its market value in return for a cash sum. You’re then able to stay in the property as a tenant, paying no rent.
However home reversion plans are high risk and can have tax implications and affect benefits and inheritance, so it’s worth investing in financial advice before opting for this or any other equity release scheme.
You may be eligible for government benefits such as attendance allowance, state pension payments, personal independence payments and pension credit, all of which can help to boost your income. It’s worth double-checking your eligibility to ensure you’re not missing out.
If your savings are between the lower capital limit of £14,250 and the upper capital limit of £23, 250, your local council will help to pay for your care. To determine how much they will contribute and how much you will need to pay, you will be required to complete both a needs assessment and financial assessment.
If you feel you need help coping with everyday tasks, you can contact your local authority to request a needs assessment. These are free of charge, can be done face to face or over the phone and usually last about an hour.
A social worker or occupational therapist will ask you how you’re coping with day to day activities and may also ask you to describe how you do certain things. Based upon this assessment your care needs will be determined.
If it is decided that you do require some support with your care, a financial assessment will be conducted to work out how much you need to pay and how much (if any) the council will contribute. In addition to your regular income (including pensions, benefits and earnings,) your capital (savings, investments, property and any business assets) will be reviewed.
Your home will not be included in the financial assessment if
You’ll receive council funding through a personal budget, which is the overall cost of care the local authority arranges for you. It makes clear how much you will need to pay towards the overall cost and the remaining amount to be paid by the local authority.
Your personal budget can be made available to you in several ways.
The frequency of direct payments will usually align with your care provider’s invoicing schedule: weekly, fortnightly or monthly. Most councils will ask for evidence of how your direct payments have been spent every few months.
If you live with a long-term, complex health need you may qualify for social care which is arranged and funded by the NHS. NHS continuing healthcare can be provided in settings outside the hospital including your own home.
It’s worth noting that the NHS continuing care funding is NOT means tested and can cover up to 100% of your costs. To find out if you’re eligible for NHS continuing healthcare funding, you will need to be assessed by a multidisciplinary team of healthcare professionals. They will relate your care needs to:
Your eligibility will not depend on any diagnosed condition, but on your needs as assessed by the NHS. If this changes, so too could your eligibility for support and funding. A decision about eligibility should be made within 28 days of the assessment.
For further information about NHS continuing healthcare call Beacon on 0345 548 0300
In addition to NHS and council supported care, charities can also be a source of care funding. Charities such as the RAF Benevolent Fund (supporting RAF servicemen and their families) can either provide some financial assistance to people struggling with care costs, or signpost them to it.
The CSIS charity fund, works with and gives grants to partner organisations that support civil and public servants and their families through challenging periods in their life. Some of these organisations include:
To find more charities that might be able to help visit The Charity Commission Website.
Working out how to pay for care can be a stressful and difficult process.
If you’re not sure whether you are eligible for financial support and feel you’d benefit from some independent advice, it may be worth talking to a financial advisor. They can also help you figure out how to use the money you have in a way that is both cost effective and meets your needs.
The following organisations may also be able to provide you with more general advice:
Get in touch with Tiggo Care today to see how we can help you or your loved one.