Care Funding Guidance
Read our useful guide – How Do I Pay For Care?
The Cost of Live in Care
Whether you are paying for care in your own home, or paying for residential care, there are five ways to help fund the cost:
- With state help, either local authority or NHS
- With cash or investments
- With an annuity
- Using your house
- Family help
Whatever your circumstances, we recommend that you follow our basic rules of preparing for care:
- Make sure you are getting the sort of care you really want and need for now and in the future.
- Get financial advice from a SOLLA financial advisor, before you start.
- Sort out your legal position; get a power of attorney, sort out your will.
There are quite a few allowances that you can get. Some of which are not means tested. Follow the Age UK benefits calculator to find out: https://benefitscheck.ageuk.org.uk/Home/Start/
The local authority
You may qualify for some help from the local authority but many people have too much free capital (over £23,250), or do not have what used to be called “substantial” care needs. Therefore a lot of people have to pay their care costs without local authority financial help. If you think that you do qualify for local authority help, it is important to contact them as soon as possible. You are entitled to a needs led assessment, whether you are eligible for financial help or not.
If the local authority does contribute, remember that you do not have to move out of your house. And if you, or your dependants live in your house, the value of your house is not part of the financial eligibility assessment.
If one spouse is more dependent than the other, it might pay that the dependent spouse pay for the majority of domestic and care costs – if there is the possibility of becoming eligible for local authority help.
NHS Continuing Health Care
This is a complete package of services arranged and funded by the NHS which can be provided in various settings including your own home. The service is free and not means tested.
Not everyone who has ongoing health needs will qualify for CHC but there are times when a person’s eligibility should be considered:
- If you have a rapidly deteriorating condition which may be terminal;
- When you are about to be discharged from hospital, particularly if you need permanent full time care at home;
- When your personal care needs are reviewed;
- If your physical or mental health decreases rapidly and your current care package becomes inadequate.
Those who live at home and are eligible can have both their health care and their personal care, such as help with dressing and bathing, paid for in full by the NHS. This includes live-in care and Christies Care has an increasing number of clients whose care is at least partly and often fully funded by the NHS.
For more information about the NHS Continuing Health Care service, download their National Framework for NHS Continuing Healthcare and NHS-funded Nursing Care document.
Cash or investments
Using your house
For many people, their house is their largest amount of capital they own. There are three main ways of using your house to pay for care:
- Sell the house, downsize and use the surplus money to pay for care.
- Retirement Interest Only mortgage (RIO). You can get an interest only mortgage on your house if you are 60 or over. Borrow the amount you think you might need (say six months’ worth of care fees at a time) plus a little more to cover interest. Interest rates at the moment are below 5%. At the end of your life, your family still owns the rest of the house. BUT, you do need enough of an income to cover the interest payments. That is why RIO lenders always ask for the size of your pension and usually make an offer of around 4x of your pension
- Equity release. You get a lump sum in exchange for your house.
There are two ways family can help pay for care:
- They make a direct financial contribution. In this case, it is highly recommended to have a properly documented loan agreement, to be a debt against the estate on death, and to ensure agreement between siblings.
- Family helps from time to time with the care. If family comes and takes over, say one week in four, the total paid for care drops by a quarter. Of course, this doesn’t work for care homes, who will charge for even unoccupied rooms.