Few of us can afford to pay the high cost of long-term care out of our day-to-day income. If you need to pay for care – don’t worry. There are other ways to finance your care.
- Why you may need to pay for long-term care
- Check your entitlements and ask the right questions
- How to fund your long-term care
- Other options for funding your long-term care
- Next steps
Why you may need to pay for long-term care
- You don’t qualify for local authority funding.
- You want to enhance your care at home by paying a little more.
- You need to make up a care fees shortfall whilst the local authority is funding your care during a deferred payment agreement period.
Check your entitlements and ask the right questions
Before you do anything, check you’re claiming all the state and other benefits you’re entitled to, some of these are not means tested.
Make sure you’ve checked out all the local authority and NHS funding options too.
- Benefits you can claim when you have care needs
- Local authority funding for care costs – do you qualify?
- Registered Nursing Care Contribution
- Are you eligible for NHS Continuing Care funding?
If you move into a care home and your property is left empty then you should receive full exemption from Council Tax until it is sold.
Is the care you are choosing affordable over the long-term?
Have you had an assessment of your needs from the local authority and would they meet the fees of a care home you’ve chosen if you had to fall back on their funding?
Alternatively would the care provider continue to accommodate you at local authority rates?
How to fund your long-term care
Immediate need care fee payment plan
Designed to help if you need care straightaway. In return for investing a lump sum you get a guaranteed income for life.
Read more about Immediate need care fee payment plans.
Selling your home and buying a cheaper one could free up money to pay for your care.
Find out more about Downsizing your home to fund your long-term care.
12 week property disregard
What is it?
If you need to live in a care home permanently, you may be entitled to 12 weeks free. This scheme was established to give people in this situation time to think about their future before making any final decisions.
If eligible, the council must not include the value of your property in your financial assessment for 12 weeks. This is called a 12-week property disregard. The council will contribute to your care home fees for these 12 weeks, or until your property sells, if sooner.
Who gets it?
To be eligible your savings (capital excluding the value of your property) need to be below the savings threshold:
In England and Northern Ireland it’s £23,250 in (2018/19)
In Scotland it’s £27,250
In Wales it’s £24,000 (care at home) or £40,000 (care in a care home).
That said, the amount local authorities will give you differs, so if you want to go into a care home that’s more expensive than what your local authority has agreed to pay for, you will have to find the extra money during the 12 weeks, or find a cheaper alternative.
Individuals who have not been able to, or do not wish to, sell their homes to pay for their care may enter into a deferred payments agreement with the local authority, whereby the authority continues to provide their funding towards the care home fees.
Read more about the treatment of property in the FirstStop Advice factsheet.
Here are some general examples:
Jane owns her own home and has £10,000 in savings. This means she is entitled to the full 12 weeks of free care because she has LESS than £23,250 in savings and she is in England.
David has £25,000 in savings. He is over the threshold, which is £23,250. Let’s say that one week in care costs £1,000. David would have to pay his own care for two weeks, until his savings came UNDER the threshold of £23,250.
Emma has £50,000 in savings. Even if her care cost £1,000 a week, she would only spend £12,000 over the 12 weeks, taking her to £38,000, which would mean that she is OVER the £23,250 threshold, so could not get free care.
This gives you a lump sum or steady income to pay for your care using some of the money that’s tied up in your house, while you carry on living there.
The money must be repaid at a later stage when the house is sold.
You should only consider an equity-release scheme once you’ve looked at all the other options.
However, there’s no guarantee that the returns will cover the cost of your care, and your money is tied up for a long time. So, they’re not generally one of the better options.
“You’d be amazed how many people sell their home, but then run out of money a few years later and end up making do with local authority funding. If only they’d taken independent advice.” – Anne
In a sale-and-rent-back scheme, you sell your home at a discount.
In return, you stay living there as a rent-paying tenant for a set length of time. This is called a fixed term.
This might seem tempting if you want to stay in your home and need to pay for care.
However, you should only consider a sale-and-rent-back scheme as a last resort. This is because:
- You will get less money for your home than you would if you sold it on the open market.
- You will no longer own your home and you will have to pay rent. This might use up money you want to spend on care.
- Your rent could go up during and after the fixed term of your tenancy.
- You might have to leave your home after your tenancy agreement ends.
- You could be evicted if you break the rules of your tenancy agreement. For example, if you fall behind with your rent.
- If the person or company buying your home gets into financial difficulties, your home could be repossessed.
The Financial Conduct Authority (FCA), the UK’s financial services regulator, is investigating bad practice in this area.
Don’t sign a new sale-and-rent-back agreement without first getting independent advice about your other options.
Other options for funding your long-term care
- Rent out your home.
- Cash in savings and shares.
- Sell things you own such as art, antiques or collectibles.
- Check for insurance policies that could cover care costs.
In some areas, there are schemes called ‘Homeshare’.
You can let a younger person share your home in exchange for some low level support, such as cooking meals or running errands.
This won’t be suitable if you need more complex care.
Did you know?
An independent financial adviser that specialises in long-term care funding is often known as a specialist care fees adviser.
Choosing how to pay for your long-term care is a big decision.
Speak to an independent financial adviser to discuss which option is best for you.
Look for an adviser with the specialist CF8 qualification. This means they are qualified to advise on funding long-term care.
They’ll be able to explain all the costs and risks, and can help with other things, like arranging your will or setting up a power of attorney.
The ultimate aim is to maximise your income for meeting care costs whilst, as far as possible, preserving your original capital.
Find a specialist care fees adviser in your area:
This article is provided by the Money Advice Service.