Paying for care

Paul Lewis / 23 May 2019 ( 30 July 2019 )

The cost of care in later life is a major worry. The fear that, in just a few years, average care-home fees will take all the wealth accumulated in a lifetime. Paul Lewis separates the myths from the reality

Most people do not go into a care home at the end of their lives – only 14% of those over 85 do so. Nevertheless, the cost of care in later life is a major worry for us all. There is a natural fear that, in just a few years, average care-home fees will take all the wealth accumulated in a lifetime. Paul Lewis separates the myths from the reality.

Who has to pay for care?

Average weekly care-home fees range from around £650 for residential care only to £900 upwards for nursing care. The rules about who pays are complex and are different in Scotland and Wales from England and Northern Ireland. When someone needs care they are assessed by their local authority.

If it decides residential or nursing-home care is needed, it will assess the income and capital owned by the individual. Before that happens (except in Scotland), the individual should be considered for ‘continuing healthcare’, paid for by the NHS. That should always happen when someone goes straight from hospital into care. If their principal need is physical or mental healthcare, rather than personal care, the NHS should continue to pay for it in full and without regard to wealth or income.

Separating personal from medical care is hard – especially with a degenerative mental disease such as Alzheimer’s. But there comes a point where the need is mainly medical: then the NHS should pay. In Scotland it is called hospital-based complex clinical care and different criteria apply.

Can you avoid care home fees?

Means test for care

If the NHS does not pay, the care given is subject to a means test. First, the person’s capital is assessed. If that exceeds £23,250 in England and Northern Ireland (£28,000 in Scotland, £50,000 in Wales), no help with the cost of care is given. If they own their home, the value of that almost always exceeds these limits. That leads to fears that the home will be ‘taken’ to pay for care. It won’t.

Its value is ignored completely for the first 12 weeks. After that, it is ignored if their spouse or long-term partner lives there. It will also be ignored if a relative who is aged at least 60 or disabled lives there. If someone lives there who has been caring for the individual, then the local council will usually ignore its value. So, in all those cases the house or flat is safe.

If none of those apply, the value of the house or flat will be counted as capital. But even then the house does not have to be sold. The local authority must provide care and offer a ‘deferred payment agreement’ (DPA), which means the bill is not paid until the person in care dies or decides to sell the house. A low rate of interest is charged, but it gives relatives the chance to rent the home out to help to pay the fees. Then, once the care bill is paid there is some value in the house to share among the heirs. A DPA cannot be taken out until other capital assets fall below the limits. DPAs are only compulsory in England. They are widely available in Scotland and Wales. In Northern Ireland, ask the Social Care Trust.

Paul Lewis on the care home fee trap

Other capital

The other assets counted as ‘capital’ are any savings or investments owned by the person in care. If there is a spouse, it is much better to separate any investments or savings so that each owns part of them. The fees are then paid only from the assets of the person in care and will run down more quickly to the level where help is given. A spouse or other relative cannot be compelled to pay care-home fees for a loved one.

Once capital falls below the limit most of the care costs will be paid, but the person in care must hand over their income except for £25 to £30 a week for themselves, depending where the home is. There is also a contribution from capital of up to £40 a week (except in Wales) until capital falls to £14,250 (£17,500 Scotland).

In Scotland local councils will pay £177 towards personal-care costs and £80 a week towards nursing care for people in care homes.

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Care self-funders

People who pay for themselves – ‘self-funders’ – will be charged more for the same room in the same care home than if the fees were paid by the local council. The difference can be as much as an extra 50%. That is partly because local authorities take a lot of rooms and get a discount. The other reason is that the amount local authorities are willing to pay is less than the cost of providing the care and that has to be subsidised by people who pay their own fees.

People aged 65-plus who pay for care can claim a benefit called attendance allowance of up to £87.65 a week (though not in Scotland).

Hiding your assets

Some people consider giving their house or flat away to a son or daughter to ‘hide’ it from the means test. That does not work. Any asset given away with the intention of boosting entitlement to state help is counted as ‘deliberate deprivation’ and the local council will count the value of the home. That applies whether you put the house into a trust or give it directly to the heirs.

Looking for advice on care funding? The Saga Care Funding Advice Service, provided by HUB Financial Solutions Limited, is here to help - Take a look today. 

Find out more about paying for care

Independent Age 0800 319 6789

Age UK 0800 678 1602

Care Info Scotland 0800 011 3200

For legal help, visit Hugh James and search ‘nursing care fees’ or call 02922 676170

You can get advice in England from the NHS; search ‘continuing care’.

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The opinions expressed are those of the author and are not held by Saga unless specifically stated.

The material is for general information only and does not constitute investment, tax, legal, medical or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.