Paying for Elderly Care : A guide to Elderly Care

This is a complicated area and one that causes a great deal of headache for many people. Care doesn’t come cheap and it is worth taking time to consider how you will fund your care in later life.

Everyone’s circumstances are different and there is no ‘one size fits all’approach to this.

At one time the costs of care would be taken care of by the State but this has changed due to an ageing population and increased longevity.

This section of the guide discusses the costs of a care home. This part contains an overview with more information about how to get help and the actual costs in the following sections:

• Can I get help to pay for a care home?
• Care home fees

If you are wondering about the costs of help at home, such as meals on wheels or someone doing your shopping then visit our care at home section. This contains information on paying for these services.

If you are thinking of moving into sheltered accommodation or an assisted living property and want to know more about the costs of these visit our sheltered accommodation or assisted living sections. Both of these can be found in our other options to a care home section.

What it comes down to is how much you can afford to pay towards your stay in a care home. Your capital will be taken into account and the level of this determines whether you will pay some or all of the costs of your care. The rules governing funding differ between local authorities in England, Scotland, Wales and Northern Ireland.

Can I get help to pay for a care home?

Local authorities will provide a ‘safety net’ for the poorest members of our society but if you don’t fall into that category and have savings or property then you will be expected to contribute.

Whether you go into a residential home or a nursing home, your financial circumstances will be assessed and the amount set at what you can afford to pay towards accommodation and nursing care.

The problem here is that it is such a complex area that few people have any real knowledge or experience. Everyone’s situation is different which is why we recommend that you read through this guide but obtain professional, independent advice as well.

It tends to be the case that you will have to pay for all of your care home fees or you may obtain help towards these from your local authority.

Note: if you pay for care in a nursing home then the NHS will contribute to this care. This is discussed in greater detail further on in this section.

Just to be clear: when we talk about a care home we use this term to refer to two types of home:

• Residential home (provides personal care)
• Nursing home (provides both personal and nursing care)

The reason for mentioning this will become clear once we start to talk about funding.

There are numerous ways of paying care home fees and it is usually the case that the total cost of care is met by more than one source.

Common sources of funding include:

• Your local authority (social services department)
• The NHS
• You

So where do you start?

Local authority funding or private funding?

The first step is to establish if you are eligible for help towards care home fees from your local authority or the NHS.

When we say ‘help’we mean a financial contribution.

There is also the possibility that your eligibility may change over time -either due to increased nursing care or a drop in your capital.

The amount of funding a local authority will contribute towards your care depends upon whether you live in England, Scotland, Wales or Northern Ireland. It will also depend upon the amount of capital and income that you have.

England

• Your local authority will pay for the full cost of your care if your income is £14,000 or less.
• Your local authority will pay some but not all of the costs if your income is between £14,000 and £23,000. For every £250 you have over £14,000 they will subtract £1. You will then have to make up that shortfall.
• If your income is over £23,000 then you will have to pay for all of your care home fees.
• If your capital is lower than the upper limit of £23,000 but your weekly income is more than the cost of your care home fees plus your personal expenses (£21.15) added together then you will have to pay in full. This is called ‘tariff income’.

Scotland

Fairly similar: except that if you have capital of £22,500 or more then you will have to pay for all of your care home fees.

Wales

As above: if you have capital of £22,000 or more then you will have to pay for all of your care home fees.

Northern Ireland

Similar: if you have capital of £22,250 or more then you will have to pay for all of your care home fees.

NHS contribution

If you are moving into a nursing home then the NHS will usually contribute £101 towards the cots of your care. This is paid for anyone who requires it irrespective of whether you are paying for your care or are receiving help from your local authority.

This is called the ‘Registered Nursing Care Contribution’or RNCC.

It is not paid to you: instead it is paid directly to the nursing home or through your local authority.

Remember: this is a contribution towards the cost of your care. You or your local authority will still have to meet the remainder of the costs of your care.

Scotland

If you live in Scotland, you will receive a flat rate contribution of £149 towards the cost of your personal care. This is for people aged 65 and over and is irrespective of how much income or capital you have.

Plus there is a flat rate contribution of £67 towards the cost of your nursing care. This is irrespective of age and is an addition to your personal care.

Wales

If you live in Wales, you will receive a flat rate contribution of £117.66 towards your nursing care. This is irrespective of your income and capital.

Northern Ireland

If you live in Northern Ireland, you will receive a flat rate contribution of £100 towards your nursing care. This is irrespective of income and capital.

Needs assessment

If you are looking for help from your local authority then you will need to contact them to undergo a needs assessment. This is then followed by a financial assessment.

The needs assessment is designed to look at what type of care you need and then deciding upon a care home which is suitable for those needs.

From this a care plan will be produced which will recommend admittance to a care home or not and whether you require nursing care or personal care.

If you think back to the early part of this section we stated what the difference was between a residential home and a nursing home. Now you can see why this is important.

Financial assessment

With the financial assessment you are basically asking the local authority to look at your income and capital and if it falls below their upper limit. If it does then you are eligible for help.

Make sure that your local authority agrees with you about the level of care you need and are willing to contribute towards the costs.

If you, or your carer/relative thinks that you need nursing care then ask to be assessed for the NHS registered nursing care contribution.

If your local authority decides that you need to go into a care home they will then conduct a financial assessment. This is designed to see how much (if any) you can pay towards the cost of your care.

This is called a ‘client (or resident) contribution’.

This is broken down as follows:

Capital: defined as investments, property or savings owned by you, here in the UK or abroad. Also includes ‘one-off’ or lump sum payments.

It usually includes the value of your home but there are exceptions to this, such as someone still living in your home.

It does NOT include your personal possessions, furniture or jewellery.

Income: defined as a regular series of payments - monthly or annually. These include retirement pension, social security benefits or an annuity.

If you have income over at the end of a month (unspent) then this is designated as capital. An example of this is a state pension: if you have not spent all of this then whatever is left over at the end of a month then becomes capital.

If you have to contribute towards the cost of your care then you may have to include all the income you currently receive apart from your personal expenses allowance.

Personal expenses allowance

This is a set sum of money which you are allowed to keep each month. This is currently £21.15 in England and £21.38 in Wales. It can be thought of as ‘spending money’ and can be used for whatever you want.

Your local authority has the discretion to increase this amount if they feel that doing so would greatly increase your quality of life, for example, taking part in certain activities.

Note: if you receive Pension Credit then you can keep the savings credit part - up to £5.45 each week for your own use.

Where does the financial assessment become complicated?

It can become complicated if there are situations where income is treated as capital and vice versa.

One such example is interest on your savings which is disregarded as income but counts as capital from the day you are due to get this.

This ‘disregard’applies to other forms of capital and income.

What about couples?

If you are one of a couple then only income and capital owned by you will be taken into account during the assessment.

Joint savings and/or capital will be treated as shared equally between both of you with one half belonging to you only.

If you both disagree with this then make arrangements to redistribute or fairly reflect the true position.

Make sure you obtain independent advice so that you don’t unnecessarily, give away any of your assets.

You will both be treated as separate individuals, even if both of you are moving to into a home and sharing a room.

As regards pensions, if you are married, the local authority will disregard half of a personal or occupational pension or an annuity as long as your spouse is not going to be living with you in the care home. Your half will be passed onto your spouse.

This is not compulsory and you need to consider the effect this action will have on any benefits you may or do receive.

The rules differ for unmarried couples.

What about if you live on your own?

If you own your own home then you will find that the value of this will be included within your capital.

But, house prices have risen to the extent that your home is likely to be worth more than the upper limit for capital (e.g. £23,000). This means that you have to pay your care home fees in full and may have to sell your own home in order to pay these.

Unfortunately this is the reality for many people who are forced to sell their home to pay for care as this is the only way they can afford to do so. This is very difficult, especially if they have lived in that house for the majority of their lives.

If you do have to sell your home then its value will be based on a price as a quick sale rather than its maximum value.

What about if someone still lives in your house?

If someone still lives in your house, such as your husband or wife then you cannot be forced to sell your home. This is a pressing issue for many people who feel that they have no choice and have to sell their home.

But, there are circumstances where your home would not be treated as part of your capital, which includes it being lived in by the following:

• Husband/wife or partner
• Close relative under 60 and incapacitated
• Close relative aged 60 and above
• Child under 16 who you are responsible for caring for

In technical terms, this is known as an ‘infinite disregard’.

Another disregard is if someone you know has given up their house to move in and look after you. Some local authorities have discretion about this.

What about if I own my home jointly with somebody else?

If you own your home jointly with another person then your local authority will calculate the value of your share of the house and include this in your capital.

The value of your share will, however, depend upon the sale price of the house and the likelihood of you being able to sell it.

So, if the other owner doesn’t want to sell the house or buy out your share then the actual value for the financial assessment may be nominal.

Something to bear in mind is that the rules differ according to whether your home is ‘jointly’owned or ‘tenants in common’owned.

What is important about the first twelve weeks?

The value of your house is not counted for the first twelve weeks after you have permanently moved into a care home.

The idea behind this is to enable you to either:

• Sell your house
• Undergo a trial period in a care home
• Convalesce in a care home before returning home

During these twelve weeks, your contribution to the costs of your care will be based upon your capital EXCLUDING the value of your house. This is called the ‘three month property disregard’.

What is a ‘deferred payment?’

This is an arrangement between you and your local authority and can be used while you are trying to sell your house. It applies only if you have capital of less than £23,000 (or the equivalents in Scotland, Wales and Northern Ireland) apart from your house and don’t have enough income to pay for the cost of your care home. In other words, your local authority ‘lends’ you the money to pay for your care home fees and this is repaid once you have sold your house. If not then it will be reclaimed after your death.

There is no legal requirement on the part of your local authority to do this and you need to check with them to see if they would enter into this type of agreement.

A word of warning: this may seem like an ideal arrangement especially since house prices have increased but you are in effect, taking on a debt which has to be repaid. It can also impact upon any benefits you are receiving.

What is a ‘legal charge'?

You may be unable or reluctant to pay your contribution to your care home fees, either because you have few savings or don’t want to sell your home.

But your local authority has the right to make a legitimate claim on the value of your house and can recover any money owed when it is sold.

This is called a ‘legal charge’.

What happens if I have to move into a care home at short notice?

If you suddenly have to go into a care home then your local authority will charge you a fair or ‘reasonable’ rate in the meantime.

Normally, your local authority has eight weeks in which to undertake a financial assessment but if this is not possible then it will set this rate until it has carried out this assessment.

Once the assessment has been done any under or over-payments will be adjusted accordingly.

What is ‘deliberate deprivation?’

This is where someone deliberately uses their savings or sells their home at less than its real value in order to obtain financial help towards the cost of their care.

If your local authority feels that you have done this in order to qualify for a contribution from them towards the fees then it will assess you as having ‘notional capital’. So, you will be treated as still having either of these (assets).

If you are thinking of getting rid of any assets such as savings or your house then obtain professional advice before you do so.

Can I rent out my home to pay for care home fees?

This may be an option but you need to check first with your local authority.

Will moving into a care home affect my benefits?

If you are receiving any benefits then these may be affected.

The first thing you need to do is to inform the benefits office that you are going into care. The effect this has on your benefits will depend on whether your stay is temporary or permanent.

Pension credit: you can claim this even if you have moved into a care home. The Pension Credit comes in two parts:

• Guarantee credit: this ‘top ups’your income to an agreed amount. If you are single this is increased to at least £130 a week. If you are a couple then it is increased to £198.45 for both of you.
• Savings credit: this is an extra amount of money for people over 65 who have some savings.

It may be the case that you can claim one or the other, or even both.

Attendance Allowance: this usually ceases after four weeks if your local authority has arranged for your move into a care home and is paying a contribution to the fees. But if you are paying the full cost of your care then this benefit will continue. This equally applies if you are receiving the care component of Disability Living Allowance. If you are receiving the mobility component of Disability Living Allowance then this shouldn’t be affected but it may be if the NHS has arranged your care.

The rules regarding this may differ if you live in Scotland. If you are receiving Attendance Allowance or the care component of Disability Living Allowance and a contribution towards your care then either of these benefits will cease after four weeks. Carer’s Allowance: if you are receiving either of the benefits mentioned above and they are stopped; if someone gets carer’s allowance to look after you then this will also be stopped.

Housing benefit and Council Tax benefit: you cannot claim these if you are moving into a care home. However, if you are a couple but used to claim these benefits when you were single (in your own name) then your partner should claim them in his/her own name.

Pensions: your right to a state or occupational pension is not affected, but, the amount of these may affect your contribution to the care home fees.

More information can be found on the Department for Work and Pensions (DWP) website or speak to someone at your local office.

What happens if I don’t meet my local authority’s criteria?

If your local authority decides that you do not meet its criteria for a care home place then it is not obliged to provide any funding -irrespective of how much or little money you have.

But, it does have to think about whether it can offer you care at home.

If you are not happy with their decision then you have the right to complain. Your local authority should have a complaints procedure. If you want more advice about this then speak to someone at your Citizen’s Advice Bureau.

Paying for your care (private funding)

If your capital is over £23,000 (England), £22,500 (Scotland), £22,000 (Wales) or £22,250 (Northern Ireland) then you will be paying for all of your personal care and accommodation costs.

Note: if you live in Scotland then you will get a contribution to the costs of your personal care.

You can choose any home you want as long as it is suitable for your needs.

When looking for a home, draw up a shortlist of several homes and visit each of these in turn. Ask as many questions as you like and if you are not happy with the answers given, ask again.

Our finding the right care home section has a checklist which you can take with you when visiting care homes.

Your instincts, a checklist and common sense will tell you soon enough if a particular home is right for you or not.

Once you have found somewhere that you are happy with it’s a case of signing a contract and then arranging to move in.

What do the fees include?

Before you sign the contract, be very clear about what the fees include and if there is anything you don’t understand then ask. Read through the contract carefully and do not sign it until you are ready to do so.

Here are a few questions you can ask when reading the contract:

• How often are these fees reviewed?
• What do these fees include (e.g. laundry, accommodation, meals etc)?
• Are there any ‘additional’ costs, for example activities
• How much notice will you give me of an increase in the fees?
• How much notice would I have to give if I wanted to move to another care home?
• Do I have take out my own contents insurance?
• What are the charges if I have to go into hospital or on holiday?
• How long would you expect payment if I were to die and how soon would my belongings have to be collected?

The last point is particularly important as it can be distressing for relatives to discover that fees still have to be paid.

Change in your circumstances

Local authorities usually review financial assessments on a yearly basis so if your income or capital changes within a year then you should inform your local authority.

The main reason that if you have between £13,000 and £23,000 in capital then you will be expected to pay towards your care. If there is a change such as a fall in the level of your capital to below a certain level then this will affect the amount that your local authority pays.

Other ways of paying for a care home

If you have an insurance policy or private health insurance then you may be able to use these towards the cost of your care.

Insurance policy

This will pay a lump sum at the time you require care and is based upon the insurer’s view of how long you will need care for, and the amount of care.

This large sum of money will provide a fixed payment for as long as required.

If you had previously taken out a long term care policy then you will find that this is no longer available. That type of policy involved the policyholder paying premiums for a long period of time before needing any care.

But if you did take out this type of policy then it should still apply (and be honoured).

Policies vary so it is a good idea to speak to an independent financial advisor who specialises in care home costs.

Private health insurance

This is usually designed to cover the costs of short term or acute care and not long term care, i.e. care home.

However, it does depend upon the type of policy you have. Your policy may include cover for recuperative or home nursing for your medical needs.

Contact your insurance company.

Local authority funding

If you have applied to your local authority for help and undergone a needs plus financial assessment then they should explain how much (if any) you need to contribute.

Remember: the financial assessment will only be carried out if you need to go into a care home. This will be based upon your full income and capital and not a rough estimate.

They will explain how much you have to contribute and how this works out. The may pay the full cost of your care to the home and your contribution is paid directly to either the home or your local authority.

If you also require nursing care then you will be entitled to the registered nursing care contribution (RNCC) which is paid by the NHS.

Your income and capital

Your local authority will assess your income and capital only: not that of your partner/spouse or relative. Even if you and your partner/spouse are moving into the same care home you will still be assessed on an individual basis.

However, there may be a situation where your spouse or partner will be asked to pay towards the cost of your care.

If your local authority decides that your capital is above their upper limit, which means that you have to pay for all of your fees then they will hand you a list of care homes in your area for you to arrange.

However, if you find this difficult to do because of poor health or because there is no-one to help you then your local authority must arrange a place for you. You will still have to pay the fees in full.

If your local authority is funding you towards the cost of your care then they should inform you of the following:

• The amount they will pay
• The maximum amount (limit) they will pay
• A list of care homes which fall within their price range

If, however, you are unable to find a care home that suits your needs and within their price limits then they should increase their price level. If not then go through their complaints procedure.

If you require nursing care then you will receive help towards the cost of this care irrespective of your capital and income.

Resident in Scotland will also receive help towards the cost of personal care.

So if you are paying some or all of your fees in a nursing home then you should see a reduction in that amount.

If you are moving into a nursing home then check if you are eligible for fully funded continuing NHS care.

(Sources: BUPA and Directgov)

Continuing NHS care

If you have permanent or chronic health problems then you may be able to get your care paid for by the NHS. But in order to do so you will have to meet their criteria. It also depends upon the type of care you need and the amount.

This involves being assessed for continuing NHS care before you move into a nursing home or following your discharge from hospital. So if this assessment is to look at help with nursing home costs it should also look at the possibility of fully funded NHS care.

The rules and criteria in England differ from those in Scotland and Wales. Each of these has their own set of guidelines.

If you are successful then the NHS will allocate a nursing home to you. You do have a say in the matter and can ask to move to a particular home but as the NHS is paying for your care it does have the final say on where you will go.

Your pension and any benefits you are receiving will be affected by this move in the same way as if you were going into hospital.

If you are refused continuing NHS care and feel that this was unreasonable or handled inappropriately then you have the right to complain. The NHS has its own complaints procedure which you go through to request that your Primary Care Trust (PCT) reviews your case.