Once the decision has been made to go into a care home and it has been established that you will need to self fund, there are various ways that you can use your existing capital to pay for the fees. One way is purchase an Immediate Needs Care Plan; this is a long term insurance product which aims to pay part of all of the costs of an individual’s care during their remaining lifetime in exchange for a lump sum payment. The plan will pay a regular, tax free income to your registered care provider, starting immediately on commencement of the plan.
Self Funding Care
Help self funders understand their self funding care options; understand care funding jargon and help to guide your self funding care actions.
One way to obtain capital when care is needed is to sell your home however, if you are not yet ready to go into a care home and just require care at home then this will probably be an unsuitable option. There is another way of raising funds from your home without the need to move out of the property or to sell it; this is known as equity release.
There are two main types of equity release; Home Reversion plans and Lifetime Mortgages.
Approximately 5.5 billion pounds of benefits goes unclaimed by older people each year.
If you find you need to self fund, or if you have a low retirement income, claiming the benefits you are entitled to could make the world of difference to your circumstances.
This is a tax free, income related benefit and comes in 2 parts:
- Guarantee Credit tops up your weekly income to a guaranteed minimum level of £148.35 (for single people) or £226.50 (for couples).
- Savings Credit is an extra payment if you’ve got some savings or your income is higher than the basic State Pension.
You may be eligible for either one or both. Due to the recent changes in legislation, if you reach State Pension age on or after 6 April 2016, you may not be eligible for Savings Credit.
Even if you are only entitled to a very small amount of Pension Credit, it is worth taking as having this benefit will open the door to other benefits such as Housing Benefit and Council Tax Reduction.
If you, or someone you care for, find that it is necessary to move into a home on either a temporary or permanent basis, it is imperative that you find the right home to suit your needs. Of course it is important that the home provides a good standard of care but you also need to consider a whole other range of issues such as your day to day living, the location of the home and if it is in easy distance to friends and relatives.
Where a residential home provides personal care only (such as help with washing, dressing and giving medication).
A nursing home provides care that needs to be carried out or supervised by a registered nurse (such as dressings, injections and so on) and must have a registered nurse present at all times.
There are two main types of nursing care:
- homes attended by registered nurses who lead teams of carers
- homes attended by registered mental nurses
People with disabilities, mental health problems or learning difficulties are often cared for at home by paid or voluntary caregivers (such as family and friends), with additional support from home care agencies.
If home based care is not available or appropriate, then residential care may be appropriate.
Residential care will typically provide accommodation, meals, laundry, a programme of social activities as well as help with day-to-day basic care needs such as washing and dressing where required.
Should you or a loved one require some form of long-term care, a natural question to ask is: how do I fund it?
The average annual cost for a Care Home in England is around £30,000; with life expectancy being so high, a lot of us are likely to discover a shortfall in how long we can afford to pay for our care.
|Type of care||Average cost (2013/14)||Cost over 4 years|
|Residential care||£28,500 per annum*||£114,000|
|Nursing care||£37,500 per annum*||£150,000|
*Source: Laing & Buisson
The Care Act 2014 will come into effect from April 2015 and is an overhaul of social care in England.
Fundamentally, the Act reforms how the law works and has prioritised people’s well being, needs and goals.
Councils must enable people to access independent financial advice to help steer them through the complexities of care funding.