We would like to acknowledge the support of specialist long term care funding advisors Baker Jenness Financial Management in the preparation of this information.
If you require comprehensive personal care services over a longer period of time, you should get a care needs assessment from your local authority to see if you are entitled to funding. If you are not entitled to claim from the local authority, or if the local authority can only fund a limited amount of your care, there are several options to consider. In certain cases where continuing care is appropriate, NHS funding may cover the cost.
For many people, their main asset is usually the family home, and with the receipt of pensions, benefits and other income, it is often the case that you can save money by having care services at home instead of the last resort of going into residential care, as payment for residential services is assessed differently. If you do not have sufficient funds and you wish to continue living at home you may also have to consider alternative funding options, such as equity release and annuity based schemes.
Many different financing schemes are available to fund your care and nursing; each scheme needs to be tailored to your specific financial circumstances and you should take proper independent advice, ideally from a SOLLA qualified advisor.
Inheritance Tax Planning
Inheritance Tax mitigation can be an important area of financial planning in general and can be used in conjunction with care fees planning. This could reduce the amount of tax your estate may ultimately be liable for if your home and other assets are worth more than the threshold limit. Any assets above this amount will be subject to inheritance tax. Your children and future beneficiaries of your estate should be included in any discussions and legal arrangements on care funding.
Care Fees Annuities
Another option to look at is an Immediate Needs Annuity also known as a Care Fees Annuity. These annuities are designed to provide a guaranteed regular and tax-free income to meet the cost of care by paying a one-off lump sum to purchase the plan.
The lump sum will depend on the following:
- Your age
- Your medical history and current health
- The amount of income required to cover the short fall in funding the care fees
It is important that the payments are made directly to a registered care provider as they will normally be tax-free, thereby increasing the amount or standard of care available to you. This is paid for the rest of your life. If you receive the annuity payment directly, it can be subject to tax, even if you use it to pay for care.
The cost of care has been increasing as a result of inflation. You can protect against inflation by requesting a plan that provides for an increasing income.
Care fees annuities can be structured to protect a proportion of the initial capital outlay although this usually comes at additional cost.
There are two main types of equity release plans:
- “Lifetime Mortgages”
- “Home Reversion Plans”
Lifetime mortgages allow you to take out a loan on your property in return for a tax-free lump sum, a regular income, or a combination of the two. Much like a standard mortgage, the loan is secured against your property and you continue to own your own home. The amount you can release depends on a combination of your age, health and the value of your property. There are several ways a lifetime mortgage can work:
- Roll-up – where the interest is not paid back on a monthly basis to the lender but rolls up over time. The loan and the rolled-up interest are repaid either when your home is sold, on your death, or if you move into long-term care. There are no repayments to make during the life of the loan and both members of a couple are covered, so if one goes into long term residential care before the other, the other party can remain in the house until they either die or move into long term residential care themselves. You generally have the choice of receiving either a cash lump sum or money in smaller amounts as and when you want – this is called a Flexible Drawdown. Your choice of product will determine how quickly the interest grows on the loan. Taking a Drawdown product may reduce the total interest cost over time and prove more cost effective than taking out a large lump sum at the start.
- Interest-only – where you pay monthly interest on the loan and the loan sum is repaid when the house is sold, on your death or if you move into long-term care. In some cases it is possible to pay monthly interest only on a loan and then roll this up when it is no longer affordable to make monthly payments.
Home reversions involve you selling all or part of your home to a company in return for a lump sum or a regular income while retaining the right to live there. When you die or move into long-term care, the provider will be entitled to its share of the property’s value at the prevailing market rate. The balance of the property that you didn’t sell goes to your estate.
The amount you can raise from a home reversion scheme depends on your age and the age of your partner but it tends to be between 35% and 60% of the market value of the property.
Domus Live-In Care are not qualified to give advice about which funding option might be most suitable for your needs. You should seek independent financial advice from a SOLLA registered advisor.
The Society of Later Life Advisors (SOLLA) was founded in 2008 as a not-for-profit organisation, to meet the needs of consumers, advisers and those who provide financial products and services to the later life market. Their aim is to ensure that consumers are better informed about the financial issues of later life and can find a fully accredited adviser quickly and easily. SOLLA ensures that all the advisers on their website have fully satisfied all criteria to become an “accredited” adviser. This means peace of mind and assurance that the advice you are given is from financial advisers who have proved they have specialist knowledge of the sector.
Further information can be found on the following websites:
The Government and local authorities provide financial assistance, advice and other forms of support to elderly, sick and disabled people who need help with their personal care or nursing. Assistance may vary between different areas of the UK.
Social Services Support and ‘Direct Payments’
Your local Social Services can arrange and may pay for, or contribute towards, the cost of the care you may need. This does not cover nursing care at home which should be the responsibility of the NHS. With the current state of the economy, there are constraints in the provision of state funding for care and many services are no longer eligible.
If you want Social Services to fund your care, you will have to have a means-test. This means that they will ask about your weekly income including pensions, earnings, pension credits, allowances and benefits as well as all your savings and investments.
For care in your own home (as opposed to residential care,) the value of your home is not considered and they will generally ignore any savings or investments you may have if they are below certain limits. The figures can vary from area to area.
The Council will then work out how much you may need to pay towards the cost of providing you with care.
With Direct Payments the local authority pays you a regular cash payment to buy and manage your own care services. For more information click here: Direct Payments.
NHS Continuing Care
Nursing and healthcare care needs are entitled to be paid for ‘in any setting’ – including in your own home – if, following a short clinical assessment, your local health authority agrees your health needs meet their criteria for funding. However, this can sometimes be a grey area and often verges on social care which is normally funded by the local authority.
The value of Continuing Care may exceed £1,000 per week if you have high needs. You do not receive the cash directly, the NHS spends on your behalf in accordance with the needs and aims stated within a Care Needs Assessment.
The health authorities are obliged to take the wishes of the patient into account. If you want, for example, to have a live-in nurse provide you with the care you need at home you should make this clear as early as possible during the care needs review.
If your partner is your main Carer, he or she may need a break now and then. Continuing Care funding may help to pay for professional respite services, e.g. a visiting nurse for an afternoon or sometimes a live-in nurse for a week.
Continuing Care funding criteria may vary from area to area, but to be eligible you must usually suffer from a serious life-limiting or terminal condition.
There are several kinds of ‘Continuing Care’. You may be eligible for help under more than one. For example, your health authority and local council may use different schemes to jointly co-ordinate and fund one package of care that meets both your health and social care needs. Domus Live-In Care provides Continuing Care services (also known as CHC services) to a number of NHS Trusts.
Not everyone with ongoing health needs is eligible. The assessment is quite strict, and being frail isn’t enough. But don’t let that put you off. Free healthcare could be worth thousands each year, so it’s important to find out where you stand.
As a guide, ‘eligible’ health needs may include (but are not limited to):
- complex medical conditions that need additional care and support
- long-term medical conditions
- physical or mental disabilities
- terminal illnesses
- rapidly deteriorating health
- mobility problems
For more information on NHS Continuing Healthcare visit the NHS website.
Attendance Allowance is a tax-free benefit for people over 65 who need help with personal care such as getting in and out of bed, washing, eating, medication or mobility, or because they can become confused and need to be watched over. Attendance Allowance is not affected by savings and is usually unaffected by any other income you may have.
Telephone your Local Benefits Office or 0845 712 3456 for more information or pick up the leaflets on Attendance Allowance from Job Centres, Pension Centres and Social Security Offices.
Carer’s Allowance is a taxable benefit for people such as friends and family members who look after someone who gets Attendance Allowance or Disability Living Allowance. Extra expenses can be claimed for paying a third party to provide care while you are out.
Telephone your Local Benefits Office or 0845 712 3456 for more information or pick up the leaflets on Carer’s Allowance from Job Centres, Pension Centres and Social Security Offices.
Pension and Savings Credit
Pension Credit is an income related benefit made up of 2 parts – Guarantee Credit and Savings Credit.
Guarantee Credit tops up your weekly income if it is below the threshold in place at the time. There are different thresholds for single people and couples.
Savings Credit is an extra payment for people who have saved some money towards their retirement, e.g. a pension.
You don’t pay tax on Pension Credit.
For more information please see the government website. This website has a calculator which shows you what you may be entitled to.
Disability Living Allowance / Personal Independence Payments
With effect from 8 April 2013, the Disability Living Allowance was replaced by an assessment-based benefit called personal Independence Payments (PIP). This is a benefit for people who need help with everyday life of who have limited mobility.
This applies to people aged between 16 and 64. If you are over 65 you can continue to claim the Attendance Allowance.
The PIP is made up of two components:
- Daily Living
Depending on your score from the assessment you will receive a per week payment within a range. If you are currently receiving the Disability Living Allowance (DLA), you will be asked to attend an assessment sometime over the next couple of years. In some cases, the PIP may pay more than the DLA and it may be in your interest to request an early assessment. To find out what you might be entitled to go to PIP checker.
For full information on PIP, we recommend that you to go Disability Rights UK where you can download a free comprehensive guide to PIP and all the necessary forms required for making an application. Telephone your Local Benefits Office or 0845 712 3456 for more information.
Independent Living Fund
The top-up fund that works in conjunction with Social Services. The Independent Living Fund (ILF) pays grants to disabled people with high support needs who wish to live independently. ILF disregards your earnings and that of your partner so you can earn without losing any funding. Phone 0845 601 8815 for more information.
Benefits Enquiry Line 0800 882 200
A confidential telephone service for people with disabilities, their representatives and carers.
Age UK Senior Line 0808 800 6565
A welfare advice line run by Age UK for older people and their carers. Free, confidential and impartial advice about benefits and community care.
If you are entitled to local authority financial support, councils are now obliged (if you meet certain conditions) to offer you the option of Direct Payments as an alternative to actually providing you directly with care from an approved care provider. This allows you to buy your own care. In many cases you can buy directly from an approved provider at bulk purchase rates agreed with the local authority. This means you don’t have to worry about employing your own staff and paying tax and employer’s national insurance.
This is regular cash income specifically to pay for private homecare and related activities such as shopping services. If you are a volunteer Carer (e.g. a relative or neighbour) you may also be able to get Direct Payments. You cannot use Direct Payments to pay for permanent places in residential or nursing homes or to buy care from the Council.
Social Services can also suggest special equipment to make your life easier, e.g., grab rails and bathroom aids.
Grants for adapting your home or providing equipment such as hoists may be available from local Community Occupational Therapists (details available through your GP).
For more information about getting help from the Social Services contact the Care Managers via your local county or borough council office.
Make an Appointment for a Care Assessment
Drop us a line by using the form below or call us on 01892 512961 to discuss your care needs or email us at [email protected].