But it's not an easy subject to broach: in our March 2024 survey of 1,091 Which? members, 56% of respondents said they hadn’t discussed the planning of later life care with their loved ones.
Here, Which? breaks down what you really need to know about paying for later life care, and dispels some common myths and misconceptions.
1. The cost of care varies depending on where you live
Paying for care, especially stays in care homes, can be something of a postcode lottery.
Unlike care homes, the cost of care at home will depend on the number of hours the carer works. According to Lottie, domiciliary care – when you receive care at home on an hourly basis – costs an average of £28 an hour. Perhaps unsurprisingly, the most expensive form of care is live-in care, in which a carer lives with you full-time. This costs an average of £1,596 a week.
Find out more:2. Your local council might help with the cost of care
Wherever you live in the UK, you won’t be eligible for help unless the value of your savings and assets falls below a certain threshold (known as the upper capital limit):
Even if your assets are valued at less than the lower limit, you’ll generally still need to contribute to care costs from your income (for example, a pension), and the council will pay for the rest.
If you have less than the upper but more than the lower limit, you will contribute the same income plus a ‘tariff income’, which is £1 a week for every £250 you have in savings between the two limits.
Most assets are included in the council's assessment, except for personal possessions such as jewellery.
You'll have 12 weeks after beginning a long-term stay in a care home before the council considers the value of your home as part of the overall value of your assets – unless certain circumstances apply (such as your spouse or a close relative over the age of 60, still lives there) - but for those receiving home care, your home won't be part of the assessment.
Find out more:3. You'll need to watch out for 'deliberate deprivation of assets'
If the council finds you’ve given money or your home away to fall below the capital limits – known as ‘deliberate deprivation of assets’ – you will be expected to pay for your care as if you still owned whatever it is you gave away.
Adrian Quick, an independent financial adviser at HarperLees, who is accredited by the Society of Later Life Advisers (Solla), says: ‘While there are some “smoke and mirror” schemes promoted as offering failsafe transfer of assets to a non-assessable status, it’s the timing and intent that may leave the door open for the local authority to recover assets to fund social care needs.’
If you’re found to be ineligible for funding support, you’ll need to pay for care yourself – there’s no way around this. In theory, there are ways to avoid your assets being included in the council’s financial assessment, but there is always the possibility of a decision that you've deliberately deprived yourself of assets.
Mel Kenny, Solla-accredited chartered financial planner at Radcliffe & Newlands Wealth, says: ‘Your estate could evolve over time such that you end up with very little in your name.
‘For previously held assets to fall outside of a local authority financial assessment, changes would need to have occurred well in advance of potentially requiring means-tested care as well as without the intention to avoid paying for care.’
4. Inheritance tax rules don't apply to paying for care
Catriona Smith, Solla-accredited independent financial adviser at Chase de Vere, says: ‘Many people believe if they have given away capital more than seven years ago, it won’t be taken into account.
‘However, while the seven-year rule may apply to inheritance tax planning [gifts given seven years before a person dies will be tax-free, regardless of their value], this isn’t the case for care home fee assessments, and anything given away could still be classed as deprivation of assets.’
If you need to make any decisions like this, you should enlist the help of a solicitor who is a member of the Society of Trust and Estate Practitioners (Step).
Find out more:5. Next of kin aren’t responsible for paying care fees
There’s no legal obligation for next of kin to pay for care fees. When the council carries out its financial assessment, it will only consider the assets of the person going into care.
As the next of kin of someone going into care, you can provide a top-up fee - but you're under no legal obligation to do so. You might decide to do this if your loved one is receiving council funding and you’re not happy with the homes in the council’s budget.
Find out more:6. The NHS might be able to help you with the cost of care
Unlike your local council, the NHS can provide funding based solely on medical needs, regardless of financial situation. However, it’s only for those with the most extreme needs – most people who apply for this kind of funding won’t be accepted. There are two types of NHS funding:
7. You’ll still need to pay for care if you have dementia
Dementia care is usually more expensive because of the extra staff resource required to provide adequate care. Due to its complexity and intensity, those with dementia are more likely to get NHS continuing healthcare funding – but it’s still difficult to get funding.
Find out more:
8. Your eligibility for benefits changes if you move into a care home
For self-funders and those who get NHS-funded care, attendance allowance payments aren’t affected. If the council pays for your care, some of your state pension and any pension credit payments will go directly towards paying for your care.
Find out more:9. You won't always have to sell your home to pay for care
Some firms offer investment bonds for long-term care, but you would need to start investing at least 10 years before you have to pay for care to get a helpful return. Bonds aren’t risk-free and are unlikely to cover the full costs of care.
source https://www.which.co.uk/news/article/9-things-you-should-know-about-paying-for-care-aCgXs6o37Deh