What are the options for funding live-in care?
With many of us wanting to remain living at home whilst we receive care, it is important to carefully consider the financial requirements and funding options needed to sustain long term care at home. With an array of choices, schemes and care plans, we have created this article in order to explain some of the live in care funding options available to you.
Council Funded Live-In Care
It is recommended that the first step you should take when considering your care funding options is to contact your local authority to discuss your care requirements.
They will arrange a free care needs assessment, where the type and level of care that you require will be examined.
In order to qualify as needing support, the council must find that your physical/mental impairment inhibits your ability to meet specified criteria such as:
- The inability to maintain sufficient nutritional needs.
- The lack of capacity to safely manage your home, etc.
This assessment will help shed light on what steps to take next, and what funding options are suitable for your circumstances.
The option to undergo a financial assessment is also available to you. This will determine whether you are eligible for funding from your local authority.
Councils establish whether they will cover the cost of your care by examining your “means”. This includes your:
- Income
- Savings
- Properties[1]
If your capital exceeds the current threshold of £23,250 *you will need to pay for the full cost of your care.
However with the introduction of “The Care Act” legislation in 2014, from 2020 the upper limit threshold will be significantly increased. There will also be a lifetime cap of £72,000.This means that after the implementation of “The Care Act” you may be eligible for funding where you previously were not.
NHS
The NHS offers 6 weeks of free intermediate home care for individuals after a hospital stay. This service is not means tested, and is available to anyone who has recently been discharged from hospital.
This option is great for individuals who are considering care at home after a hospital stay, but who are still in the process of arranging funding.
NHS continuing healthcare is a funding scheme available to individuals with long term, complex conditions and illnesses.
If you meet the specified criteria by showing that your primary care needs are health driven then the NHS will cover 100% of your live-in care fees.
Ask your GP for a continuing heath care assessment as you may be eligible for complete care funding.
Self Funding Live in Care
When self funding, it is important to seek independent financial advice. Advisors will advise you on the legal aspect of funding care, inform you of any state benefits you are eligible to claim, and provide you with suitable funding options for your specific circumstances such as:
Immediate Care Plans
These are designed to help cover the continual and future cost of care.
They are a type of annuity contract which allows you to convert a one off lump sum payment into a consistent stream of potentially tax free* income. This income can be directly paid towards your care fees.
Your care fees are covered for life, even if they exceed the cost of the original payment and this makes this a stable and concrete option for long term care funding.
However, it is also important to consider the factors which will affect the price of your plan such as:
- Your age and life expectancy
- Pre-existing medical conditions
- Lifestyle and health
Investment Bonds
Another method of raising money for your care is through investment bonds. Insurance companies invest a proportion of your money into a variety of bonds and these will in theory increase your capital.
The return made from the investments can be used independently to fund your care, potentially leaving your initial investment unaffected.
It is important to note that investment bonds often yield long term returns and therefore may not cover the entire cost of your care as of when you need it.
Using Your Home to Fund Live- in Care
Equity Release Schemes
An Equity Release Scheme is an option available to individuals whose capital is tied up within their homes. It allows you to access the cash value of your home without having to sell it.
There are two options available:
Home reversions – This scheme allows you to sell a proportion of your home for less than the market value. Releasing the cash tied up in your home without having to move out or pay for rent on the property enables you to continue living at home, with enough money to pay for your care fees.
Life time mortgages –This is where you are loaned a sum of money using your home as the guarantee.
Advantages
- The loan is usually payable after death or after the sale of the home.
- The debt won’t be passed on to your family
- Regulated by the Financial Conduct Authority who follow a strict code of conduct
Disadvantages
There are costs involved in equity release schemes such as:
- Legal fees
- Advisor fees
- Admin fees
Downsizing
Another option available for people wishing to release cash from their homes is downsizing. This is where you buy a smaller and cheaper property from the cash you’ll receive from selling your current home. For example, selling your three bedroom house for an accessible 2 bedroom bungalow ought to raise some much needed capital. The cash difference between the two can be used to pay for your care fees.
Downsizing is an effective method of raising money, leaving you with cash and property. However it is important to consider certain factors such as sustainability.
Often people do not raise as much money as they originally thought they would when downsizing because solicitor and estate agency fees are deducted from the cash total. These fees can sometimes amount to thousands of pounds, therefore it is important to consider whether the cash you raise from the selling of your home will cover the total cost of your preferred care over an extended period of time.
