Funding care: A short guide to paying for care

Funding care: A short guide to paying for care

If you are considering arranging care for yourself or a loved one, you should think about how much it will cost and whether you are entitled to any financial support.

We understand that navigating these questions is not simple. With our Funding Care guide, we give you some useful information on:

  • Local authority and NHS funding
  • State benefits
  • Care needs assessments
  • Direct payments
  • Self-funding your care

Of course, we can’t answer every question you might have in just a few sections - but we hope to give you enough information to at least know what questions to ask, as well as suggestions for where to go for professional financial advice.

Section 1

Overview: The difference between social care and health care

It is important to first make sure whether your primary need is for social or health care, as this is the initial step in understanding who is responsible for helping you to arrange your care and, when relevant, fund it.

Overview: The difference between social care and health care

Primary need for social care

Despite the absence of a formal definition, a social care need is often described as ‘support with the ‘activities of daily living.’ These include daily tasks such as:

  • Getting up or going to bed
  • Washing, dressing and using the bathroom (‘personal care’ activities)
  • Getting around the home
  • Eating meals

A social care need usually refers to help required to maintain your independence, social interaction, manage complex relationships and be protected in vulnerable situations. It is in these circumstances that your care will often fall within the remit of the local authority.

Eligibility for social care support will be explored in detail later in the guide. However, it is worth mentioning that it is first dependent on a ‘needs assessment’ to determine whether your needs are deemed to meet a threshold to warrant support. Once this has been established, then the services you are eligible for are ‘means tested.’

Tip: If you don’t know who your local authority is, you can find out by entering your postcode into the government’s website.

If you search ‘Social care’ and select ‘Adult’ under ‘type of care required’ you will find the details of your local authority’s social services department, including contact details.

Primary need for health care

In contrast, a healthcare need is one related to the treatment, control or prevention of a disease, illness, injury or disability and the after care of someone with these conditions. Whilst not defined in law, this definition of healthcare needs is set out in what is known as the National Framework for NHS Continuing Healthcare and NHS Funded Nursing Care (October 2018 Revised).

The National Framework establishes that where the primary need for care is a health need, then the responsibility for providing for that health need lies with the NHS and is free at the point of need, regardless of where you receive your care. This is a complex area to navigate. Living with a disease, for example dementia, does not automatically entitle you to receive (free) NHS Continuing Healthcare.

We will explore NHS continuing healthcare funding later in this guide.

This assessment takes into account your needs and your ability to independently carry out activities of daily living without support. Based on this assessment, the local authority will consider:

  • The level of support you need
  • Where, when and how you should receive your care
  • The cost associated with the care you need
  • Whether you can live safely and independently in your own home

It is possible you might be assessed as not having sufficient or severe enough needs to qualify for help from the local authority. The Care Act 2014 introduced national criteria for eligibility. This came into effect from April 2015. What this means in practice is if someone’s level of need does not meet the minimum eligibility criteria, they won’t be entitled to any funding from the local authority.

The output of the assessment will include a ‘Care Plan.’ This is a document which explains the identified needs and recommendations of services to meet these needs, such as how many care visits might be needed per day and for how long. This should be created in consultation between you, any loved ones you want to involve, social services and any other relevant health professionals, with the aim of supporting your health and wellbeing day to day. Depending on the risks observed and your ability to undertake your daily activities, there might be a need to make adaptations to your home. These could be minor home adaptations such as the installation of grab rails. Or might be more extensive, including changes to your bathroom or installation of a chairlift to make your home suitable for your needs and to reduce risk of accidents, such as falls.

If it is agreed that you can no longer live at home safely and independently, you may receive the recommendation to move into a residential or nursing care home.

Tip: While having to move into a care home can be a daunting prospect, you shouldn’t let this prevent you from requesting an assessment. Local authorities are expected to place an individual’s choices, as well as their wellbeing, at the forefront of any recommendation made.

Financial assessments

Once the needs assessment has been carried out, the social services team will then need to work out how your care package will be funded. This is known formally as ‘financial assessment.’ They will look at your income and capital (including savings and property) to understand your ability to pay for your care yourself, and from this, how much you will be required to pay.

Eligibility threshold

The financial eligibility thresholds (also known as capital limits) are different across the UK. If your total capital exceeds these amounts, you will be required to pay for your own care until the value of your capital depletes to below these levels. The thresholds are:

  • £23,250 in England (2018/19)
  • £40,000 in Wales, (2018/19 – due to increase to £50,000 in the near future)
  • £27,250 in Scotland (2018/19)

Please note that in Scotland, personal care is free for people over the age of 65. The costs of services such as personal alarm services or meals on wheels, however, are charged. In Wales, there is a cap of £80 a week for social care costs for somebody not in a residential home.

References: Age UK, Paying for care and support at home in Wales ; Care Information Scotland

Your home

If you own your own home, you choose to and are able to remain safely with care in your home, then the financial assessment will exclude the value of this.

The value of your residential property is disregarded if you live in it. If you have to move into a care home, the value of your home may be included in your financial assessment. However, there are a number of exceptions to this where there may be another resident in your home, including:

  • Your spouse
  • A close relative who is aged over 60
  • An incapacitated relative
  • A child who is aged under 18 and who you are legally obliged to support

The value of your home is calculated at its current market value, minus your mortgage or loans you have taken out against your home. If there would be expenses involved with selling your home, 10% of its value can be removed from the final figure. If the care you need is short term or temporary, the value of your home should not be included in the means test that is carried out.

“References:” Age UK, Financial assessment; Age UK, Do I have to sell my home to pay for care?

Topping up or choosing to pay

In some circumstances a third party such as a friend, member of your family or charity might provide a ‘top-up’ if there is a gap between the amount the local authority is willing to pay, and the actual cost of your care.

Tip: You should note that should a relative or friend choose to provide this top- up on your behalf, whilst it isn’t their capital or income that is being assessed, they need to consider the risks associated with this option. If there is a change in their financial situation, or a sudden increase in your care fees, this could result in difficulties with them being able to cover the required top up at some point in the future.

References: Paying for Care, Do I need to fund my care?; Age UK, Financial Assessment

Section 3

State Benefits: Understanding what is available

It is important to consider whether you are currently receiving all the state benefits that you are entitled to, as some of these are not means tested.

What you will be entitled to is dependent on your circumstances, where you are in receipt of care, and who you are receiving it from. Outlined below are some of the key State benefits that may be worth exploring.

State Benefits: Understanding what is available

Attendance allowance

Eligibility: For people aged 65 or over who need help with personal care due to illness or disability, including physical, mental or learning disabilities. Attendance allowance is tax-free and not impacted by any savings or income you may have. It is not based on the care you are currently receiving, so even if you don’t currently receive support from a Care giver, you may still be entitled (if you meet the criteria above).

The level of support depends on your need. The weekly rates for 2018/19 are £57.30 at the lower rate, £85.60 at the higher rate.

Tip: You should have needed help for at least six months to be entitled to this allowance. However, if you are terminally ill, you can claim immediately.

Personal Independence Payments

Eligibility: For people aged under the age of 65. This replaced the Disability Living Allowance for people aged between 16 and 64.

PIP is tax-free and is not impacted by your savings or income. It is paid every four weeks. There are two components to PIP:

  • Activities of daily living - paid if you require support with personal care needs
  • Mobility - paid if you need support with getting around

The level of support you receive for each depends on the extent of your needs.

The weekly rates for 2018/19 are:

  • For daily living: £57.30 (standard) or £85.60 (enhanced)
  • For mobility: £22.65 (standard) or £59.75 (enhanced)

State pension

State pension age is different for men and women. What you get is based on what National insurance contributions you made during your working life. Those who qualified for State pension (even if you deferred or did not claim it yet) before 6th April 2016 are entitled to a maximum of £125.95 per week, while those who qualified on or after 6th April 2016 are entitled to a maximum of £164.34 per week.

Tip: The calculations are not straightforward, as there are many factors to take into account. It’s important to get professional advice to ensure you are receiving the right amount.

Pension Credit

Pension credit is a benefit for people on lower incomes, and provides a guaranteed minimum weekly income. If your income is below £163.34 per week for single people or £263.80 per week for couples, it can be topped up by the portion of a pension credit known as Guarantee Credit. People who have saved towards their retirement could also be entitled to the portion of the pension credit known as Savings Credit.

Personal expense allowance

The personal expense allowance is a small amount of spending money that people whose care is fully funded are allowed to keep. This totals £24.90 a week in England and Northern Ireland, £27 a week in Scotland and £28.50 a week in Wales.

NHS Continuing Care and NHS-funded Nursing Care

These benefits are not means tested and will be explored later on in this guide.

Helpful Resources

For people in England, Wales or Scotland, find out more and how to claim here:

References:

Section 4

Direct payments

What is a direct payment?

If your local authority agrees to fund your care, you can choose to receive this in one of two ways:

  • The council will organise the services that you need
  • You can receive direct payments from the council and then arrange the care for yourself
Direct payments

Direct payments give you more choice and independence when making decisions about the care they want and need by giving them the budget allocated as a result of the local authority assessment.

It does mean you have greater responsibility, as you have to manage your budget yourself. There are independent services who are able to support you in managing your direct payment, which your local authority will be willing to introduce.

This means that, if you are concerned about managing it yourself, support is available and you can still have the greater control you want.

Tip: If you opt to take a direct payment, you are able to change this later on if you decide it is not right for you.

How do direct payments work?

Direct payments will be paid to you in an agreed bank or building society account. The amount of your direct payment depends on your assessment, as outlined above. As previously mentioned, there are organisations that support with managing direct payments. These may also offer a ‘managed account’ service where your direct payment is received to a new bank account in your name, but they support you to administer payments from it.

Note the council will want to be satisfied the direct payments made are going towards the agreed services outlined in the Care Plan they have provided and not just anything. You cannot use them for informal care arrangements, for example for help from a partner or close relative who lives with you. Therefore, if you have a friend or other personally connected party, you should be careful to explain this and make sure it is an agreed arrangement, in order to avoid any challenge.

If you are new to care, your social services should discuss direct payments as an option with you when assessing your care needs. If you are already receiving care, you should speak to your social worker.

When a direct payment might be right for you

Whether or not to have a direct payment is your choice, but here are a few ideas of when it could be right for you:

  • If you want greater control of your own care services and more choice in selecting the products available
  • If you are able and willing to take more responsibility for managing your own budget and the associated paperwork, including record keeping

When a direct payment might NOT be right for you

For some people, a direct payment may not be your preferred option, for example:: If you’re happy with your local authority managing your care or are happy with your current care services:

  • If you find a private care worker and you are not comfortable managing the people that care for you directly
  • If you are not confident in managing finances, maintaining records of your care

Employed relationships

Some people may choose to use a direct payment to employ a carer. Whether a carer is your employee depends on the individual circumstances of each relationship. Employing a carer results in additional responsibilities, including:

  • Registering as an employer
  • Setting up payroll services to address ‘Pay As You Earn’ tax (PAYE) and ‘National Insurance Contributions’ (NICs)
  • Arrange holiday pay and sickness pay, pensions and liability insurance

Note there is currently an exemption, upto a limit, from National Insurance Contributions for employers hiring their own care worker. As such it might be more cost-effective than you think, and a more cost-effective option than using a traditional care agency.

It is important to speak to an expert to understand the implications of this and the social enterprises and charitable organisations previously mentioned who help people with direct payments will be well suited to advise.

Useful Links

References:

Compared with social care needs, discussed earlier, where a person qualifies for NHS CHC the relevant Clinical Commissioning Group (CCG – the NHS organisations that are responsible for the planning and commissioning of healthcare services for an area) will be responsible for funding the full package of the assessed care requirement, rather than the local authority. As such, the criteria, assessment process and terms of the packages provided are different and eligibility for NHS CHC is not means tested.

Eligibility: What is a primary health need?

NHS CHC is for adults (over 18s) with needs that have arisen due to disability, accident or illness that cannot be met by existing or specialist services alone.

Assessment is undertaken by a multi-disciplinary team of healthcare professionals who review the following:

  • What help is needed
  • The complexity, intensity and the severity of the need; and
  • The unpredictability of these factors, which may result in risks to your health if the right care isn’t provided.

The diagnosis and the health condition support that is required do not alone confirm eligibility. Eligibility depends on the nature of your need and the type of everyday care required as a result. If your needs change, then your eligibility may change as well.

If you do not qualify for full NHS CHC, there may still be a responsibility for the NHS to contribute to ensure health needs are met. This might be by commissioning or part-funding this aspect of a care package, and can be known as a ‘joint package of care.’

Assessment Process

The CCG will arrange a specialist assessment, which has two stages.

First stage First there is the checklist assessment. This looks for indications of the criteria required for CHC funding, and provides a ‘score.’

Second stage Based on the outcome of the checklist assessment, you may be eligible for a second assessment, which is the full assessment provided by a multidisciplinary team of healthcare professionals.

Note that throughout the process you should be provided with copies of the assessment, which should be kept for future records as your needs, and therefore eligibility, may change over time. Additionally, it is worth noting you have a right to appoint an advocate to assist you with the process.

Regional variations: At the same time these decisions are made locally by the relevant CCG. Therefore, across the country there may different outcomes. However the National Framework for NHS CHS funding is designed to reduce the variation of experience.

The full assessment will look at your needs across 12 areas known as ‘care domains’:

  • Behaviour
  • Cognition (understanding)
  • Psychological/emotional needs Communication
  • Mobility
  • Nutrition (food and drink)
  • Continence (control of bladder and bowel)
  • Skin (including wounds and ulcers) Breathing
  • Symptom control through drug therapies and medication
  • Altered states of consciousness
  • Other significant needs

The assessment will provide a score relating to the level of need for each of these areas (low, moderate, high, severe or priority). The examples given on the NHS website suggest that there is an opportunity to be eligible if:

  • You have one priority need
  • You have severe needs in at least two areas
  • You have severe needs in one area plus a number of other needs
  • You have a number of high or moderate needs, depending on the nature, intensity, complexity and unpredictability

However there is no specific combination of results that guarantee eligibility. Eligibility depends on how these conditions interact, and the resultant outcome and risks to the individual’s health.

Personal Health Budgets (PHBs)

The CCG will determine eligibility and funding available and will arrange the care package. However, you can request a ‘Personal Health Budget’ (PHB). The principles of this are similar to that of direct payments provided by the local authority. They are intended to give the user greater choice and control over the care services commissioned to meet their needs and provide the budget directly to the individual in receipt of care. The funds must be directed to the services that are required as agreed in the care plan.

NHS-funded nursing care

If you are not eligible for NHS continuing healthcare and have been assessed as needing care from a registered nurse, the NHS may pay a contribution for the nursing care component of nursing home fees, directly to the nursing home you are resident of. A NHS CHC assessment should be done first, and often a separate assessment is then also required for the NHS-funded nursing care.

Nursing care includes services provided by a registered nurse, as well as planning, supervising and monitoring nursing and healthcare tasks. The contribution is the same across England: £158.16 per week (2018/19).

Section 6

The importance of planning and professional advice

It is important that you have a clear understanding of your financial situation, if you are exploring your care options. Care needs change and evolve over time, which can have an impact on the type of care you need, and the associated cost. Having a clear understanding of your finances will help you better plan for your care, ultimately giving you more choice and control over what your receive.

The importance of planning and professional advice

As the need for care can arise unexpectedly, investing some time in advance to get all your documentation together will enable you to have a clearer understanding of your financial position and options. You should also think about what matters to you, and how you would want to be cared for, and make your wishes known to someone you trust.

When it comes to paying for care, only a financial adviser with specific qualifications is qualified to make a recommendation regarding how best to pay for your care. These professionals will help you understand your options by taking into consideration factors such as; your current care needs, potential future needs, how you want to be cared for, what you can afford, and how any decision you make could impact your loved ones. You could start to think about collating the following information to help you with assessing your financial situation:

  • Income – e.g. state/private/occupational pensions, income from annuities, income drawn from investments
  • Savings – such as bank accounts, ISAs
  • Property – residential and commercial
  • Current state benefits you are currently receiving
  • Information about your personal circumstances – your living situation, if you have a partner and other dependents

It’s really important to check that any advisor you engage with is suitable accredited and qualified. Financial advice is authorised and regulated by the Financial Conduct Authority (FCA). The FCA holds a register of financial advisors which you can find on the FCA website.

It’s really important to see a regulated financial adviser that holds the specific care advice qualification, as many people do not fully understand that these financial advisers are the only professionals able to advise on and recommend ‘Long Term Care Insurance,’ also known as ‘Immediate Needs Annuities’ that guarantee to pay fees at any required level for as long as they are needed.

The Society of Later Life Advisors SOLLA is a not-for-profit organisation dedicated to higher standards and accessibility to regulated financial advice, serving older people and their families. Financial Advisers who are accredited by SOLLA should have the appropriate soft skills and specialist knowledge in this area to help you achieve a good outcome when it comes to your care and paying for care needs.

Tip: Make sure your adviser is fully qualified. An independent financial adviser who specialises in long-term care needs is often known as a ‘Specialist care fees adviser.’ Look out for this and a CF8 qualification.

Section 7

Self-funding your care: some options and common considerations

Paying for your own care (self-funding) is becoming an increasing reality for many in the UK. One of the major issues is that of longevity risk because it’s impossible to predict how long you will need to pay for.

Self-funding your care: some options and common considerations

There are many ways to pay for care, some which involve using your home as a funding vehicle, and some which don’t. Here is a list of some of the available options:

  • Deferred Payment Scheme
  • Savings
  • Selling, downsizing or renting out your home
  • Releasing equity from your home
  • Long Term Care Insurance – formally known as an ‘Immediate Needs Annuity’

Deferred Payment Scheme

Since April 2015 and following the introduction of part one of the Care Act 2014, local authorities in England have had to offer a loan to meet care costs, secured on the individual’s home at a fixed interest rate. This is known as the ‘universal deferred payments system.’

The establishment of a deferred payment scheme means that people should not be forced to sell their home in their lifetime to pay for their care. It should be made clear to anyone considering this means of payment that the payment for care and support is deferred and not ‘written off’ – the costs of provision of care and support will have to be repaid by the individual (or a third party on their behalf) at a later date.

Tip: Note that this scheme is only available to people that have capital (eg. savings set apart from the value of the home) of less than the upper capital limit. For further details on eligibility thresholds, see section 2 (Social care and local authority funding).

Savings

The most accessible resources available to fund care often include savings, shares and liquid investments. Some investments will give a return over time, but this can often be over the longer term, and returns can’t be guaranteed. Some other options include selling antiques, art or other collectibles. Personal possessions however, are excluded from the local authority’s Financial Assessment, so by selling items like this, it is likely that their capital value would be included in the financial assessment which could effect you entitlements to benefits. This would also prevent you from giving these items to a loved one. It might also be worth checking your insurance policies to see if there is anything included to cover or contribute to care costs.

Selling, downsizing or renting out your home

Where the rentable value of a property is such that the owner is able to generate significant income from it, consideration could be given to using thistopay/partpaycarefees. Alternatively,selling your home or selling to buy a less expensive home can be a way to release funds to pay for care. This option may offer some non-financial benefits, like living in a home that is more manageable or that is better equipped to meet your needs. One housing option that is desirable by many is bungalows because the way they have been designed often better caters for needs associated with mobility decline. Some other alternatives which might be suitable include retirement or care villages, and sheltered housing.

Tip: You could consider renting out your home in case you think you may otherwise need to rush a sale to release funds quickly, if you have an emotional attachment with your home, or want to have the opportunity to benefit from a possible increase in value.

Long-Term Care Insurance

In return for a lump sum of money, your care fees are paid by an insurance provider for the rest of your life, protecting you against longevity risk. This allows you to ‘ring-fence’ some of your savings/capital.

The cost of one of these plans depends on many factors including, but not limited to your; age, your medical history, your life expectancy and the level of income you need to fund your care. You can also choose to add product features to one of these plans such as escalation (your payments increase every year), and capital protection (you can protect some of the lump sum payment you made to buy the plan, so some of this can be returned to your beneficiaries if you die earlier than expected).

Tip: We recommend this solution if you want peace of mind, knowing that your care fees will be paid no matter how long you live for.

Releasing equity from your home

Equity release is a way of benefiting from the value of your home and accessing some of the money tied up in it, without having to move out. Equity release schemes aren’t used exclusively to fund long-term care. But because they’re designed to generate additional income, they can be used for this purpose.

Tip: Tip: You should consider releasing equity from your home if you are living and wish to continue living in your own home.

References: Money Advice Service: Self-funding your long-term care

There are some cases where a person may have tried to deliberately avoid paying for care and support costs through depriving themselves of assets – either capital or income. Where a local authority believes they have evidence to support this, in such cases, the local authority may either charge the person as if they still possessed the asset (known as notional capital) or, if the asset has been transferred to someone else, seek to recover the lost income from charges from that person. However, the local authority cannot recover more than what the person gained from the transfer. A person can deprive themselves of capital in many ways, but common approaches may be:

  • A lump-sum payment to someone else, for example as a gift
  • Substantial expenditure has been incurred suddenly and is out of character with previous spending
  • The title deeds of a property have been transferred to someone else
  • Assets have been put in to a trust that cannot be revoked
  • Assets have been converted into another form that would be subject to a disregard under the financial assessment, for example personal possessions
  • Assets have been reduced by living extravagantly, for example gambling
  • Assets have been used to purchase an investment bond with life insurance

However, this will not be deliberate in all cases. Questions of deprivation therefore should only be considered where the person ceases to possess assets that would have otherwise been taken into account for the purposes of the financial assessment or has turned the asset into one that is now disregarded. If you give away or spend amounts of money in unusual measure in comparison to before you needed care or knew you would need care, then the local authority could consider this as an act of deliberate deprivation if later you fall back on them for financial support.

There are any number of reasons why someone may transfer assets to members of their family for example. However it is also important to bear in mind that, once you give away your savings or your property, you no longer have any rights and will have lost control over them.

Gifting

People with care and support needs are free to spend their income and assets as they see fit, including making gifts to friends and family. This is important for promoting their wellbeing and enabling them to live fulfilling and independent lives. However, it is also important that people pay their fair contribution towards their care and support costs.

If you need care and are self-funding, you are free to spend your income and assets as you like, however if at some point in the future you run out of money and fall back on the local authority for financial assistance, it is at that point they could consider whether you have deliberately deprived yourself of any of your income or assets to avoid paying for care fees.

References:

Section 9

Where to find further help

Browse our comprehensive list of helpful resources to find more information on how to fund your care.

Where to find further help

Section 10

Introduction to SuperCarers

SuperCarers began as two brothers seeing the difficulties their mother had in finding the right care for their grandmother. Adam and Daniel realised that the existing system was not designed to give families what they really needed - quality, choice and control, at an affordable price. So, they decided to change it.

Introduction to SuperCarers

How can SuperCarers help?

At SuperCarers, we help families find the best elderly care professionals in their area, and provide the tools you need to easily manage the care yourself. This reduces the cost to you, while allowing carers to take home the majority of what you pay. So everyone can focus on what matters most – caring.

We match you with qualified, vetted care professionals based on interests and personalities as well as care needs. This includes shortlisting suitable candidates for you to meet and interview first, before making any decision - so you can be completely confident that they are the right fit for you.

We currently offer hourly and night-time care in London and Greater London, as well as live-in care throughout mainland UK.

Call one of our care advisors on 020 8629 1030 for a free care consultation or visit our website supercarers.com for more information.