Many of us will find ourselves needing full-time or part-time care towards the end of our lives – but have you given any thought as to how you’ll pay for it?
Paying for care for your loved ones
It’s no secret that the UK has an ageing population, and nearly 441,000 people are currently living in a UK care home. Whether or not you end up in a care facility, it’s important to be prepared for the possibility, so that you don’t suffer financially. In this article, we will cover the average cost of a UK care home, how care home fees are paid and by whom, and what assets may be used against care home costs.
How much do care homes cost in the UK?
Depending on the location and the home itself, care homes cost an average of £949 per week (£49,348 p.a.), and nursing homes an average of £1,267 per week (£65,884 p.a.). This is a daunting prospect for most people, but especially those on a fixed income or with limited savings, however, you may qualify for some or all of your fees to be paid for by your local authority. In England, your local council is responsible for assessing whether you qualify for financial support through a means assessment.
What is a means assessment?
The financial means assessment is how your local council determines whether you can reasonably pay for your own care home or nursing home costs. You will need to request a means assessment yourself if you hope to qualify for financial assistance.
The process for a financial assessment is straightforward; your local council’s adult social care team will arrange for your assessment and request financial and property documentation from you. This will include bank statements, pension valuations, mortgage and other property information, etc. The council will then add up your assets and savings, subtracting any outstanding debt you may have, and determine where on the care home thresholds you sit.
What are the upper and lower thresholds for paying care home fees?
Upper and lower thresholds differ across the UK and will determine whether some, part, or all of the care home fees are paid for by the local council or by yourself. We have provided a breakdown of these thresholds below:
England
- Lower threshold: £14,250 in total savings and assets
- Upper threshold: £23,250 in total savings and assets
Scotland
- Lower threshold: £21,500
- Upper threshold: £35,000
Personal and nursing care are free in Scotland (subject to an assessment of your needs), and some payments for care home fees may be claimed.
Wales
- Lower threshold: £50,000
- Upper threshold: There is no upper limit. If you have less than £50,000 in savings and assets, the local authority will fully fund your care home fees.
Northern Ireland
- Lower threshold: £14,250
- Upper threshold: £23,250
What is included in a means assessment?
The means assessment is designed to formally value all of your savings and assets, as well as determine if you have tried to deliberately give away those savings to avoid paying care home fees – known as a deprivation of assets.
Your local authority will look at:
- Income – pensions, annuities, benefits, or any other earnings
- Capital – savings and investments
- Assets – your home and any other properties or land you own
- Expenses – certain expenses may be considered, such as disability-related expenses, and these can be offset against your savings amount
- Debts – outstanding mortgage payments, loans, and overdrafts will be counted against your savings
What is a deprivation of assets?
A deprivation of assets involves gifting large amounts of money or assets to friends, family, etc, in order to artificially lower your total savings and assets value before a means assessment. If your local authority suspects you of doing this, they will include the gifted amount as part of your assets, which in the worst-case, could leave you to pay your entire care home fees yourself, without the funds available to do so. The financial means assessment will go back several years, or longer if foul play is suspected.
This does not mean that giving your grandchildren £100 at Christmas will land you in any hot water. There is a clear line between regular gifting and deprivation of assets, but if you are concerned about whether you have crossed that line, please feel free to contact us to discuss your options.
Deprivation of assets can also include putting your house into a trust so that it sits outside of your estate for the sole purpose of not including it in your means assessment. However, there are many legitimate reasons for putting your property into trust which don’t fall afoul of deprivation of assets. If your property is in trust and you are concerned that this may be an issue, or if you want to consider putting your property or other assets in a trust for legitimate reasons, please get in touch for professional estate planning advice.
What is not included in the means assessment?
There are plenty of assets not included in a means assessment, such as any personal possessions, any assets held in a trust (where you are not the beneficiary), and certain types of income like the Disability Living Allowance or PIP. Assets that are jointly help will only be considered based on the percentage you own, for instance, if you and your spouse have equal shares in your home, only 50% of the property value will be included in the means assessment. The same is true of joint savings or joint investments.
It is also worth noting that your property value (or the value of your shares in the property) will not be included for the first 12 weeks of your stay in a care home, known as the 12 week property disregard. This is to help you keep your options open for a little longer; if your stay in a care home is temporary, or if you change your mind after moving in and want to try a part-time/full-time nurse instead, it’s not too late. This also gives you time to consider how you want to use your home to pay for your care, if necessary. You can sell the property, use equity release (provided you seek professional financial advice first), or even rent the property to generate income.
Preparing for your future
A financial means assessment is a straightforward process that tells councils how much financial assistance you qualify for, in the event you need to enter a care home or nursing home. The assessment will look back on previous years’ bank statements to check for foul play, but will only include assets that are solely yours, or your portion of assets that you jointly own.
Many of us will spend time in a care facility of some form towards the end of our lives, and the ongoing costs of care homes are likely to keep rising. It is never too early to start planning for your future and making sure you understand your options, so that you have enough time to carry out your financial plans. If you want to learn more about later-life and estate planning, please get in touch.
