As care home fees continue to rise, many families wonder how to keep covering these costs once their loved one’s savings are exhausted. Fortunately, in the UK, there are several funding options and support systems available. This article will guide you through the resources available to cover care home fees when savings are depleted, including local authority assistance, government programs, and financial planning tips.
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Understanding care home costs in the UK
Care home fees vary widely across the UK depending on factors like the location, type of care needed, and level of support. According to recent data, the average cost of residential care can range from £600 to £800 per week, while nursing home care fees may be even higher. It’s no surprise that personal savings may not last indefinitely, but there are options to help cover ongoing costs.
1. Local authority funding for care homes
When an individual’s savings and assets fall below a certain threshold, they may be eligible for financial support through their local authority. Here’s how it works:
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The means test
The means test assesses the individual’s income and assets to determine eligibility for local authority funding. Here are the key thresholds in England:
- If total assets are below £23,250, the local authority may contribute to the cost of care.
- If assets are between £14,250 and £23,250, the individual will receive partial support, with a sliding scale based on the value of their assets.
- If assets fall below £14,250, they qualify for maximum support, though they may still be required to contribute a portion of their income.
Personal and nursing care allowances (Scotland)
In Scotland, residents over the age of 65 are eligible for free personal and nursing care. This funding covers essential services like personal assistance and healthcare support, easing the financial burden for many families.
Applying for local authority funding
To apply for local authority support, contact your local council’s social services department to request a financial assessment. They’ll determine eligibility and arrange a care plan that outlines the financial assistance available.
2. NHS continuing healthcare funding
In cases where an individual has complex medical needs, they may qualify for NHS Continuing Healthcare (CHC) funding. This program covers the full cost of care for individuals who require significant health-related support, regardless of personal assets.
Eligibility for NHS CHC
To qualify for NHS CHC, the individual must meet specific criteria that demonstrate their need for ongoing healthcare support. These assessments are conducted by an NHS multidisciplinary team who evaluates the level of care needed.
Applying for NHS continuing healthcare
Request an assessment through your local NHS authority if you believe your loved one may qualify. If approved, NHS CHC covers all care fees, removing the financial responsibility from the resident and their family.
3. Deferred Payment Agreements (DPA)
If the individual in care owns property, a Deferred Payment Agreement (DPA) can be a viable option. A DPA allows the local authority to pay for care home fees, using the property as security for the loan. The fees are then repaid when the property is sold, either after the individual leaves the care home or upon their passing.
How DPAs work
DPAs are particularly useful for those who wish to keep their property and avoid an immediate sale. The agreement accrues interest, but it allows the individual to continue receiving care without liquidating assets immediately.
Eligibility for deferred payment agreements
Eligibility criteria may vary between councils, but generally, DPAs are available if the individual has less than £23,250 in other assets (excluding their home). Reach out to your local council to discuss this option and understand the specific terms and conditions.
4. Using benefits to supplement care home fees
Individuals in care may qualify for certain benefits that can help supplement the cost of care. Here are a few common benefits to consider:
Attendance allowance
Attendance Allowance is a non-means-tested benefit available to individuals over 65 who need help with personal care due to a physical or mental disability. This benefit is paid at two rates (lower and higher), depending on the level of care required, and can be used to help cover care home fees.
Pension credit
Pension Credit is another means-tested benefit that can boost income for seniors on a low income. If eligible, Pension Credit may provide additional income that can help contribute toward care fees, particularly if personal savings are depleted.
Personal Independence Payment (PIP)
If the individual is under 65 and requires personal or mobility assistance, they may be eligible for PIP. Like Attendance Allowance, PIP provides financial assistance to those needing support due to a long-term health condition or disability.
5. Selling or renting out property
For those who own property, selling or renting it out can provide a reliable source of funds to cover care home fees.
Selling the property
Selling the property is a common solution, especially if it is not currently occupied. The proceeds from the sale can be used to fund care fees, offering a long-term financial solution.
Renting the property
For families who prefer to retain ownership of the property, renting it out may provide a steady income stream. Rental income can help supplement care home fees, and in some cases, it may even cover the full monthly cost.
6. Charities and non-profit organisations
Several charities and non-profit organizations in the UK offer grants and financial support for those who cannot afford care fees. Many focus on specific conditions, like dementia or disabilities, while others may support low-income individuals needing long-term care.
Examples of charities offering support
- Age UK: Offers information, support, and sometimes financial assistance for elderly individuals.
- Alzheimer’s Society: Provides grants and resources for individuals with dementia, helping cover care-related costs.
- SSAFA (Soldiers, Sailors, Airmen, and Families Association): Supports veterans and their families, offering financial aid for long-term care.
7. Family contributions
If savings run out and other funding sources are limited, some families may decide to pool resources to cover care home fees. Families can set up regular contributions or work with a financial advisor to explore options like trust funds, shared contributions, or even interest-free family loans.
- Creating a financial plan: A well-organized financial plan can help family members understand their responsibilities and manage costs over the long term.
- Professional advice: Seeking guidance from a financial planner can help families navigate tax-efficient options, trust funds, or other financial tools that make shared funding more manageable.
Preparing for long-term care costs
For families planning for future care needs, it’s wise to consider financial planning tools that may ease the burden of care home fees:
- Long-term care insurance: Purchasing long-term care insurance early can cover future care costs, reducing the reliance on personal savings.
- Financial planning: Professional financial advice can guide investment and savings strategies to offset potential care costs later in life.
- Open family discussions: Having honest discussions with family members about future care plans can prevent financial surprises and help families prepare together.
Running out of savings doesn’t mean care needs to stop. From local authority support and government benefits to deferred payment options and family contributions, there are numerous ways to cover care home fees when personal funds are depleted. By exploring these funding options, families can make informed choices that support their loved one’s needs, ensuring that they receive the quality care they deserve.
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