Funding your care

The long-term costs of care can be significant, so working out plausible ways to finance your future support needs is essential. You may want to take the opportunity to think about what living with support at home might mean to you, your partner, or your relatives, and the financial implications that come with it, particularly if you become unable to make such decisions for yourself. It’s very important to record what your preferences and wishes for future care are, so you can plan accordingly, and implement eligible financial support solutions for when the situation requires it.

By planning well in advance, you can rest assured knowing that when the time comes for that extra little bit of assistance, you’ll have the support network in place to manage this transition. Many of us have not had the time to actually do this “care planning” as one does not want to think about these decisions until the situation facing us becomes critical. But after a crisis, our families or decision makers will feel pressured into making decisions quickly on our behalf-decisions that provide short-term solutions and that will not always encompass your long-term wishes, resulting in an uncompromising situation for all parties involved.

Changes in the Care Act 2014

The Care Act 2014 creates new provisions that will come into force from April 2020 onwards. It will introduce a ‘Cap in Care Costs’ that, for the first time ever, will offer you protection from the risk of losing everything you have to meet your care costs. It does this by setting a maximum amount that you will have to pay towards your eligible care needs. This amount will be set nationally, but if you meet the necessary criteria for receiving support from your local authority, your outlay will be significantly less.

At present, the maximum threshold for receiving help from your local authority is £23,250. If you have more than this in assets, you won’t be able to receive help with the cost of your care, and will have to rely on your own financial means entirely. Yet from April 2020, this upper limit will be raised, enabling more people to access the financial help and resources they need to live independently for longer. However, the government has put in place several stipulations in the act, where it ends up still costing you a significant amount of money, and will, ultimately, erode your hard-earned savings despite the threshold.

Who can help you with funding?

If you have savings and/or you are a house owner with a total worth above the threshold, you will end up funding your own support. About 75% of private health care funding currently comes out of people’s cash reserves. In the beginning of the process, most people have no idea about future long-term care costs, yet confidence and peace of mind comes from planning in advance.

When considering care costs, it’s easy to choose the cheapest option available, but often you do get what you pay for, and this could mean that you end up with care calls at times not suitable to you and your wishes, but appropriated to the providers’ schedules instead, making it a much less cost-effective proposition, and an inconvenient choice for the future. Indeed, it is far better to focus on all the extras offered by a care provider, rather than simply going for the cheapest care calls.  Planning well in advance means that you can take the time to weigh up every available alternative on offer, enabling you to make a confident and considered decision for your future care.

Self-funding Options

People with household assets totalling more than £23,250 will be expected to meet the full costs of their care needs themselves.  This is known as ‘self-funding. For self-funders, current economic deficits (such as interests rates at historic lows, high inflation and jittery markets), means that the risks of running out of money to fund personal care costs is an all too real reality.

It might be worth involving financial advisors who are specialists with regards to care planning. They will be able to advise you on either care annuities, or talk to you directly about the benefits of equity release, and how this can work to your advantage to solve your care costs conundrum. Care annuities are tools which will enable you to preserve your capital for longer, and also ensure inheritance tax protection for the long-term. In our resources section, you will be able to find contact details of local organisations who can assist you in these matters.

Immediate Needs Annuities: This is where savings are used to buy an available monthly income which is paid until death. The money is paid directly to the care provider, and the income is tax-free. The funds freed up from this annuity plan are dependent on several, varying factors, including: gender, state of health, and the age of the person requesting support.

It’s a good choice to consider if you’re in reasonable health when you go into care, or are considering requesting homecare support services in the future. The benefit of opting for an annuity is that they tend to offer unrivalled rates of capital that cannot be matched by either personal savings, or other traditional investment plans. They also ensure peace of mind, although the risk of the policyholder dying early should also be weighed up and factored into the decision, along with the fact that there’s a resolute sense of finality to this option; once purchased, you are unable to get the capital back.

With regards to equity release, this option often gets a bad press, as in the past the advisors were not regulated. However, this is a very viable alternative nowadays, and it will give you the choice to stay in your own house for longer, whilst paying for the support.

How to get help with funding

When considering future care needs, the first port of call should be your GP, who can liaise with the relevant authorities on your behalf, and organise a financial assessment to determine your eligibility for grants or funding such as:

• NHS or local health authority
• Social Services help (and direct payment plans)

How to get help from the NHS or your local health authority

If the primary reason for needing a support service derives as a direct result of ill health, the NHS has a responsibility to foot the bill. Yet the requirements that need to be met for NHS funding are notoriously stringent..

If you are trying to get funding for care and support services, you are unlikely to get funded by the NHS, due to the strict requirements of the eligibility criteria. But if you are looking after somebody with Parkinsons’ Disease, MS or End-of-life needs, you might be able to get financial help. Your GP should be able to advise you on this in more detail.

Help from your Local Authority

It is definitely worth contacting the adult social services of your local council to learn more about the options available to you and your family. If the needs are urgent, your doctor will contact Social Services in order to get an assessment arranged. Often, they will alert the authorities to get the ball rolling. An assessor will come and see what the needs are, do a financial assessment , gives you advices on possibilities and then appoint you with a provider who is part of their preferred provider’s list. This provider will make sure your care needs are met at their standards.

You could apply for Direct Payments from Social Services. This will give you the additional benefit of taking an active role in organising your care to suit your specific preferences, rather than simply having a provider assigned to you. You will get a monthly allowance for your care based on the local authorities care costings. However, if you would like to go for a provider who is slightly more expensive, yet offers you a more bespoke service and better timings, you can have the choice of “topping up” the care costs with additional personal funds. In many instances, families or friends will pay for the difference in order to get better standards of care for their loved one.

Protecting your home

It may also be worth considering applying for a ‘Deferred Payment Scheme’ from your local council. It pays for care for the first 12 weeks, after which it will take an interest-free charge on the property. Any money owed must be paid from the proceeds of your house when it is sold. To qualify, savings and other assets (except the property), can’t exceed £23,000. Once the person dies, the accrued interest will be charged.

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