Funding your care

The Care Act 2014 has created new provisions since April 2020. It introduces a ‘Cap in Care Costs’ that offers you protection from the risk of losing all your money to home care funding. It does this by setting a maximum amount that you will have to pay towards your eligible care needs. This amount is set nationally, but your outlay will be significantly less if you meet the necessary criteria for receiving support from your local authority.

At present, the maximum threshold for financial assistance for home care 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 without any home care funding help. 

Yet, as of April 2020, this upper limit was raised, enabling more people to access financial assistance for home care and resources they may need to live independently for longer. However, the government has put in place several stipulations in the act, which could still cost you a significant amount of money, and will, ultimately, erode your hard-earned savings.

When considering home care funding help, 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)

It is definitely worth contacting the adult social services of your local council to learn more about the home care funding help options available to you and your family. If your needs are urgent, your doctor will contact Social Services in order to get an assessment arranged. Once booked, an assessor will come and see what the needs are, do a financial assessment, and give you advice on possibilities and then appoint you with a provider who is part of their preferred provider’s list. They will then 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 to care costs. 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 ones.

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. For example, home care funding for dementia patients will be provided by the NHS due to them qualifying for extra help. 

To work out whether you or your loved one qualifies for NHS help, an assessment will be undertaken by medical experts. This assessment takes into consideration four main factors when considering who qualifies for NHS support services. These include: 

• Breathing
• Behaviour
• Medication
• Altered state of consciousness

It may also be worth 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.

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 interest rates at historic lows, high inflation and jittery market means that home care funding support for the elderly is not provided, which can drain your assets very quickly.

Financial advisors can provide home care funding help 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 that will enable you to preserve your capital for longer and also ensure inheritance tax protection for the long term. 

Immediate Needs Annuities: This is where your savings are used to buy an available monthly income which is paid until the end of your life. The money is paid directly to the care provider, and the income is tax-free. The funds freed up from this annuity plan depend 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 need care or are considering requesting home care 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 finality to this option; once purchased, you are unable to get the capital back.

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

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. At 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 home care funding for the elderly, it’s easy to choose the cheapest option available.

However, you do get what you pay for, and this could mean that you end up with care visits at times not suitable to you and your wishes. Indeed, it is far better to focus on all the extra home care funding help rather than simply going for the cheapest. 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.