27 October 2020
Care Home Funding
Moving into a care home can be a stressful time, but understanding the financial implications upfront can help ease the transition. Care homes are expensive, and whilst there may be help available, the system can be complicated. According to healthcare analysts LaingBuisson, the average cost of nursing care is £750 a week.
In order to determine your eligibility for help with the costs, your local council will need to carry out a care needs assessment.
Council Means Test
The council means test takes into account both your income and capital. Certain types of income, such as money from certain disability benefits, are ignored in the means test, but the majority of income and capital types are taken into account.
In most cases, the value of your property will also be included in the means test. If you are to be taken care of in your own home, the value of the property will not be included in the test.
The following illustrates what you will need to pay based on your level of capital:
- Over £23,250 - You must pay for 100% of your care
- Between £14,250 and £23,250 - You contribute from income included in the means test, such as pensions, plus an assumed income based on your capital between £14,250 and £23,250.
- Less than £14,250 - You no longer pay an income based on your capital, but you must continue paying from income included in the means test.
Equity release arrangements can also used to fund care home stays. This can avoid the need to sell your house, at least immediately.
NHS Funding
In some cases, where your needs are determined to be primarily health-based, the NHS will arrange and pay for your care under NHS continuing healthcare (NHS CHC). If this is the case, your placement will be free. If you do not fully meet the criteria for NHS CHC, but require nursing care, the NHS will pay a contribution towards the cost of the nursing care.
Deprivation of Assets
The term deprivation of assets refers to a deliberate attempt to give away or dispose of your assets in order to avoid using them to pay for care home fees. If the council has reason to believe you have done this to avoid paying care home fees, they may still include those assets in the means test.
Common examples include:
- Cash Gifts to family or friends
- Transfer of ownership of your home
- Significant and unusual spending
- Gambling
There is no fixed timescale beyond which an asset can reliably be judged to be out of your possession. However, discussing these matters with a solicitor up front helps to ensure they’re managed carefully.
Whilst not a hard and fast rule, it’s harder for a council to link the giving away of assets to avoidance of care home fees if the decision was made when you were in good health.
Trusts
Sometimes people opt to put their assets into a Trust. There are many legitimate reasons to place assets into a trust, but if the council believes this has been done with the specific intention of avoiding care home fees, then the asset may still be counted in the means test. However, if the assets were placed into a trust when you were fit and healthy then it may be deemed unreasonable to reach this conclusion.
Deferred Payments
A ‘deferred payment agreement’ is a long-term loan that can be requested from the council to help you pay your care home fees. An arrangement such as this may allow you to avoid having to sell your house to avoid care home fees, or at least buy you time to sell your home. It is effectively a bridging loan to cover your care home costs, using your home as security. The loan debt does of course need to be paid back at some point, either on sale of the home of via other means.
In England, councils are required to offer deferred payments if you meet the following criteria:
· You’re receiving long-term care in a care home, or soon will be.
· You have less than £23,250 in savings (other than the value of your property).
· You’re a homeowner and there isn’t anyone else living in the property.
12-week property disregard
In order to allow you some breathing space, under certain circumstances the value of your property may be disregarded for the first 12 weeks of care. This gives those who are eligible some valuable time to make important decisions such as whether to sell your home for care.
Get Advice Early
Ultimately the best course of action in this area is to put measures into place as early as possible. Those who take measures such as disposing of assets or setting up trusts shortly before entering care are highly likely to be judged to have done so to avoid care home fees.
Making the right decision at the right time increases the likelihood of you being able to manage your estate as you wish should the time come for you to go into care. A solicitor can help offer confidential advice on such matters up front to put you in the driving seat. Get in touch today to find out more.
