If you require care in later life there are a few options available - you may arrange help in your own home or decide to move to ‘easier’ accommodation such as sheltered housing or you may decide to go into residential care. However, if you need financial assistance from the local authority with any of these options, including asking them to cover some or all of the costs of residential or nursing care, there are some key things you need to be aware of.
Care home costs usually fall into three categories:
- ‘accommodation’ costs
- personal care costs
- nursing care costs.
Whether you are able to receive financial support for all or any of these costs will depend on your personal circumstances and what capital you have.
Accommodation costs
If you need help with paying for accommodation costs then your local authority will carry out an assessment based on nationally set rules, which ensure that you can keep some money for your personal use. Most of your income (including pensions and capital) will be taken into account when deciding what you should pay.
If you have capital of more than £27,250 the local authority will make no contribution to your accommodation costs and you will have to cover the full expense, though you would be able to select the care home of your choice depending on availability.
For individuals with capital between £17,000 and £27,250 the local authority will part-fund the accommodation costs and this takes into account your level of income. Your ‘actual capital’ is assessed notionally giving you an income and will be taken into account allowing you to keep some funds for personal use.
For those with capital of less than £17,000 the local authority will fully fund the costs of a local authority care home. In this case your capital is not assessed and the funding can include personal care and nursing care costs if they have been approved. Funding for accommodation costs may also be available in a private care home, but it is important to ensure that the local authority can agree a contract with the home at the outset if you think you may have to rely on this.
It may be possible, as part of this contract, for third parties to agree to top-up costs where there is a gap between the home’s charges and the local authority’s contribution. Third parties are often family members and they might be asked to give written confirmation.
Personal and nursing care costs
The local social work department also has to carry out an assessment to establish if an individual’s needs mean that personal care (and if appropriate nursing care) costs are to be paid. After the assessment has been carried out, the social work department can organise the move to a home, which must be suitable for your needs. If you require a place urgently you may have to accept what is available, although there may be circumstances where you can be put on a waiting list for your preferred location.
If you are over 65 then, subject to the social work assessment, you will receive £174 per week to fund your personal care costs and this will be paid directly to your care provider
The provision of nursing care costs is similar to personal care costs except that they are available to people of any age who have been assessed as needing the service. The amount you will receive each week is £79, which is paid directly to the care provider on your behalf. However, if you qualify to receive this free personal care and/or nursing care then you may lose your entitlement to Attendance Allowance or the Care Component of Disability Living Allowance.
What is included as ‘capital’ for means testing?
When means testing for accommodation costs, for married couples and civil partners, the assessment will include a half share of any joint assets they have. That said, your home will be disregarded so long as your spouse or civil partner continues to live there.
Capital includes a wide variety of assets including, land, premium bonds, stocks and shares and savings. If you own your home or a second property then this will also be included as part of the capital which is means tested and, subject to the protection given to spouses who continue to live there, you will be expected to use that capital before accessing financial support.
It is sensible to have good lines of communication with the local authority if you need to sell your home to pay for care home costs. Although they may decide to apply a charging order to the property to protect their position, it may be possible to agree deferred payments for 12 weeks to allow the sale to be concluded.
If the property you live in is not owned by you this should not be taken into account unless you have gifted it away with a view to avoiding the implications of this assessment. As well as asking about what you own at the time the assessment is carried out, the local authority will also ask what assets you have owned in the past. If you have given away assets, the local authority can still view the property as being notionally yours and even if other savings are less than £17,000 you will still be classed as self-funding.
There is no time limit beyond which the local authority will not question such gifts although, in practice, the further back in time they were made the less likely they are to cause a difficulty.
Under current rules if the gift took place more than six months before you apply for funding then the local authority does not have the right to recover the assets or claim the cost of care from the recipient. The local authority would, however, still look for you to pay for your care.
Clearly everyone is entitled to make decisions about their property and may nonetheless decide to gift it to a family member. There are risks attached to this if the family member goes through financial or relationship difficulties and there are tax implications when you continue to reside in your property following the gift. Please ask us for information on the risks involved with the gifting of your home.
If you would like any advice on these issues please get in touch with a member of our Private Client team who would be happy to help.
Figures correct as at April 2018
