A Guide to Funding Live in Care
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In this guide we take a look at some of the options to help you fund live- in care. Read on to discover your options.
If you are looking to know more about elderly live-in care, check out our detailed guide: What is Live in Care?
Understanding your eligibility for care funding
In some cases, you may be eligible to receive support with paying for your care. For those paying for live-in care, if you are under 65 years old and you require care then you will be assessed for the Disability Living Allowance. This will determine whether you are eligible for payments that could be between around £22 to £140 per week.
If you are over 65 years old, then it will not be the Disability Living Allowance but rather the Attendance Allowance instead. The amount you are eligible for will depend on whether you need help in either the day or both the day and the night. The lower rate is about £55 per week and the higher rate is £82 per week.
All of these payments are non-means tested and are payable tax-free.
Another funding option that you may be eligible for is the NHS Continuing Healthcare fund. If you have complex care needs that are long-term then the NHS pays for the cost of the live-in care in your own home. This again is non-means tested and you would have to be assessed by the NHS to see if you meet criteria.
The council will carry out a needs assessment and also a financial assessment that can look at whether your income and savings fall below a certain threshold. In the UK, this threshold is £23,250. If you meet criteria and the council does pay for some or all of your care, then they must give you a support plan. This explains what your needs are and how they will be met using the budget they have allowed for you. For homecare, usually people choose to receive this budget as a direct payment each month because this allows you to choose your own carer. For a care home, you can pick which care home you want to live in.
It is a good idea to receive support from a financial advisor when considering funding long-term care. The Society of Later Life Advisers (SOLLA) website can help you find an accredited Later Life Adviser that specialises in helping people with financial matters later in life.
Unfortunately, if you don’t meet the threshold for support from your local council and you are not eligible for any other kinds of health benefits, then there is no easy way to avoid paying for care costs. It can be tempting to try to reach a financial asset level where the council will pay for your care, such as ‘selling’ your property to a relative but this can be seen as deliberate deprivation of assets. This is an illegal act and your local council may be aware of people trying to do this.
List of options for funding
There are various options that you can turn to in order to fund care.
Here is a list of the different options you have, together with a brief idea about what each one entails.
- A Carer Allowance Assessment- if you are caring for your loved one then you may be eligible to receive some income for this. If you care for someone for over 35 hours a week you could get £67 per week. Read more about this here.
- Local authority financial assessment- this is when your local authority will assess whether your assets and finances reach below a certain threshold (£23,250 in the UK). If they do then you may be eligible to receive funding for your care from the government.
- Personal independence payment (PIP) is a type of benefit you can receive from the government if you have a long-term condition or disability. Attendance allowance is for those who have reached state pension age.
- Care annuity is a tax-effective way of paying for live-in care or a care home. The principle is that some of your capital can be used to buy yourself an income which can then pay for your care for the rest of your life.
- Some people choose to sell their home or rent their home out and move to a care home.
- Equity release- accessing the cash value of home whilst still living in it.
- Deferred payment scheme- an arrangement with your local authority that helps you pay for care fees using the value of their home.
- Using your savings to pay for care
- A Pension can often fund care but you may not be able to use it all of it as you will still need to fund your day-to-day living
- The NHS covers the cost for some people who meet the criteria for Continued Healthcare. This funding option is for those who have complex health care needs. You will need to be assessed to see if you are eligible for this.
- Some people are able to get funding from a 3rd party such as a charity or a relative. The charity Macmillan can often help with palliative care for people with cancer.
How much does a carer cost? For elderly live-in care, costs are flexible because you can decide how much input you receive from your carer. Less intensive care at home can be as low as £650 per week but on average a live-in carer costs about £1000 per week. If you require 24/7 care at home then this can be as much as £2000 per week or more. For a couple, this cost only increases slightly so it can be a very cost-effective way of receiving care for you and your partner. Domiciliary care, when the carer does not live in the home but still delivers the care at your home, costs about £20-30 per hour, with costs increasing at weekends and bank holidays.
There are different finance options with a list of options for funding listed above.
Here you will be able to find a bit more information about the different finance options available.
Some of your capital can be used to purchase a tax-free income which can then be used to pay for care for the rest of your life. Therefore, you must think there is a reasonable chance that you will receive back in income the amount you have used to buy the annuity. The income stops on the death of the person who owns the annuity so in some cases you can lose money. However, most policies offer a part refund of premium if the client passes away shortly after buying the policy.
Deferred payment scheme
This is an arrangement with the local authority that lets people use the value of their homes to help pay for care costs. If you are eligible then the local authority will help you pay your homecare bills. You can delay repaying the council back until you choose to sell your home or until you die. The local authority will ensure that the money you owe for your care will be repaid by putting a legal charge on your property. The charge is removed when the debt is paid. Typically, you can’t use more than 70-80% of the value of your home to pay for fees.
This type of option allows you to get a tax-free lump sum of money that is valued against your house. You can remain in your property until you die or move into long-term residential care. If you have a partner, the money does not usually need to be paid until they too die or move out.
2 main types of equity release:
- A lifetime mortgage
- A home reversion plan
A lifetime mortgage is when you have been loaned money against the value of your house. The older you are and the greater the value of the property, the more money you will be able to borrow. For instance, an 80-year old may be able to borrow up to 40% of the value of their home.
The total loan is only repayable when the property is sold or if you move out permanently.
Be aware that interest is added to the amount you have borrowed so this can go up considerably over time and will need to be paid back with the original lump sum you borrowed, once the house is sold.
A home-reversion plan is when you sell off a proportion of your home to a home reversion company, providing you with a lump sum of tax-free cash. You can sell further percentages as time goes on if you need to. Similar to the lifetime mortgage, you will not need to repay the loan until the property is sold or you move out. At this point, the home-reversion company would receive a share of the sale, relating to the proportion that it owns. You will lose sole ownership of your home with this scheme.
In order to be eligible for equity release you need to live in the UK and own your home outright. You will also need to be over a certain age and if you are a couple, the youngest partner will need to be over this age too (usually around 60 years old). Additionally, the property needs to be in a reasonable state of repair and have at least 75 years remaining on the lease.
If you are self-funding your care then you can consider some of the options above or you may have savings, investment or property that can help contribute to your care. Remember that if your total income and assets reach below the threshold of £23,250 then you will be eligible to receive support from the government.
Funding for residential care and funding for care homes are expensive but most people do end up having to self-fund. Remember that if you are self-funding you can approach a care home yourself and agree the financial arrangement collaboratively but you may also wish to still have a needs assessment carried out by the local authority. This can help you have more say in the type of care needed and whether certain care homes are able to meet your requirements. Make sure that you have a contract written up so that you are clear about what is included in the fee and if there are any hidden costs.
For domiciliary care, you can approach care agencies who will be able to talk you through the different care packages and carers that might be available for you. You also need to make sure that you are aware of the financial obligations and the fees you are paying the Agencies. Generally, they are helpful and will talk with you about the different options available.
You can find out more about how to finance live in care in our detailed care guide.
How we can help
At The Live in Care Company, we make the procedure of arranging for a live in carer as hassle-free and straightforward as possible. Our team will get to know you and your preferences requirements in detail and will be on hand help you through the process. They will take the time to help you better understand your options before matching you with a wonderful live-in carer.