If you are in retirement and are planning a care home for you or your parents, it is important to understand the different financing options available. In this article, we will explore the different ways that you can finance a care home, including self-funding, local authority funding, and private funding.
We will explore each of these options in detail so that you can make an informed decision about which one is right for you.
How are care homes paid for?
The cost of a care home depends on the type of care required and the location of the property.
There are three main ways to pay for a care home: self-funding, local authority funding and private health insurance.
Self-funding means that the individual or their family pays for the care home costs from their own savings or income. This is the most common way to pay for a care home, with 36.7% of people self-funding their care.
Local authority funding is means-tested and is only available to those who have less than a certain threshold in savings and assets. The local authority will pay for some or all of the care home fees, depending on the assessment, between 2019 and 2020, 63.3% of residents in care homes were state-funded residents.
Private health insurance can be used to pay for care homes, but it is important to check that the policy covers this type of care. Some policies will only cover nursing care, rather than general residential care.
Will my local authority pay for a care home?
Your local authority will carry out a financial assessment to see if it can help contribute to the cost of your care. This means-tested assessment looks at your income and savings, including any property you own.
What is included in capital for the financial assessment?
Your capital is everything you own, including:
- The value of your home (if you own it and it’s not your main home)
- Any savings you have in the bank or building society
- Any investments you have, such as shares or a portfolio
- The money in your pension pot (including any state pension you’re entitled to)
- Any money you have coming in regularly, such as rental income
- The value of any property or land you own outside the UK
How is income treated in the financial assessment?
For the purpose of the financial assessment, your income is considered to be anything you receive that can be used to pay for care. This includes:
- State pension
- Any private pensions you receive
- Any earnings from employment or self-employment
- Other regular income, such as rental income, Income from businesses, but, this is typically disregarded in England and Wales.
The value of any benefits you receive, such as Disability Living Allowance or universal credit, is also taken into account as income. You may not be permanently self-funding, Once your income and assets drop below the criteria level, you may then qualify for state funding.
Care home financial assessment: England and Northern Ireland
For England and Northern Ireland, if your household income is less than £14,250 a year, you may receive full support from your local authority. You won’t have to put any of your cash forward, but you will be expected to do so from your income, If your savings fall between £14,250 and £23,250 inclusive, you will be eligible for some assistance but will have to pay towards the cost of your care at a rate of £1 for every £250 in savings, this is referred to as “tariff income”.
You will usually have to pay the entire cost of your care if you earn more than £23,250. If you live alone in your own home and the value of it is included in your capital, But if your spouse, partner or a disabled relative is living in your home it will usually be disregarded from the means test.
Care home financial assessment: Scotland
In Scotland, If you’re earning less than £18,500 a year, you’ll receive the maximum support from your local council. You won’t have to put any of your assets into play, but you will be expected to contribute from your earnings. If your income is between £18,500 and £29,750, you will be eligible for partial support, but you’ll have to contribute towards the cost of your care. ‘Tariff income’ of £1 for every £250 of savings.
If your yearly income is less than £29,750, you are unlikely to qualify for local authority assistance in covering care home costs. However, Regardless of your assets, you may receive free personal or nursing care in Scotland.(see below).
The value of your home will be taken into account in Scotland if you are a homeowner, unless your partner, a relative aged 60 or over, or another dependent still resides there.
Care home financial assessment: Wales
Wales have a far more generous system than other parts of the UK. Here, if you have less than £50,000 You will be eligible for the greatest level of council assistance. You won’t have to contribute from your assets, but you may be asked to do so from your income.
If your annual income exceeds £50,000, you will usually have to pay the full cost of your care. If you own your own home, it is likely that its value will be considered unless your spouse remains there.
How much does a care home cost?
The cost of a care home will vary depending on the type of care you need and the location of the home. In England, the average weekly cost of a residential care home is £704, while the average nursing home cost is £888 per week across the UK.
If you need to go into a care home on a permanent basis, you will likely have to pay for it yourself unless you qualify for financial assistance from your local authority. The cost of care homes can be high, and it’s important to factor this into your retirement planning.
Do you get to choose which care home to go to?
If you have to self-fund your care, you will be able to choose which care home you go to. However, if you are eligible for local authority funding, the council may only be able to offer you a place in a limited number of homes.
It’s important to understand the cost of care homes and how this will impact your retirement planning.
Paying for care can be a significant financial burden, so it’s important to understand the options available to you. Whether you’re self-funding or eligible for local authority assistance, there are a number of things to consider when choosing a care home.
The cost of care homes varies depending on the type of care you need and the location of the home. It’s important to factor this into your retirement planning.
The cost of a care home can be high, and it’s important to factor this into your retirement planning. If you need to go into a care home on a permanent basis, you will likely have to pay for it yourself unless you qualify for financial assistance from your local authority.
If you’re self-funding, you will be able to choose which care home you go to, but if you’re eligible for local authority funding, the council may only be able to offer you a place in a limited number of homes. It’s important to understand the cost of care homes and how this will impact your retirement planning.