How to Fund your Long-Term Care
When it comes to the point where a loved one or yourself needs care, it can be a difficult time emotionally. And this isn’t made any easier by the cost of care. Paying for care can be very expensive and there are complex rules when it comes to organising funding. The questions are numerous: how will you fund care? Will your own savings be enough or will you need help from other sources? What will be assessed when it comes to your personal assets? There is a real fear for many people about the possibility of having to sell their house to fund their care, which can be very distressing.
The cost of care varies greatly depending on your needs, with your health and mobility, the level of support you need, and the value of your assets, income and savings all being taken into account. When it comes to receiving outside sources of funding, you could end up paying nothing for your care, for some of your care or for all of your care.
By having a plan in advance, you can really help to reduce the stress, upset and confusion of suddenly having to organise your care services and finances. Here we’ve given a breakdown of some of the funding options as a helpful starting point, but it’s always important to seek independent advice from a specialist advisor before committing to any long-term care funding plan.
Outside Sources of Funding
There are several sources of external care funding available from the state. These sources include state benefits such as additional state pension credit and attendance allowance, local authority support and NHS funded care. However, to receive funding from these bodies, you must firstly satisfy strict guidelines that include assessments of your health and finances. If you have decided on home care, you live in England and have combined assets of over £23,250 (excluding the value of your home) then it is unlikely that you will receive funding for your social care, but you may be eligible for alternative non-means tested state benefits.
Local Authority
Depending on the result of your care assessment and means test, your local authority could pay none, some or all of your care costs. Funding from a local authority is, however, subject to eligibility criteria. Individuals will have to be means tested and undergo a care needs assessment. This is an important first step in your search for funding. It is important to remember that if you want to receive home care, then your property will not be taken into account when you are means tested by your local authority. If you are choosing to go into residential care, however, then the value of your property normally will be included.
NHS
NHS continuing healthcare is a package of healthcare that’s arranged and funded by the NHS and is provided to you at your home, or in a nursing home, hospital or hospice. Continuing healthcare funding tends to be awarded to individuals that have healthcare needs rather than social care needs and therefore the criteria can be very strict. However, it’s important to know whether you are eligible as the potential funding can make a big impact to your care. Your GP or social worker can help you with this.
Self-Funding
Insurance
By buying an insurance policy - otherwise known as a long term care annuity, an immediate need annuity or simply a care plan - you will have a regular income to help fund your care fees for as long as you live. You will need a lump sum upfront to be able to partake in this option, but it could be a good option to provide a guaranteed income for life.
Downsizing
Often seen as a bit of a compromise, downsizing does mean having to sell your house but it doesn’t mean giving up on independence altogether as you will be moving into another smaller house or apartment. If your current house is a large property that only you live in, then it can make sense to sell it so that the funds can be used towards care payments and buying a smaller property.
Releasing equity
Generally designed for people who want to stay in their own homes, equity release schemes may be an option to consider should this be your desire. Releasing equity gives you a regular income or a lump sum to pay for your care by using money that is tied up in your house, without you needed to sell. The money from equity schemes must be paid back when the house is sold at a later date, however. This is quite a serious step that comes with a potential range of advantages and disadvantages and should therefore only be considered with specialist financial advice.
Investments
It is possible to use your assets and investments to provide funding for your care. There are a multitude of ways in which people can go about doing this. If you own a property, it could be worth considering renting it for a steady income. Or, if you choose to sell your property, the money could be invested in bonds, shares or ISAs. This can create a cash flow that allows you to receive regular payments that can go towards your care.
If you want to find out more about the funding options or would like any further information on our care services and how they could help you or your loved one, then you can get in touch with our friendly team. We’re always happy to help.
