State Funding for Care

Following our opening article in this series focusing on planning considerations in later life, we answer the key questions on how the state may provide financial support when care is needed.

What are the primary ways in which care is provided in the UK?

  • At home living alone, with a spouse, partner or family member providing care.
  • Home care with a visiting or live-in professional carer.
  • Residential or Nursing home setting.

You may also receive specialist care in a hospital or palliative care at a hospice.

How much can Care cost?

As there are variations in the type of care needed, so there are differences in the cost of care.

“Home care” is provided where it is possible to remain in your home, but you need assistance with everyday tasks such as washing, dressing, and cooking. Typically, this is charged on an hourly basis depending on the amount of care needed, and the national average rate is around £15 per hour.

Where it is necessary to move out of the home and into a permanent care environment, the costs can be much higher. The national average weekly cost of a residential care package is £672 per week, but this increases when more complex support is required and the cost of a nursing home package averages £937 per week nationally.

Will I receive help to pay for my care?

Yes. There are state benefits available to all individuals who require personal care due to disability or ill health. These include:

  • Personal Independence Payment (PIP)
  • Attendance Allowance (AA)

These payments are unlikely to meet the full cost of the care package so will need to be supplemented by other financial means, such as personal savings and income.

To determine how the state can additionally support the cost of care, the first stage of this process is to arrange a “Care Needs Assessment” with your local authority. The assessment determines the kind of social care that would meet your needs, whether this means adapting your home or moving into a care home. Following the care-needs assessment a financial means-test will take place to determine what financial support you could receive.

There may also be financial support available via the NHS, which is not means-tested and will be led by medical professionals to determine if you fulfill the criteria. You should contact your care home, social care worker or GP to initiate this assessment process.

What does “Means Testing” involve?

Your local authority will review your income and savings, which can include your main residence depending on the type of care you are receiving.

In England, if your total capital is calculated to be under £23,250 you may be eligible for some level of support, but you may still be required to pay some of the total fees from your income. Different rules can apply in Scotland, Wales and Northern Ireland.

Will my house be taken to pay for my care?

If you are still living at home, need only temporary care in a residential or nursing home, or have a partner or certain relatives living at home, your house will not be included in the initial means-test assessment.

If the house is included in the assessment, but you are unable to sell the house immediately a “Deferred Payment Agreement” can be made with the local authority. In these circumstances, the local authority continues to meet the cost of your care, but a legal agreement is in place to repay the costs when the property is sold.

Should I give away money and assets to reduce my capital?

Whilst this may have the effect of bringing your capital under the thresholds set-out, local authorities have power to investigate instances of “deprivation of assets” and so it is not recommended.

If you are considering making gifts to family members for purposes not related to your care fees funding and are concerned about the treatment of these when care is needed, seek advice from a suitably qualified professional.

Do my National Insurance contributions matter to the level of support I would receive?

No. Whilst any gaps in your National Insurance record can reduce the level of State Pension you may receive; it is not a factor towards the level of financial support you could get in a local authority care funding package.

Does my choice of residential or nursing home impact on my care-funding package?

In some circumstances the cost of your personal choice of care home may exceed the financial support provided by your local authority. In this instance your choice of care home does not reduce your benefits, however you will need to meet the additional cost yourself from savings, or with help from relatives or friends.

How do I seek advice?

The area of state funding in respect of long-term care planning is complex and advice should be sought before making any decisions from a suitability qualified professional, such as from the Society of Later Life Advisers (SOLLA).

The above information is based on our current understanding of the HMRC tax and legislative position, which is subject to change. These are generic scenarios which may be overly simplified and may not apply to your specific circumstances.

This article should not be construed as a personalised recommendation and no action should be taken without further formal advice.

The rules surrounding pension protection are complex and any course of action will depend on your specific objectives and circumstances. For a detailed review of your arrangements, please contact our Financial Planning department.