When the time comes to start thinking about elderly care, whether live in care or a care home, many people are surprised to realise that they will need to pay for the care themselves and become very stressed at the prospect of working out exactly how they will do so. Many of us underestimate the cost as well, which in some regions can be up to £40,000 per year for high level care.
Financial Assessment
Although you may have paid National Insurance contributions throughout your life, this doesn't actually count towards social care. You will need to complete a financial assessment to confirm whether or not you qualify for funding. This is a means test and if you're not deemed eligible for assistance, you will need to pay towards your long-term care. The means test looks at all of your income including pensions, benefits, earnings and your capital including savings, investments, land, property and business assets. If your overall income is above £23,250 then the burden of payment remains with you.
There are a number of caveats to this. If you are a homeowner, your home won't count as capital if a partner or dependent remains in the house. The value of your home will also be excluded from the means test if you choose to receive home care. You will still need to pay for the cost of care if your income is above £23,250 but the value of your home will not be taken into account.
How will I pay for my care?
You will be required to pay either the full cost of your care, or a contribution of the cost until your funds fall below the threshold. The worrying thing for many people is that once the local authority takes over the cost of your care, they may ask you to move into a cheaper care home. You need to consider whether you would be happy to move to the care home provided by the local authority. There is an option to remain in your chosen care home and allow the local authority to take over payments whilst topping up the remaining balance from your own funds but you'll need to think about how you will make up this shortfall.
There are a number of funding options available to you if you'd like to release money to give yourself more control over the location of your care. If your mortgage is paid off, you could use an equity release scheme. This enables you to take out a loan secured on your home to fund care. Releasing the equity means that you would not need to sell your home or move out to be able to use the value that is locked into it.
You may also find that your local authority offers a deferred payment scheme. If you're moving into a care home and most of your money is tied up in your property, you may be able to access a deferred payment agreement. This means you wouldn't need to sell your house immediately but could still use the value to pay the care home costs. The local authority will not ask for any repayment until the house is sold or you pass away.
Funding elderly care, whether live in care or a care home is a costly and complex business so planning in advance and informing family of your intentions is a smart thing to do to avoid financial and emotional distress in the future.
Long term care is only something I have recently started to think about because my Father has started to need care. He was extremely fit and well for 81 years - I hardly remember him ever being ill. Yet within 18 months he has deteriorated to the point of needing help washing, dressing, getting around etc. So even if you lead an active healthy life, a sudden illness can have profound repurcussions.
And you're right about so many people just assuming their partner will care for them - my mum has been caring for my dad but she is elderly herself so it just became too much for her physically to help him.
Thanks goodness for a wonderful carer we found who comes to the house twice a day to help out. She has been an absolute godsend - but not cheap! Thankfully my parents can afford this personalised care and my dad can retain his dignity - but sadly that's not the case for everyone.
Here in the US, we have a similar situation to the UK. While I'm not certain, under the Affordable Care Act, long-term care may be covered, at least by insurance. I would advise anyone who thinks they may be dependent upon care in the future to buy long-term care insurance. I got that insurance under a waiver for pre-existing conditions (my paralysis) and it has served me well for 12 years from an original 10 year capped (fixed) amount. It will run out two years from now, unless more funds are added under cost-of-living, like before, or legally mandated not to be capped.
I have been under care in my home for 25 years. Initially I paid for the small amount until it grew difficult and then I got some assistance from the state. That continues and probably will until I die. A caregiver can be a family member and paid for by either insurance, the state, or Medicaid, I believe. I highly recommend that everyone consider staying in their home. Being forced by being indigent to go where the state mandates can be very traumatic.
I highly recommend that everyone plan not only for their retirement, but their eventual care as well. It can happen to anyone as a result of a stroke, a disease like diabetes, a car accident or heart attack. Don't make your loved ones make the hard decisions for you. Plan for the cost to be taken care of.
Ron