Paying for care – what will you have to pay?

Councils provide upfront information on paying for care including how much people can expect to pay and how charges are worked out.

This information must be made available when a needs assessment is carried out and written confirmation of how the charge has been calculated must be provided after a financial assessment.

People with more than £23,250 in savings or capital have to pay the full cost. The value of the home is not counted when working out charges for non-residential care. If you have more than £23,250 you should tell Adult Social Care if your savings are likely to fall below this amount.

Councils calculate charges in accordance with their Fair Access to Care Services policy. This ensures people paying for care are only required to pay what they can afford, taking into account capital, income and expenditure and based on their eligible needs.

The financial assessment looks at how much money you have coming in, if eligible, it gives an allowance (set by the Government) for everyday living expenses and makes allowance for disability-related expenditure. Disability-related expenditure is the extra amount you spend as a result of your disability or illness. Adult Social Care can help you to identify these costs. They will also carry out a full benefit check and, if you want them to, assist you with claiming anything you may be entitled to. Most people on a very low income are not required to pay.

Figures mentioned here may change.

Non-means tested care and support

Care provided by the NHS is free; for example services provided by a community or district nurse. Intermediate care, sometimes known as ‘reablement’, is also free. This type of care is often provided to avoid hospital admission or given as support following hospital discharge.
Reablement can be provided free for up to six weeks. If ongoing care needs are identified at any time during this period however, the ongoing service is no longer classed as reablement and becomes chargeable.

Some people do not have to pay towards care services. For example, aftercare services provided under section 117 of the Mental Health Act are free of charge.

If you are in need of care or support you may be eligible to claim Attendance Allowance (AA) or Personal Independence Payments (PIP). AA and PIP are non-means tested benefits. This means that when you apply for this type of benefit your financial circumstances are not taken into account. Provided you have the need for care and support you can receive AA or PIP regardless of how much income or capital you have. AA is payable to people over the age of 65 and PIP for those aged 16 to 64. There are different rates that can be awarded, dependent on the level and type of help you need.

Other ways to fund your care and support

If you do not qualify for financial assistance from Adult Social Care there are various ways in which you could consider paying for care and support. It is important that you seek independent financial advice when considering other funding options. There are independent financial advisers that focus specifically on care funding advice, often referred to as specialist care fees advisers. They are regulated by the Financial Conduct Authority (FCA) and must stick to a code of conduct and ethics and take shared responsibility for the suitability of any product they recommend.

The Society of Later Life Advisers (SOLLA) aims to assist consumers and their families in finding trusted accredited financial advisers who understand financial needs in later life. To find a SOLLA fully accredited independent financial adviser a search is available on their website: http://societyoflaterlifeadvisers.co.uk/find-an-adviser

Equity release

If you cannot get the care or support you need from your local council and do not have sufficient income or savings to pay for services, equipment or adaptations privately you could consider equity release if you own your home. Releasing capital from your home is becoming more popular as property prices have substantially increased over the years.

There are two types of equity release – Home Reversion Plans where you sell part of your home in exchange for a lump sum and/or a regular income and continue living there and Lifetime Mortgages where you borrow against the value of your property and the interest on the loan rolls up, added to the loan and repayable when you sell the property or move out.

The Equity Release Council
The Equity Release Council is the industry body for the equity release sector and members adhere to a strict code of conduct meaning they must:

  • provide fair, simple and complete presentation of their plans. Clearly setting out the benefits, obligations, variables and limitations in their literature;
  • include all costs which the applicant has to bear in mind when setting up the plan, the position on moving, the tax situation and the effect of changes in house values;
  • ensure the client’s legal work will always be performed by the solicitor of his or her choice who will be required to sign a certificate to the effect that the contractual terms have been fully explained; and
  • all members’ plans carry a ‘no negative equity’ guarantee so you will never owe more than the value of your home.

The dos and don’ts of equity release:

Do:

  • Consider the alternatives – family or friends, existing savings, claiming benefits, grants or downsizing.
  • Consider the impact on means-tested benefits or council support.
  • Involve family members in your decision.
  • Ask the right questions: Can the plan be repaid early? Are there early repayment charges? Can I borrow more in the future? How much will the debt be in future years compared to the property value? Can the plan be transferred if I move? Is it approved by the Equity Release Council?
  • Borrow only what you need immediately. If you require future funds, using a drawdown plan means you only pay interest on the money from the date you borrow it.
  • Choose an independent solicitor with experience in dealing with equity release and preferably agree a fixed fee.
  • Choose an independent financial adviser (IFA) with the relevant equity release qualification, experience and access to all equity release plans on the market.

Don’t:

  • Borrow money to help you in paying for care. It is risky to hope that investing money borrowed would provide a return greater than the costs of borrowing it.
  • Proceed without specialist advice.