Long-term care refers to the range of services available to support those who need long-term or permanent assistance in caring for themselves. This can include residential and nursing home care, as well as domestic help.
Services are provided by a wide range of different bodies and organisations, including local Authorities, the NHS, private organisations and charities.
In the UK, better standards of living and improvements in healthcare have led to people enjoying a longer life expectancy. While in 1950, the average person could expect to live until they were nearly 69 years of age, today we have a life expectancy of over 81 years old.
While many older people can now expect to live to an advanced age in good health, it is inevitable that some will require care and assistance as they reach their later years.
How much does long-term care cost?
According to the Money Advice Service, the average annual cost of residential care is between £30,000 and £40,000 per year. These costs may not be all-inclusive, either – visits to the hairdressers, day trips and other forms of entertainment, for example, can all cost extra.
Home care costs will vary according to the person’s needs. On average, the cost of a home carer is around £17 per hour. So, even if you only need two hours of care per day, it could still add up to £12,500 per year.
Does the government help to pay long-term care fees?
Government funding is available to help you with the costs of long-term care. The amount to which you are entitled varies across the UK, with each devolved nation offering different levels of support.
England and Northern Ireland
If you live in England or Northern Ireland, the government funding you receive will depend on how much capital you have. If you have capital assets:
Less than £14,250: You’re entitled to local government funding to cover the cost of your care. You won’t be expected to contribute from your capital, but if you are still drawing an income (e.g. a State or private pension), you’ll be expected to contribute this except for a personal expenses allowance (PEA) of £24.90 per week. If the cost of your care is more than your local authority’s standard rate, you may have to pay the difference – this is called a ‘third party top up’.
Between £14,250 and £23,250: You’ll be entitled to some funding, but you may have to contribute all income in excess of the PEA, as well as £1 per week for every £250 in capital you have between the upper and lower limits. For example, if you have savings of £21,000, you’ll be expected to contribute £27 of your capital per week in addition to your income.
Over £23,250: You will have to pay for your own care.
The capital limits are higher in Scotland, but similar rules apply.
If you have capital assets:
Less than £18,000: You’re entitled to funding to help with your care fees. As above, you won’t be expected to contribute from your capital, but you will be expected to contribute all income over the PEA (£28.75 per week in Scotland).
Between £18,000 and £28,500: You’ll be entitled to some funding from your local authority, but will be expected to contribute £1 of your capital per week for every £250 you have between the upper and lower limits, as above.
Over £28,500: You will be expected to pay the full cost of your care.
In Wales, there are different rules depending on whether you need at-home or residential care.
If you have capital worth:
Less than £24,000: You will not be expected to use your capital to pay for your care. Your local authority can only look at your income when deciding what to charge you.
Over £24,000: You will be obliged to pay for your home care, but the Welsh government has capped the cost at a maximum of £90 per week.
If you have capital worth:
Under £50,000: You won’t be expected to use your capital to pay for residential care. You will, however, be expected to contribute all income in excess of the PEA, (£32 per week in Wales).
Over £50,000: You will be expected to pay the full cost of your care until your capital is reduced to £50,000 or below.
What counts as ‘capital’ for long-term care means tests?
For the purpose of local authority means tests, your ‘capital’ includes the value of the following assets:
- Property (although this can be disregarded under certain circumstances)
- Money held in bank accounts/building societies
- Premium bonds
- Any benefits you’re eligible for (even if you’re not claiming them)
What if I’m not entitled to government funding for my long-term care needs?
If you have a disability or complex health needs, you may be eligible for NHS continuing healthcare (CHC) free of charge. It is a package of care that can be provided at home, in a nursing care home or in a hospice. You’re more likely to qualify if you have healthcare, as opposed to social care needs.
If you are ineligible for government or NHS funding, there are ways to self-fund your care. Whether you’re paying in full or in part, the costs can mount up and it’s wise to prepare yourself financially. You could do this, for example, through savings and investments, or through a care fees plan (also known as an immediate needs annuity). This is a specialist insurance plan designed to convert capital into income to meet your care fees.
Consulting with an independent financial adviser well ahead of time will equip you with the tools you need to prepare yourself for the potential costs of long-term care.
Will I have to sell my house to pay for long-term care?
Your property will be included in government means test assessments, except in the following circumstances:
- Your spouse/civil partner lives in the property
- A disabled relative lives in the property
- A relative over the age of 60 lives in the property
- A child under the age of 16 lives in the property
- Your care needs are only temporary
- You are in your first 12 weeks of needing permanent care
If you do need to sell your home to pay your care home fees, the 12-week deferment period (which only applies if your capital falls under the upper limit in your country of residence) gives you time to find a buyer for your property and complete the transaction before you have to start paying fees.
Can I give away my property so it’s not included in the means assessment?
Even if you give your home away, for example to your child or another relative, it may still be counted as capital in the means test. This is because your local authority may see it as a ‘deprivation of assets’. This means that you have gifted your property for the sole purpose of discounting it from a means assessment. So, you might have to pay for the cost of your care as if you still owned your home anyway.
What happens when I can no longer make important decisions for myself?
Some people who require long-term care have lost mental capacity, and no longer have the ability to look after their money or advocate for their needs. That’s why planning ahead is so important, to enable your family to step in and manage your affairs when you need it most.
You can nominate somebody who is legally entitled to manage your personal and financial affairs with a document called a Lasting Power of Attorney (LPA). There are two types of LPA:
- Health and Welfare LPAs allow your nominated attorney to make vital decisions relating to your health and personal welfare (including decisions surrounding long-term care);
- Property and Finance LPAs will allow them to make key decisions about your money and property (e.g. whether or not to sell your house to pay for care home fees and accessing your capital to pay for your care).
Without an LPA in place, your family could face a drawn-out court process before they are able to give you the help you need.
Assistance is at hand
If you have capital and property that places you above the capital limits in your country of residence, then it is extremely important to seek professional independent financial advice from an adviser specialising in long-term care planning.
Our SOLLA (Society of Later Life Advisers) accredited care fees planning team can help you create a robust plan for later life, in order to avoid difficult financial decisions for yourself and your loved ones down the line.
At Tees we offer expert independent financial as well as legal advice which gives us the ability to combine your financial planning and legal needs, giving you a fully joined-up view.
We can take care of your later life financial plans in conjunction with advising you on estate planning and Powers of Attorney. We’re here to help, and only a phone call away.