How to Avoid Care Fees
Needing to move to a care home is stressful enough, but worrying about how you'll pay the fees for your care can make it even worse. Generally, if you live in the UK, you can get free medical care through the NHS. However, if you need to move to a care home or nursing home, you must pay for the care fees yourself. Unfortunately, there's no real way to avoid care fees unless you meet the strict means test for assistance from your local authority.
Qualifying for Local Authority Funding
Determine if you are eligible for NHS funding.The NHS provides continuing care if you are disabled or have a medical condition that requires long-term care. This care can be provided in a hospice, at a care home, or in your own home. Provided you qualify, your care would be free of charge.
- The guidelines for NHS continuing care are extremely strict, and most people do not qualify. For example, if you are elderly and are generally having a harder time keeping up with things, you likely wouldn't qualify.
- If you have a physical or mental disability, chronic medical condition, or terminal illness, you may qualify. Ask your doctor to arrange an assessment for you. This is the only way to find out if you qualify.
Total your savings and assets.You will have to pay your own care fees if your total savings and assets are greater than a set amount. This is also referred to as themeans test. The amount differs based on where you live, and is updated periodically.
- For 2019-19, the maximum threshold for savings and assets is £23,250 if you live in England or Northern Ireland, and £27,250 if you live in Scotland. If you live in Wales, the maximum threshold is £24,000 if you're seeking in-home care, or £40,000 if you need to move to a care home or nursing home.
Contact the social services department of your local authority.Even if your savings and assets are above the limit, you still may qualify for some services and assistance. This depends on your medical needs as well as the resources available to your local authority.
- If you live in England or Wales, you can find the social services department of your local authority by entering your postal code at .
- Find your local authority (council) in Scotland by clicking the name of your local area at .
- If you live in Northern Ireland, visit to find contact information for the Health and Social Care Trust nearest you.
Complete a needs assessment.Your needs assessment is a brief written description of the care you need, based on any disabilities or medical conditions you have. You can do this yourself, have a family member who cares for you do it, or get a full needs assessment from a social worker at your local authority.
- If you have your local authority conduct the needs assessment, you'll be asked a few questions to determine your basic situation. The person who actually conducts the assessment may be a nurse, a social worker, or an occupational therapist – whichever is best suited for you.
- It can be worthwhile to get a full needs assessment conducted by your local authority, even if you believe you are able to complete a self-assessment on your own. The assessment will be more thorough, and may uncover assistance you can get for free that you wouldn't have thought about.
Find out your contribution to care fees.After your needs assessment is complete, the local authority will review financial documents and information from you for a financial assessment. Based on the outcome of this assessment, the local authority will determine how much money you have to pay for your own care.
- If your savings and assets are below the means threshold, the local authority will pay for care for you. The care you receive will be based on the outcome of your needs assessment.
- Even if your savings and assets are above the threshold, you may qualify for partial assistance from the local authority. You may also be eligible for other programs, such as meal delivery or home assistance, depending on the resources available to your local authority.
Entering a Deferred Payment Scheme
Stay in the care home for at least 12 weeks.After 12 weeks in a care home, you become eligible to apply for a deferred payment scheme with your local authority. With a deferred payment scheme, your local authority gives you a loan to pay for your care fees.
- Deferred payment schemes apply to both residential care homes and nursing care homes. However, if you are getting in-home care in your own home, you cannot use a deferred payment scheme to cover the cost of your care.
- If you don't need the scheme immediately, you can have it start at a date further in the future.
Apply for the deferred payment scheme.Contact your local authority for an application. If you can't travel, a social worker will visit you. If you own a home, use the local authority where your home is located, not where you are receiving care (if they are different).
- Go to to find your local authority if you live in England or Wales.
- If you live in Scotland, you can find your local authority (council) at .
- Deferred payment schemes in Northern Ireland are handled by the Health and Social Care Trusts. Visit for contact information.
Provide financial information to your local authority.The local authority will evaluate your savings and assets to determine whether you're eligible for a deferred payment scheme. You may be charged interest on the scheme, depending on your personal financial situation.
- It is possible to combine a deferred payment scheme with a plan to rent out your property. However, you must tell the local authority and get permission.
Review the terms offered to you.After reviewing your finances, the local authority will present an offer to you. The local authority has broad discretion to charge interest or include other fees for the privilege of entering a deferred payment scheme.
- If you don't understand the terms of the scheme, ask for clarification. Don't agree to the scheme unless you understand it completely.
Discuss the deferred payment scheme with your family.Entering a deferred payment scheme could reduce the value of your property or any inheritance you plan to leave to family members. Your family should understand the amount of money involved and when it must be paid to the local authority.
- If you die before paying back the loan, all outstanding money owed must be paid within 90 days of your death. Make sure you won't be leaving your family in dire financial circumstances if this happens.
- Entering a deferred payment scheme can limit the size of the inheritance you leave. If you want to leave your house or other assets to family members, a deferred payment scheme may not be the best option for you to help pay for your care fees.
Complete the paperwork to enter the scheme.As with any loan, you'll have forms to fill out and sign before you'll be officially entered into the scheme. After you enter the scheme, the local authority will pay for all or part of your care fees.
- You aren't responsible for any payments unless you leave the care home or sell your house. If you end up selling your house before leaving the care home, or if you leave the care home and return to your house, you must repay all outstanding debt within 56 days.
Dealing with Property if You Own Your Home
Estimate the cost of your long-term care.If you don't qualify for assistance from the local authority, you may be able to use your home to cover your costs. If you rent your home out or get an equity release, you won't have to sell it to cover your care fees.
- Consider how long you're likely to need care. Your doctor can help you with this. Look at your medical prognosis and consider whether you'll likely get better and be able to care for yourself after some time.
- The costs of care vary significantly depending on where you live and the level of care you need.You can estimate your care costs using the online calculator available at .
Evaluate whether renting is the best option for you.Generally, renting out your home is best if you have no other family members who will be living in the home, and you have trusted friends or family members to help manage the rental property. You'll be able to charge a higher rate for rent if you have well-kept property in a desirable area.
- If you don't have a trusted friend or family member nearby to help you manage the property, you can hire a property management company. However, you'll have to pay a fee to the company, as well as cover any costs that are incurred.
- If your property is under a residential mortgage, you'll have to get it refinanced as a "buy to let" mortgage, which will likely be more expensive. You'll also likely want to get landlord insurance.
- Any income you generate as a result of renting out your house will be taxable, even if you're using it entirely to pay for your care fees.
Determine how much equity you can release from your home.With an equity release, you take out what amounts to a second mortgage on your property. That mortgage is secured by the equity in your home. You won't make any payments on that mortgage until you sell your home, or upon your death. You can use the funds from the mortgage to cover your care fees.
- Generally, you should avoid releasing more equity than you'll actually need to cover your care fees. If you have a mortgage on your property, the equity available would be subject to what you still owe on the mortgage.
- Contact your mortgage company to find out how much equity you have in your home. If you don't have a mortgage on your home, get your home appraised to find out how much it's worth.
Discuss your property options with close family members.Both renting and equity release allow you to keep your home. However, an equity release may drastically reduce the amount of inheritance you leave for family. Make sure anyone potentially affected by your decisions understands the implications of using these methods to cover your care fees.
- If an equity release doesn't completely cover your estimated care fees, you can also rent out your home for additional money.
- If the combination of rent and savings would cover your care fees, at least in the short term, you may want to wait until later to get an equity release. The longer you wait to get an equity release, the better the rates and terms will be.
Consult an equity release advisor to find an equity release loan.An equity release advisor (or specialist) will help you secure the equity release that best suits your needs. They advocate for your rights and protect your interests. They can also help you estimate how much an equity release scheme would cost you.
- There is a directory of reputable equity release specialists available at . You may want to interview more than 1 specialist so you can find the person who you believe would be best for you.
- Equity release companies offer varying rates and terms for these loans. Your equity release advisor will review the terms of each offer with you and help you evaluate them to choose the best offer for you.
- The equity release process is similar to any other mortgage. Equity release schemes typically charge a set-up fee, which may be several thousand pounds. This set-up fee is due when you sign the paperwork for the scheme.
Hire a local property agent for help with renting.A reputable property agent with good knowledge of your area can properly assess the rental value of your home and help you get the best rate. To find a property agent, start by asking your neighbors or friends and family if there's anyone they would recommend.
- You can also find reputable letting agents by going to and clicking on "Find an Expert" at the top of the page.
Reserve space at a care home before you rent your house.Many care homes have wait lists for spaces, and you may not be able to move in right away. Use the NHS directory to find a care home that provides the services you need, and tour the facilities at least once before making your final choice.
- Go to to start your search. If you want a care home with nursing services, click the appropriate tab to begin your search.
- You also want to leave time to sort your belongings before renters arrive. You may need to take out a storage unit, or leave precious items with a trusted friend or family member.
- Before moving to a care home, you may want to draw up power of attorney documents for the person who will be managing the rental property for you while you are in the care home. These documents will give the person the power to sign things for you on your behalf. You may be able to find forms you can use, or you can get a solicitor to draft the forms for you.
- This article discusses ways to cover care home fees in the UK. If you live in another country and are concerned about elder care expenses, speak to a financial planner or estates attorney who specializes in elder care.
- Some people place their home in a trust so they won't have to sell it to pay care fees. This won't work if you do it immediately before you enter a care home. The local authority will consider it "deliberate deprivation" and you will not meet the test for assistance with care fees.
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