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Funded vs Self-Funded – What is the Answer? – Part One

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Navigating your way through the question of Funded versus Self-Funded care for a parent or elderly relative, can prove challenging and finding the right advice, solution and result is not always easy.

Kieron Robertson, Age Space Sussex’s Finance Partner at Concierge Wealth Management, is a Later Life Specialist and an Accredited Member of the Society of Later Life Advisers (SOLLA); the organisation which helps people and their families find a trusted and Accredited Financial Adviser who understands the financial needs of later life matters.

Kieron said: “The intricacies of the numerous decisions and choices you need to consider when looking at care funding issues, need thorough and expert advice as not all funding options may be right for you. Professional financial advice will help you make informed decisions which will assist you in making the best decision for you and your elderly parent or family member.”

In the first in a series of constructive and helpful blogs, Kieron answers some pivotal questions which you may find useful.

Funded Care – Who pays for my care and how?

There are three or four parties who, potentially at least, would fund care costs of someone requiring care –  the NHS (Health Care), the Local Authority (Social Care), the person requiring care (Self-Funded) and/or their family/loved ones (3rd Party).

NHS Continuing Healthcare, which is non-means tested and would cover the cost of care either at home or in a nursing home, is given where the primary need for care is a health care (as opposed to a social care) need and, in the first instance, you should speak to their GP to obtain guidance or arrange an assessment.

It is worth noting, if nursing care is required but the individual is not eligible for NHS Continuing Care, they may still be eligible for a Funded Nursing Care Contribution (£158.16 per week in 2018/19) which is also tax free and non-means tested.

If a care need does exist (following a care needs assessment) and NHS Continuing Care is not available, the Local Authority needs to establish whether they are responsible for providing that care via a financial assessment, noting that any care needs should be established prior to any financial assessment.

If your elderly parent or family member has over a certain amount in assets, presently £23,250 in England, or Northern Ireland (different rates apply to Scotland and Wales), they will be expected to fund their own care as far as the local authority is concerned, be it at home or in a Care or Nursing Home.

AdobeStock RetirementEither way, assessments are required to establish eligibility for both NHS Continuing Care and/or LA funding which should be considered as soon as possible and, for those who do have limited finances and collateral i.e. less than the present £23,250 in assets, financial help is available via the County Councils through Local Authority funded places.

In West Sussex approximately 60% of individuals requiring care in a Care or Nursing Home do not qualify for LA funding, as they can cover the costs through their savings, pension, investments and other income streams so, if your assets exceed these thresholds, you are deemed to be a self-funder and would be expected to meet your own care costs.

It should be noted, that there are other types of care funding which may be available, depending upon your circumstances, which are not means tested such as Attendance Allowance or Personal Independent Payments.  These additional options are worth investigating, where your family member is funding their own care.

Attendance Allowance can help with additional costs if your parent or family member has a disability severe enough that they need someone to help look after them. This is only available to people over 65-years of age, who are not receiving local authority funding for their care costs, and covers help with such things as washing, dressing, cleaning, preparing meals and eating.

Attendance Allowance is paid at two rates: the lower rate of £57.30 per week which covers supervision and assistance during the day or at night.  The higher rate of £85.60 per week relates to those who need help and support throughout both the day and night; or if they are terminally ill.

The Personal Independence Payment is for those under the age of 65, in a similar position, with comparable payments although there is also a mobility component.

As reported by UK Government, an individual could also receive Pension Credit, Housing Benefit or a Council Tax Reduction if they claim Attendance Allowance.

If you own your own home, you could also explore the possibility of using the Deferred Payment Agreement.

Deferred Payment Agreement

These are specifically for people who own their own property but need to move into a Care or Nursing home, who have little or no savings and do not wish to sell the property. Your Local Authority is obliged to offer the opportunity of a Deferred Payment Agreement. This means that the property will not need to be sold (immediately, at least) to cover the fees of a Care Home. The Local Authority will temporarily cover the cost of the Care or Nursing Home fees, until they are repaid once the property is sold or, until an upper limit of borrowing is reached.

AdobeStock Retirement home

Of course, there are restrictions such as a limit, on the amount that can be borrowed to pay for Care or Nursing Home fees, to ensure at least 10% of the property value plus the lower threshold amount (£14,250 in 2018/19) remains.  The is to leave the Executor of the Will with sufficient funds to cover the cost of selling the property as well as help ensure the Local Authority’s investment is returned, should house prices fall. Another restriction is that the borrower can only retain 10% of rental income for personal use with a DPA, the remainder is to be used to fund care. There is an initial cost to establishing a DPA, as well as ongoing fees and interest.

The Scheme will only come into effect once the individual has been in a Care or Nursing Home for over 12 weeks on a permanent basis, during which time, the property is disregarded from any financial assessment anyway, under the property disregard rules, and the local authority should cover the care costs during this period assuming the individual has no other assets.

If you only have enough, or a limited amount, of money to cover Care or Nursing Home fees for a short time, there are a range of options to help and it is advisable to have a Social Care Assessment as this could potentially help with future fees. To help, I’d advise that you seek the professional expertise of an accredited, independent financial adviser, who specialises in Later Life and Long-term care.

 

If you’d like any more financial help or advice, please contact Kieron at Concierge Wealth Management via email: kr@conciergewealth.co.uk or telephone 07840 245 968, or visit www.conciergewealth.co.uk

Do you have experience of helping elderly relatives or friends move into a Care or Nursing home? Share your experience or see others’ advice in our Age Space Forum at www.agespace.com