Care home costs and funding in England
Arranging residential home care can feel like no easy feat. With so many factors to consider, it can be a daunting period, and the prospect of funding the transition into a care home can feel overwhelming.
At Birchwood House, we want to reassure you that these feelings are normal. It’s a big transition, but it’s important to understand the steps involved with funding your care and whether you can access support.
To help lighten the load and provide some clarity, we’ve compiled some of the most asked questions about care home funding.
As the demand for care homes continues to grow, its important to understand the various funding options available to support the costs associated with residential care, and to plan wisely for the future.
The information shared below is general and for informational purposes only – it is not intended to be personal financial advice, and Birchwood House cannot be held liable for any actions you take as a result of anything you read here. Before making any decisions, we encourage everyone to conduct their own due diligence, and/or consult an independent financial advisor or licensed professional to advise on these matters where appropriate.
Funding support for care home fees
Care home residencies are often funded through a combination of different sources, depending on both the individual’s financial situation and the level of care required. This may involve both personal contributions (known as self-funding) and government or local authority involvement (known as means-tested support), depending on how much capital you have, and how much money you receive weekly (such as pensions or benefits).
In Kent, where Birchwood House is located, the local authority is Kent County Council. You can arrange to have a care needs assessment undertaken, which is free of charge and will help the council understand your care needs, whether you are eligible to receive its support in funding residential care.
According to the council:
“If you have over £23,250 in capital (which includes savings and investments) or you choose not to disclose your financial information you will not qualify for any financial assistance and then you will need to pay the full cost of your care directly to your chosen provider.
It’s always a good idea to take independent financial advice when paying for a care home yourself so that you can make all the right decisions and don’t risk running out of money.”
There are several articles on the council website which provide additional information, and which may be useful, including:
Care annuities and insurance
Care annuities and insurance policies may also offer further financial support to help you manage the cost of a care home. These involve regular payments to cover care fees and are based on a predetermined agreement.
- Immediate Care Annuities: this involves paying a lump sum to an insurance company which, in return, provides a guaranteed income for life to cover care home costs. This arrangement can offer financial security and stability throughout an person’s care journey.
- Long-Term Care Insurance: these policies are designed to cover care home fees, allowing policyholders to receive financial assistance in times of need. As with insurance, it is important to carefully review the terms, coverage, and limitations of such policies before making a decision, and seek appropriate financial guidance where possible.
The importance of planning ahead
It is important to plan ahead and explore funding options well in advance of needing care home services. During these planning stages, it is a good idea to consult with financial advisors and care professionals who can help you make informed decisions tailored to your specific circumstances. They can further explain your options, ensure the information is current and up to date, and that your decision best meets your care needs and financial capabilities.
By understanding these funding avenues, individuals and families can better navigate the complex landscape of care home financing, ensuring that everyone receives the quality of care they deserve.
To learn more about the importance of planning for care and changes that may affect your support, we’ve shared a blog here.
Frequently asked questions about funding care
How do I know if I meet the £23,250 threshold?
This is calculated using a financial assessment (means testing) conducted by the local authority, where both your capital and income are considered.
If you have more than £23,250 in capital, the local authority will not contribute towards your fees, so this is something to bear in mind.
What’s the difference between capital and income?
Capital refers to assets, meaning it includes bonds, investments, savings, and property value (although sometimes your house is not always considered). Income refers to any money paid to you in regular instalments, including both state and personal pensions.
If I don’t qualify for council finding, do I have to pay privately?
Yes – however there are lots of ways to do this. If you self-fund your care, you can choose the care home of your choice, and it’s not limited to certain financial constraints, unlike with council funding.
You may find it helpful to look into Equity Release as this allows you to use the value tied up in a property you own to generate funds. However, there are long-term implications associated with this, so it is best to consult a financial adviser for further information.
Are there any further alternatives?
There are often grants and other forms of financial aid available through charitable organisations, such as Friends of the Elderly.
Could I get an Attendance Allowance?
An Attendance Allowance could be claimed by anyone over 65 years old, subject to the criteria they have a physical or mental disability (or both). This is separate to the Disability Living Allowance and Personal Independence Payment, and you can’t receive an Attendance Allowance if you already receive either one of these.
The funding from an Attendance Allowance varies on whether you have a daytime need, a nighttime need, or both. Before you make a claim, you must have had needs for at least six months and expect to have this need for another six months. You can download a claim form from the government website, and they usually take around 40 working days to process.
Does the threshold for care funding support change?
Currently, the threshold is set to £23,250. However, it’s possible your capital could fall below this amount through selling your private assets, in which case you could then potentially qualify for assistance from the Local Authority. It is also possible that the threshold may be increased or decreased at some stage.
Is my house considered in the financial assessment?
Whether your house is considered in your financial assessment depends on the following criteria, and it’s not included if:
- There is a child (under 16) who lives in the house
- Care is being provided on a temporary basis
- Your parent still lives in the home
- A relative over 60 lives in the home
- A disabled relative lives in the home
What is a Personal Expense Allowance?
The local authority must let you keep a Personal Expenses Allowance (PEA) of at least £30.15 a week – this is money for your personal use, covering basic expenses that the care home doesn’t provide (such as toiletries and stationery).
During the financial assessment, the local authority will use your income and capital to calculate how much you should contribute towards the costs, taking into account the PEA of at least £30.15 a week.
What is the 12-week Property Disregard?
This is when the local authority disregards the value of your property, instead of taking it into account during your financial assessment. This happens for 12 weeks from when you first move into the care home, where the local authority will pay their set standard amount towards your care. If after 12 weeks your property has not been sold, the local authority can still lend you money for your care via a Deferred Payment Agreement.
What is a Deferred Payment Agreement?
This agreement allows you to defer your care home fees, so you don’t have to pay until later. This is arranged with the council, and uses the value of your residential property (your house) as a way to delay paying for the care home costs. You can therefore repay the council after you sell your house, or after you pass away. To be eligible for this DPA, you must undergo assessment from the local authority to prove you need permanent care in a care home, and that the property you own is registered with the Land Registry.
Can I arrange my care myself?
Yes, you are able to find your own place in any care home, provided you can pay the whole amount of your care home fees.
Before your placement begins, the care home must provide you with a written copy of the terms and conditions of your stay, and this must be in line with Care Quality Commission standards.
Birchwood House accepts funding from those paying for their own care (self-funding residents) and publicly funded residents (Local Authority and NHS).
