How to pay for Live-in Care.

As people get older, many worry about how they will find the money to pay for the care they might need in later life. Life savings are often insufficient to cover this, and the thought of selling a family home with so many good memories can be extremely upsetting.

Whilst many older adults can cope on their own into their 80s and even 90s, some may need more help earlier, and this uncertainty around care needs for the future can cause anxiety around the changes that may need to occur.

Who needs to pay for care in the UK?

The amount that an individual will need to contribute to the cost of their care is something that will require a means-tested assessment by the local authority/local council. The amount of income and savings an individual has, together with whether they are a homeowner and the value of their property, are all considered when making such an assessment. Although note that if you own a home jointly with a spouse or partner who lives there then the value of the property is not taken into account.

Those who own their own homes – with no partner or family member living there – assume that it will be necessary to sell their home when they go into care and that this money is needed to pay for that care. However, other options are available to them. A lifetime mortgage, for example, is just one of the alternatives.

When will I not have to sell my home?

There are some circumstances when the sale of your property will not be required, including:

• You opt for live-in care
• You have a spouse or partner who lives in the property
• There is a relative over the age of 60 living in the property
• A relative with a disability lives in the property
• You have a child under 18 who lives in the property

In some cases, the responsibility for paying for care lies with the local authority in the area where you are based. This responsibility covers various care solutions, including nursing, residential, and live-in care. However, this is only if you cannot pay yourself. According to a report by The Nuffield Trust fewer people now qualify for publicly funded care due to a tighter eligibility test as the thresholds of assets and savings used for the means test have not risen in line with inflation for the 13 years to 2023.

What types of care are available?

Most people assume that the only care options available to them in later life are residential or nursing care. However, there is a third option, in-home care, and this is becoming increasingly popular.

For those who have medical issues that require a little more care, nursing homes have traditionally been the best option. Similar to a residential home, this provides them with access to onsite specialist nursing care to help them with any medical issues that they might have. Residential care is more appropriate for those who simply need more help on a daily basis, and if later on they need medical care as well, the move to a nursing home is a relatively simple one. Live-in care means just that: staying in your own property with a live-in carer. This is someone who can assist with day-to-day tasks or with the appropriate training to help with a medical condition.

Meeting the costs of care

With both residential and nursing homes, meeting the costs can sometimes be achieved by renting out your property. However, the rent will need to be enough to cover the fees in a home, which is often not the case. A deferred payment scheme is another option if your savings are under the appropriate threshold.

A lifetime mortgage is another option for those who want to consider live-in care as this allows for the use of some of the value of the property to pay for live-in care. Depending on the amount the property is valued at, this can potentially still leave an inheritance to loved ones, and there is the possibility that the value of the property will increase over time.

Whichever option you prefer, it is important to consider early financial planning to help plan for potential care needs in the future. Knowing how you will pay for live-in care or any other care option, if required, will provide peace of mind.

What assistance is available from the local authority?

For those seniors or individuals who may require care in their later years, there is sometimes assistance available via the local authority. This care is assessed on a means basis or a needs basis and will vary from one person to another. The amount that you will need to pay is dependent on any income and levels of savings that you have, together with the value of your property if you are the sole owner. However, for those with certain needs funding is not means tested.

If you are not able to pay for your care, the local authority will be responsible for covering a range of care options.

Funding for those with healthcare needs

It is important to know that if you or a family member requires care and has a significant health need, such as dementia, Parkinsons or Alzheimers then the cost of their care could be paid by the NHS via funding called continuing healthcare funding (also known as CHC funding). This funding is not means tested and it can cover up to 100% of care costs but is only available after a full assessment of needs. Essentially it is aimed at those people whose care requirements are primarily for healthcare, rather than social or personal care reasons.

An NHS continuing healthcare package of care can be received for care in care homes, hospices or your own home so could fund the cost of live-in care or home care.

Deferred Payment Scheme Option

A local authority deferred payment scheme means that the local authority will pay in full for any care that you receive, and once your property is sold, they will receive money from the proceeds to pay them back. This is available if your savings are under the threshold and you have equity in your property. It is a similar scheme to equity release. Because there are many different types of equity release schemes available, it is a good idea to shop around for the best deal. You should also see which care options are available to you if you choose this route.

Planning for the future

It is never too early to start thinking about finances for later life, and this includes thinking about the type of strategies that you might use in order to safeguard your home whilst still preparing for the potential costs of care.

This planning should consider all of the options that might be available to you and should include checking out the costs of the various types of care that are available in your area.

It may also be appropriate to look at ways in which you can protect your assets in the future and the legal tools that are at your disposal to do this, for example trusts.

There are a number of care options that are available in later years, and not all of them involve the sale of your home. Do some research to find the right care solution for your expected needs. With the right, careful, financial planning there are alternatives available that are well worth exploring.