Paying for care for the elderly
Money expert and Founder of Fairer Finance
Last updated 15th April 2020
Almost all of us will need some kind of help and support in the later years of our lives. For many people, that may simply be help provided by family members.
But for many, it will mean paying for carers to come to their home and help them with essential daily tasks – like washing and cooking. Alternatively, it may mean moving into a care home.
Care can be expensive – not least because people are living longer, and so in some cases that extra support is needed for a number of years.
The good news is, there’s plenty of pots of financial support available – and lots of different ways you can look to fund your care if you need to pay for it yourself.
But the care funding system is complex, and varies across different territories. For example, personal care services at home are provided free in Scotland and Northern Ireland – regardless of how much money you have.
Whereas in England and Wales, how much support you’ll get will depend on your savings and your income.
This article talks you through what you’re entitled to, how to claim and how to prepare for the cost of care in your later years.
Paying for care at home
If you think you need support with basic daily needs – like making meals or washing – the first step should be to contact your local authority and request a care needs assessment.
Everyone is entitled to an assessment, no matter how much money you have or how great your needs are.
The local authority will let you know where it thinks you need help – or if it recommends modifications are made to your home.
If you need extra equipment – like stairlifts - or modifications made, such as the addition of handrails, your local authority may provide financial support for this. It will let you know what’s on offer when the assessment is done.
If your care needs are greater and you need someone to come into your home to help with your personal care, the amount of financial support you get will depend on where you live, and may depend on how much money you’ve got.
In England, you won’t qualify for any financial support if you’ve got more than £23,250 in savings (in the 2020/21 tax year). If you live in Wales, you’ll need to have savings below £24,000 to get any support.
In Scotland and Northern Ireland, your personal care needs will be paid for by the local authority regardless of how much money you have.
If you qualify for local authority funding, the way you’ll receive it will also vary according to where you live.
In most parts of the UK, you can either ask for the local authority to arrange your care for you, or you can elect to receive direct payments. These payments can either be made directly into your bank account – or into a pot held by the local authority, or by a care provider.
Direct payments are designed to give you greater choice and flexibility around putting together a care plan that fits your needs – rather than having to take the local authority’s off the shelf packages.
In some parts of the UK, you may only be able to opt for direct payments.
Paying for care in a care or nursing home
If you need to move into a care home, local authority’s may still fund some or all of the fees, depending on where you live and how much money you have.
In England and Northern Ireland – in the 2020/21 tax year – you need to have less than £23,250 in savings and assets to qualify for help. In Scotland, you need to have less than £28,000. And in Wales you need to have less than £50,000.
If you own your own home, the financial assessment will usually include this as part of your capital. However, if your partner lives with you and is going to continue living in the property after you move into care, your home may not be included in the assessment.
There are other exemptions for other close relatives or dependents living in the property. Check with your local authority.
If you qualify for local authority funding, and you’re assessed as needing to go into a care home, then the local authority should provide you a place at a suitable care home.
If there aren’t any available to meet your needs at the rate the Council is willing to pay, then it should be willing to pay more to find a suitable place for you.
If you decide that you want to go to a care home that charges more than the local authority rate, then you can ask a family member or friend to provide a top-up.
Finally, if your plan is to sell your home to pay for care home fees, and you’re struggling to find a buyer (or you don’t want to sell it), you could look at getting a deferred payment agreement from your local authority.
These allow you to borrow money from the Council using your home as security. The loan is then repaid when you die – or sell the house.
Like all financial products, a deferred payment agreement is subject to an eligibility check and has pros and cons to consider first.
Care funding from the NHS
If your care needs are greater than most, you may qualify for your care to be paid for entirely by the NHS. This scheme is called NHS continuing healthcare and is generally given to those with more complex healthcare needs who are in need of support around the clock.
If you qualify for this kind of support, there is no means testing – meaning it’s free regardless of how much money you have.
If you think you may qualify, you can ask for an assessment by contacting your GP and social worker.
NHS Continuing Care is not available in Scotland. However, the health service will still pay for any healthcare you need – whether at home or in a care home.
Funding the cost of care yourself
If you don’t qualify for support from the local authority or from the NHS, you’ll have to fund the cost of your care from your own income and savings. Although bear in mind that once you’ve spent down your savings to below the thresholds, you should eventually qualify for state support.
Hopefully your pension will go some way to covering the cost of care. However, if you need to move into a care home, the average cost in the UK in 2019 – according to experts Laing & Buisson – was £33,852, which is over £2,800 a month.
These fees do tend to be all inclusive, so you shouldn’t have many more expenses to pay for on top. Nevertheless, these are significant sums of money for most people to find.
As a starting point, it’s worth ensuring that you are getting all the benefits that you’re entitled to. The key one that all people over 65 who need care should qualify for – regardless of how much money they have – is attendance allowance.
There are two levels of attendance allowance. The lower rate is paid to people who need help either in the day or at night. While the higher rate is paid to those who need help both day and night.
In 2020-21, the lower rate of attendance allowance was £59.70 a week, and the higher rate was £89.15.
You need to apply to the Department of Work and Pensions for attendance allowance.
Personal independence payment
If you’re under 65, you should qualify for a personal independence payment. This is broken down into two parts – the daily living component and the mobility component.
The daily living component is paid at a lower and higher rate – which is the same as the lower and higher rates for attendance allowance.
The mobility component – awarded to people who have difficulty moving around – is again paid at a lower and higher rate of £23.60 and £62.25 a week in 2020-21.
Like attendance allowance, you need to apply to the Department of Work & Pensions for a Pip.
Other options to pay for care
Once you’ve got all the benefits you’re entitled to, there are a number of other options available to top up your income to meet care fees. Read our guide on boosting your pension income.
If you own your own home, you could consider selling it and moving to a smaller property – or to a cheaper area – to release some of the value in your property.
Alternatively, if you have family who are comfortable financially, they’ll usually be willing to help with care fees. You could then repay them from the sale of your home when you move into long-term residential care or from your inheritance when you die.
Immediate needs annuity
One of the difficulties of funding long-term care is that it’s not easy to predict how many years you’ll need it for. One way to provide some financial certainty if you’re moving into a care home is to consider an immediate needs annuity.
These are financial products that will provide a fixed amount of income for the rest of your life in return for a lump sum.
They pay much better rates than regular annuities – and can be a good way of capping the amount you have to pay for your care – but they can be poor value if you don’t live long after buying the annuity.