How will you af­ford care home fees?

As cost of look­ing af­ter el­derly soars to £33,000 a year...

Daily Mirror - - NEWS - BY TRICIA PHILLIPS Per­sonal Fi­nance Edi­tor

Care home costs have shot up by 25% in the past five years to hit an av­er­age £33,094 per year, the Mir­ror re­ported yes­ter­day.

At the same time, pen­sions have stag­nated at an av­er­age of £14,522, which would pay for five months of care and leave a £19,382 short­fall in the an­nual fund­ing needed.

The av­er­age stay in a res­i­den­tial home lasts 30 months, so it leaves many fam­i­lies strug­gling.

But is there any help out there and who is en­ti­tled to it?

Here, we an­swer your ques­tions on the care fund­ing cri­sis:

Q Is there any help to­wards care costs?

A Yes, but it is means tested and you qual­ify only if you have lit­tle or no sav­ings and do not own your own home.

If you have sav­ings and as­sets worth less than £14,250, you can be en­ti­tled to sup­port from your lo­cal coun­cil, but you will have to con­trib­ute to care costs from your in­come, such as your pen­sion.

If you have sav­ings and as­sets be­tween £14,250 and £23,250, you may get help, but you will have to con­trib­ute on a slid­ing scale to­wards care costs.

Peo­ple with sav­ings and as­sets of more than £23,250, in­clud­ing prop­erty, will usu­ally have to pay their care fees in full.

Q Are there any cir­cum­stances in which care is fully paid for?

A Yes, there is a very com­plex thing called NHS Con­tin­u­ing Health­care fund­ing which is not means tested. This pays all care costs and nurs­ing home fees when a per­son’s needs are pri­mar­ily on­go­ing health­care, such as some­one with com­plex med­i­cal needs due to a dis­abil­ity, ac­ci­dent or ma­jor ill­ness.

The cri­te­ria is com­pli­cated and can be dif­fi­cult to ac­cess. It is de­cided by an NHS as­sess­ment.

Fam­i­lies must en­sure a rel­a­tive, who is, for in­stance, mov­ing from hos­pi­tal to a nurs­ing home, is as­sessed. The fund­ing is not widely known, which can mean peo­ple strug­gle to pay for care costs or sell their homes need­lessly.

Q Will I have to sell my home?

A That will de­pend. If you have a part­ner or de­pen­dant liv­ing in your home it does not count to­wards the value of your as­sets for means test­ing and you won’t need to sell it.

Q What about help with the cost of care in my home?

A The good news here is that the value of your house is not in­cluded in the means test for home care. So, you could be el­i­gi­ble for coun­cil fund­ing for home care, which you would not get if you ac­tu­ally moved into a care home.

Q What op­tions do I have for rais­ing the cash to pay for my care?

A If you own your home you could con­sider re­leas­ing the eq­uity via an eq­uity re­lease plan. But this won’t be right for every­one. You will only get a per­cent­age of the value of your home, and al­though you don’t usu­ally have to make monthly re­pay­ments on the loan, it means the debt can soon build up.

Re­leas­ing a lump sum can also af­fect your en­ti­tle­ment to state ben­e­fits, so you must speak to an in­de­pen­dent fi­nan­cial ad­viser to en­sure you fully un­der­stand the im­pact it will have on fi­nances.

You could also con­sider a de­ferred pay­ment agree­ment, which is an ar­range­ment with the lo­cal au­thor­ity that lets peo­ple use the value of their home to help pay care home costs. If you are el­i­gi­ble, the coun­cil will help pay your care home bills and you can de­lay re­pay­ing the coun­cil un­til you choose to sell your home, or un­til af­ter your death.

Many lo­cal au­thor­i­ties set a limit of be­tween 70% and 80% of the value of the prop­erty.

If you have money in ISAs or the bank you could con­sider buy­ing an im­me­di­ate needs an­nu­ity. This is a type of in­sur­ance pol­icy that pro­vides a reg­u­lar in­come in re­turn for an up-front lump sum. The in­come is tax free if paid di­rect to a care provider.

But you need to thor­oughly check this out be­fore you buy as there are risks. You will have to hand over a large sum of money that might cover, say, four years of care home fees. If you live for many years longer then this could be good value, but if you die quite soon, your fam­ily would not get any of your money back.

Q Is there any­thing I can do to help with fu­ture fi­nances?

A Hav­ing a will in place and set­ting up Power of At­tor­ney over your fi­nances and health­care can save lots of heartache.

It means if you take a turn for the worse your fam­ily will be able to sort ev­ery­thing out much more quickly and with­out hav­ing to deal with masses of red tape.

If you have sav­ings and as­sets it can be worth get­ting ad­vice from a lawyer to find out about the pos­si­bil­ity of putting things into trust for your chil­dren.

Al­though this needs to be done when you are fit and healthy – and with cau­tion.

If a coun­cil thinks you have de­lib­er­ately trans­ferred, say, the own­er­ship of your home to your chil­dren to avoid pay­ing care fees they will chal­lenge this as “de­lib­er­ate de­pri­va­tion”.

In this case any trusts you had set up would be ig­nored.

HELP­ING HAND There are ways to plan for fu­ture care

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