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What do I do if a loved one needs long term care?

Zoe Taylor • 23 July 2023

Your five step guide to finding and funding care

If you or a loved one – perhaps a parent or grandparent – might need some form of long-term care either now or in the future, it can be a worrying and confusing time for all involved. The fact is that arranging care for older people in the UK is not always easy, due to the complex systems that exist and the way they vary from one part of the country to the next.

What’s more, for many, care can turn out to be very costly – which often comes as a surprise, since so many people wrongly assume that the NHS or their local authority will pay for all their needs.


Most of us will not have had any experience of social care until we need it, and finding the right information at the right time can be difficult and time consuming.  For my masters degree in finance, I researched how people made decisions about funding care fees – how they were impacted by stress, high emotions and the complexity of the system. I discovered that those who had help during the process found it much easier to manage.


Therefore, I hope this guide will help. It sets out a simple pathway that will take you through the main stages of the process. It will give you an idea of what to expect at each step, as well as some of the most important things to be aware of and questions to ask.


It is by no means exhaustive, and we know that no two experiences will be the same, but it will give you a general idea of what steps to take and when.


STEP 1


If you feel you’re not managing in the way you used to – or the same is true for someone you’re close to, such as a parent or grandparent – an important first step is to work out what level of care is required. This may seem obvious, but it’s often a difficult and emotional conversation to have with the people around you.


It’s important to ask practical questions such as:


  • Is there a need simply because you or your loved one is getting older and requires a bit more help?
  • Is it because there’s a medical problem – which could be physical or mental – that requires regular support?
  • How are things likely to develop in the months and years to come?


What’s more, your situation is unlikely to remain the same over the months and years to come, so you should be ready to reassess things as time goes on and try to make sure that whatever measures you put in place are as flexible as possible.


TOP TIP;


Many people miss out on a valuable, tax free state benefit, as they think they have savings or too much income to be eligible, which is not the case. Attendance Allowance is a benefit for people over State Pension age who need help with personal care or supervision because of an illness or disability.


If you or someone you know requires support, it would be well worth checking to see if you are eligible. What’s more, Age UK are fantastic at helping people claim what they are entitled to – check out this case study.


STEP 2


Once you’ve identified the need for some kind of care for yourself or a loved one, the next step is to have an assessment that will help you to understand and list your precise requirements. You can apply for a care-needs assessment from your local council, which will be carried out by the social services department, either face to face or on the phone.


This will help to establish the best way to provide support, which could include measures such as:


  • Installing equipment in your home, such as a personal alarm (in case of a fall, for example) or a stairlift
  • Practical help or medical support in the home by a paid carer or nurse
  • Moving to a care home or nursing home


This assessment is free and anyone can have one. If the need for care is predominantly for a health reason, then you may be eligible for NHS continuing healthcare – we will explore this later in this blog).


STEP 3


Once you have an idea of your or your loved one’s specific care needs, it then becomes easier to understand the type of care you can opt for. This generally falls into two main categories.


1. Care in your own home


A lot of people might think that needing care means moving to a care home – but that certainly isn’t always the case. Care in your own home can often solve many of the day-to-day challenges you might be facing, and is usually most people’s preference if at all possible.


This kind of support could range from relatively straightforward things, such as having meals delivered and help with the cleaning and gardening, to regular help with washing, dressing or medical matters from someone with a professional qualification.


It could also mean having adaptations made to your home, such as installing a personal alarm, a stairlift, grab rails or a walk-in shower with a seat, which would allow you to stay in your own place for as long as possible.


2. Care in a care home


As with care in your home, this can vary enormously according to your needs. At one end of the scale are residential homes that offer straightforward personal care such as help with washing, dressing and taking medication. They also usually organise social activities such as coffee mornings, visiting entertainment and outings (subject to COVID-19 restrictions, of course).


At the other end, nursing homes offer all of the above, combined with more specialised nursing or dementia care from qualified professionals. Many homes also offer both kinds of support.


Means testing


If your local council has agreed that you are eligible for care (see page 6), you can undergo a means test to find out if it will pay for some or all of the cost.


If you want to receive financial help towards your care needs, you must take a means test – but, of course, you can decide not to if you think there’s no chance you will qualify for financial support.


Some assets can be exempt from the calculation - such as investment bonds with a linked life-assurance benefit. It is always worth considering an assessment, or having a conversation with a specialist financial adviser, known as an accredited member of the Society of Later Life Advisers.


STEP 4


Now that you have a clear idea of what kind of care you or your loved one requires, and what the options are, it’s time to find the right solutions.


The most important questions to consider are:

  • Can you stay in your own home or will you need residential care?
  • If you need residential care, would you prefer to remain in your own area or would moving closer to family (if they live away from you) be a better option?


As you’re doing your research, it’s helpful to have a list of all your care needs – as well as some of the extras you might want, such as social activities in a care home or pet care if you’re staying in your own home – then you can tick them off as you research each care provider.


It’s worth taking some time to thoroughly research what’s available in the area where you want to be. This is often best done online in the first place. So, if you’re not confident on the internet or don’t have access to a computer, it’s a good idea to ask a friend or family member to help out.


These decisions can be very difficult to make, so it’s worth taking the time to think it through and discuss it with family and trusted friends. Experts who can offer practical advice, such as Care Sourcer, can also talk you through your options in more detail and help you to think about the questions you might need to ask of each possible care provider. Or, if you prefer, they can actively search for suitable care providers on your behalf.


STEP 5


Paying for care


When thinking about paying for care, there are three main aspects to bear in mind, as follows:


Will we have to pay for Long Term Care?


In the first instance, it’s helpful to have an idea of how much – if anything – your local authority will pay towards your care, and if you will need to pay some or all of it yourself, how much you’ll be able to afford.


If you apply for the means test (see pages 6 and 7), the first thing the council will do is work out a reasonable cost for your care – this will, however, be just the amount needed to cover your basic requirements without any extras.


It will then look at your ability to pay for this, firstly through your regular income (such as from the State Pension and any private pensions you might have).


If you receive enough income to cover the costs of your care, you’ll have to pay for it all yourself from this income, without having to use your savings.


If you don’t, it will look at any financial assets that you have, such as savings and investments. If your assets are held jointly with your spouse or partner, they will usually be divided equally and only your share will be taken into consideration.


If the total value of your assets is above the following thresholds, you’re unlikely to receive any funding from your local authority:

• £23,250 in England and Northern Ireland

• £28,750 in Scotland

• See below for Wales


There is also a lower threshold, which is as follows:

• £14,250 in England and Northern Ireland

• £18,000 in Scotland

• See below for Wales


If the value of your assets falls below this figure, the local authority will probably fund all of your care. If it falls somewhere in between, it will partially fund your care: you’ll have to contribute £1 for each £250 of assets you own above the lower level.


• In Wales, there is a single threshold of £50,000 for those in residential care. That means if the value of your assets is above this level, you will receive no funding, while if it is below, you will receive full funding.


For those requiring non-residential care (for example, care received at home), the single threshold is £24,000. Because these figures are quite low, wherever you are in the UK, it’s very likely that you will have to fund your own care, or at least make a contribution to the cost, as is the case for the majority of people needing long-term care in the UK.

If, once you’ve started paying for care, the value of your assets falls below these thresholds, you can apply for a reassessment from your local authority.


The other important factor to bear in mind is that if you move to residential care and own your own property, you will usually be expected to use the equity in this property to fund your care (unless your spouse or another eligible relative will remain living in it - in which case, your property will be disregarded.


How much does care cost?


If you’re paying for your own care, you’ll need to work out how much it’s likely to cost if you don’t qualify for financial support from your local authority. Unfortunately, most care is not cheap and so paying for it yourself is likely to represent a significant outlay.


It’s very hard to say precisely what you’re likely to have to pay, as each person’s needs are different and the cost of care varies significantly from one part of the country to another.


As a general guide, however, you could expect to pay in the order of £15 per hour for basic care at home*, which comes to around £5,500 per year if you need someone for an hour a day. And of course, if more hours or more specialised care are required, those fees can go up by a lot.


For a residential care home, the UK average for a basic level of care is around £35,000 a year, but varies a lot according to the region. For example, costs might be closer to £30,000 in Northern Ireland, Wales, Scotland and the north of England, but could rise to £43,000 or more in London and the south-east of England.


Costs can also vary depending on the choice of care provider, and if more specialised nursing or dementia care is also required, you could expect to add at least another £12,000 per year on top – maybe even more*.

*LaingBuisson, Care of Homes for Older People UK Market Report, 2019


Managing your finances to meet the cost


For many, the cost of care can be a daunting prospect, so it’s important to seek expert financial advice as soon as possible. A Society of Later Life adviser can help you work out what you can afford and the best way to structure your finances to meet the cost, while also advising you on making the most of any tax reliefs or allowances available to you.


Some of the funding options you might want to consider are:


  • Renting your home and using the income to pay your care fees
  • Selling your home
  • Using savings and investments: this could include the income from them and/or using some of the capital
  • Taking a lump sum or an increased income from your pension
  • Equity release: you either take a lump sum or a guaranteed income, which is then repaid from the sale of your home when you die (this option is often used by people who want to be able to stay in their own home).
  • A deferred payment agreement: this is effectively a loan from your local authority, where it will pay the costs of your care and then take repayment from the sale of your home when you die
  • An immediate care plan or immediate needs annuity: you use a lump sum to buy an insurance policy that provides a regular income to cover the cost of your care-fees shortfall for the rest of your life.


Many of these options can have tax implications, and it’s also essential to make sure your money doesn’t run out before you die. To ensure you can keep as much of your money as possible and it remains protected, it’s a good idea to seek expert financial advice.


The value of an investment with St. James’s Place will be directly linked to the performance of the funds you select and the value can therefore go down as well as up. You may get back less than you invested.


The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.

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These figures are for illustrative purposes only and based on Which? calculations. The levels and bases of taxation and reliefs from taxation can change at any time. Tax relief is dependent on individual circumstances. References 1. The PLSA/Loughborough University Retirement Living Standards, 2019 (Based on 26 qualitative discussion groups across 13 UK locations, with almost 250 participants from a wide range of socioeconomic and geographic backgrounds.) 2. ONS, 'National life tables – life expectancy in the UK: 2017 to 2019', September 2020 3. Which?, 'How much will you need to retire?', November 2020 (based on responses from 6,300 retired and semi-retired couples Which? members in April 2020) Links from this website exist for information only and we accept no responsibility or liability for the information contained on any such sites. The existence of a link to another website does not imply or express endorsement of its provider, products or services by myself. 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You have a better chance of success if you are hopeful of the outcome and will make more positive decisions along the way. “When you are a pessimist and the bad thing happens, you live it twice,” Amos Tversky Dream big! Set your ambitions high and you’ll have a better chance of a great outcome. It’s much more satisfying to reach 75% of a challenging goal than 100% of an easy one. Diversify. You can’t control market ups and downs, but you can do something to help control how much your investments are affected by them. Different types of investments behave in different ways at different times. So, if you’re investing in only one or two kinds, you could be exposing yourself to quite a degree of risk. Making sure that your money is spread across different types of investments and geographical locations - called diversification – could mean that the overall value of your investments is less likely to fall as dramatically than if you were just invested in one or two kinds. Mighty oaks grow from little acorns grow. Small regular contributions soon add up – between growth and compound interest the value can quickly build so don’t be conscious of seeking advice just because ‘wealth management’ doesn’t seem quite the right phrase to use right now! References 1 Women and Retirement 2020 Standard Life 2 Living a financially resilient life in the UK beyond Covid-19 – CII IWF 3 https://russellinvestments.com/Publications/US/Document/2017_Value_of_Advisor_study.pdf 4 https://www.plsa.co.uk/Press-Centre/Press-Releases/Article/PLSA-launches-Retirement-Living-Standards The levels and bases of taxation, and reliefs from taxation, can change at any time. The value of any tax relief depends on individual circumstances.
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