Long-term care: what are my options?
We’re all living longer. And naturally, we all hope to be able to enjoy a long, happy, healthy retirement. So the idea that we may one day need long-term care is something most of us would rather not think about.
Finding a care home can be an emotional and difficult time. That’s why we’ve created this guide to help you make the first steps towards thinking about it in an informed way and explore the options that are available to you.
Should I plan ahead for long-term care?
If you haven’t looked into the cost of care before, you may be surprised at how expensive it can be. According to Which?, the average cost of a single room in a residential care home in 2018/19 was £33,488[i] per year.
Like many people, you might assume the state will pay for your care. However, if your assets - cash, shares, property and bonds - are over £23,250 you will probably be required to pay for some or all of the care yourself unless your primary care need is ‘healthcare’. Slightly different rules apply for Wales and Scotland.
The assets which are typically included in the means test are your pension, benefits and earnings, plus any savings, investments, land, property or business assets that you may own.
The average man over 65 will spend around £37,000 on care.[i] That rises to £70,000 for the average woman of the same age.
Of course, you can’t predict how long you might need care for, and therefore, what the eventual care costs will be. Just like any big financial decision, it makes sense to understand your options so that you can plan ahead and make the right choices at the right time.
What care options are available to me?
It’s worth spending time thinking about what sort of care services you might need, what you would prefer and who will pay for it. For example:
- Do you want to stay in your own home?
- Will you need extra nursing care?
- Do you wish to stay near friends and family?
- Do you have pets you couldn’t live without?
This short-term care (maximum of six weeks) takes place in your home and is provided by the NHS for people who have recently been discharged from hospital. It provides visits from your GP and round the clock, rapid-response medical care.
Home care (domiciliary care)
If you’d prefer to stay in your home, this kind of care provides a range of support services like meals on wheels, home adaptations and regular visits from a care worker to help with personal care and day-to-day tasks.
This option lets you retain a degree of independence, with your own front door and personal space, but living in a purpose-built home that comes with a warden, communal facilities and alarms.
Sheltered housing is available in a number of forms. Some sheltered housing is owned by local authorities for those who are eligible for state-funded care. However, if you are self funding, you can choose from a wide range of private rental accommodation in retirement villages with a variety of shared facilities, communal spaces and round-the-clock support from live-in wardens.
When you need more support than the options above, a care home is often the answer.
There are two kinds of care home:
- With nursing care
- Without nursing care.
You can usually live in one of these homes with your partner. At both kinds of care home, you’d receive professional help with your personal care. Some care homes have special facilities for the elderly and people with dementia.
From time to time your partner or carer may need a short break from care responsibilities. Respite care can range from someone to look after you for a few hours to a longer holiday. If you are receiving care at home, respite care can provide you with a room at a care home where your needs will be taken care of by professionals while your carer takes a break. Talk to your local authority about how this is funded.
Ways to pay for long-term care
There’s a variety of ways to pay for care depending on your health, your personal preferences and the level of your assets. If you have sufficient funds, you may wish to pay for your own care. However, long-term care doesn’t come cheap and is beyond the means of many of us. In this case, the first option to look into is to find out whether you're eligible for state-sponsored care.
If your savings and assets are below £23,250 you may be eligible for state-sponsored local authority funding for your care home needs. If your primary need is ‘healthcare’ you may be eligible for NHS-funded care.
- How to get a Care Needs Assessment
Contact the social services department of your local authority and ask for a care needs assessment. You’re entitled to one of these, no matter what your financial situation is. This assessment of your care needs is usually carried out by an occupational therapist or a nurse and you can take a friend or relative with you if you would prefer.
- How to get a Carer’s Assessment
If you look after someone you can ask for an assessment which will determine what kind of help might make your life easier. This includes help with taxi fares if you don’t drive, respite care, help with benefits or training for carrying out tasks like lifting the person you’re caring for. The assessment is free and available to anyone over the age of 18. To arrange a Carer’s Assessment, contact the adult social services department at your local council.
Self-funding care: paying for care
If your assets are above £23,250 in England and Northern Ireland and you are not eligible for local authority funding or if you want to top up your care to a higher level, you will have to pay for it yourself. Here are some options to consider:
If you’d like to stay in your own home, downsizing is a simple way to release some of your capital to pay for your long-term care needs. Moving into a smaller, easier-to-maintain or specially adapted home closer to friends or family could also help reduce the amount of care you need.
Equity release schemes are a way to free up some of the capital tied up in your home while you’re still living in it. There are two forms of equity release:
A lifetime mortgage is a mortgage secured against the value of your home which provides either a lump sum or regular payments to cover the cost of your care. The loan is repaid when your house is sold. To avoid the potential problem of your home being worth less than the outstanding balance on your mortgage when it’s sold, most providers now offer a ‘no negative equity’ guarantee.
It’s important to take independent financial advice before you commit to an equity release scheme as there are implications in terms of your tax liability, your entitlement to other benefits and also the amount of legacy you leave to your family. There are independent financial advisers who specialise in care funding advice. The Society of Later Life Advisers can help you find a Financial Conduct Authority-approved, suitably qualified adviser.
With a home reversion scheme you sell all or part of your home at less than the market value in return for a lifetime income to pay for your care needs. This means you continue to live in your home as a tenant, rent-free until you sell the home, or when you pass away. As with lifetime mortgages, home reversion schemes may not be suitable for everyone and it’s advisable to seek independent financial advice to make an informed decision. The Society of Later Life Advisers can help you find a Financial Conduct Authority-approved, suitably qualified adviser.
Long-term care insurance
Long-term care insurance is now no longer sold but some people will have policies that are still in force. If you think you may have taken out this kind of insurance in the past, it’s worth checking whether you still have cover in place. While it was available, there were two kinds of care insurance:
This is an insurance policy into which you pay premiums while you are healthy, to cover your care home or nursing costs when you’re older.
Not to be confused with immediate annuities, immediate need annuities (also called immediate care annuities) are usually bought with a pension lump sum and provide a guaranteed income to pay for your care needs for life. If you have the allowance paid directly to your care home the income is tax free, which will help you to make your money go further.
Savings and investments
If you’re fortunate enough to have savings or investments this can be a simple and flexible way to fund your care needs without the need to sell your home, move or downsize if you don’t want or need to. As with any investment it’s worth taking independent advice to ensure you’ll have enough to fund your needs should they change in the future.
Getting the right financial advice
Funding your care needs can be a big financial decision. Some options include selling all or part of your home. So it’s important to talk to trusted independent financial experts who understand the complexities involved in funding care needs.
The Care Act 2014 made it a legal requirement for your local authority to help you access independent financial advice so that you can navigate the complex steps involved in care funding. Talk to the social services department of your local authority and ask them to recommend a suitably qualified independent care home funding adviser in your area.
What if my money runs out?
Get in touch with your local authority. They can often give you the option to delay your payments – known as a deferred payment – so you don’t have to quickly sell your home while you’re in a care home. They can then be paid when you have sold your house, or collect the payment from your estate after you pass away.
Long-term care can be expensive. Find out about the typical costs of long-term care so you can build them into your financial plans.
The information on this page was sourced between June - October 2020. Information on this site does not constitute any form of advice, representation, or arrangement by us and you take full responsibility for making (or refraining from making) any specific investment or other decisions. You should take independent financial advice from an adviser who is registered by the Financial Conduct Authority.
[i] Source: Which? 'Care home fees across the UK' article January 2020.