We often hear about there being a ‘crisis’ in social residential care and that council tax bills are always rising to enable Local Authorities to fund a social care ‘black hole’. The crisis appears to come from rising demand and previous spending cuts. These types of headlines always raise a concern about how this relates to the family home and whether it would need to be used when paying for residential care in old age.
Whilst some subjects can cause differing opinions and debates across generations, the issues that relate to whether a family home may have to be used to pay for care could see different generations working towards the same goal.
The older generation’s view can often be something along the lines of, “we have worked hard all our life and want to pass our home onto our children and not use it to pay for our care”. The younger generation’s view is often, “don’t worry about us, spend it on yourself”. What both generations agree on, however, is that the family home belongs to the older generation and they shouldn’t have to use it when paying for residential care.
Paying for residential care
Am I entitled to NHS funded residential care?
If you were to move into a care home, the first thing to establish at that time would be whether you were entitled to receive NHS funded continuing care.
This care can be provided in a hospital, residential care home or a person’s own home and would mean that the NHS would pay the costs of meeting your health care needs and, if you were living in a care home, your care fees there also.
Whether you would qualify for this would depend upon the level of your health care needs at that time.
The current capital limits in relation to residential care, which dictate how much a person pays for their care, mean that more people are having to self-fund their care than was previously the case at the beginning of this decade.
If you don’t qualify for NHS funded care
Whether the Local Authority will help you with payment of your care fees will depend primarily upon the level of your capital and income.
A person’s total income (pensions, interest on savings, dividends, etc.) apart from a small amount would be used to pay the residential care home fees. If that isn’t enough, the person would have to pay the extra amount from their capital, until it is reduced to the upper limit when Local Authority help is available.
Once that happens, the person would only have to pay a proportion of the extra amount until their capital is reduced to the lower limit. At this point, the Local Authority would have to pay in full up to weekly fee levels decided by that Authority.
What is your capital?
Your capital includes the value of any property, savings and investments you own. Where assets are held by you jointly, the default position is that you would each be treated as owning a 50% share.
Capital of more than £23,250
Whilst you have capital of more than £23,250 you will pay your own care fees in full.
Capital under £23,250
If your capital falls to below £23,250 you would be expected to use all your income towards the payment of your care fees – apart from a small weekly amount for personal expenditure (currently £24.90) which you would be entitled to keep.
There may then be a shortfall between the care fees and your income contribution. The Local Authority would provide some financial assistance towards this shortfall and you would need to fund the rest from your capital.
Capital under £14,250
If your capital was below the above amount you would again be expected to use all your income towards the payment of your care fees, apart from that weekly amount for personal expenditure.
The Local Authority would fund any shortfall between your income contribution and the care fees charged in full, subject to locally imposed limits.
What if you still owned your home when you moved into residential care?
- If you are a couple and one of you has to move into care the value of your home would be completely disregarded from the assessment of your capital, as it would be occupied by the other of you and would therefore be exempt. This is for so long as the occupation continues.
- If you are a couple and both of you had to move into care, the value of your home would be included in the assessment of your capital with the default position being that each of you would be treated as owning a 50% share.
- If you are single or a widow or widower and had to move into care, the value of your home would be included in the assessment of your capital.
- The value of your home could still be exempted if it met certain conditions at that time, which include it being occupied by a relative who is under 18 years old or over 60 years old, or incapacitated. This is at the discretion of the Local Authority.
- Even if your home is included in the assessment of your capital, a Deferred Payment arrangement could be put in place to prevent it having to be sold during your lifetime. A charge would be secured on the property to cover repayment of your care fees, plus interest and costs when the property was sold.