We often discuss with clients how financial assessment for care at home works so we decided to provide you with some additional information here.
Sometimes when you move into a residential care home or nursing home, your local authority may contribute towards your care costs. To determine how much this will be, they will assess your finances to look at how much money you have. This is often referred to as a ‘means test’. The financial assessment for care follows the care needs assessment. This is when your local authority looks at your needs to determine what type of care and support you require.
We do highlight to our clients that there are different thresholds for paying for care depending on where you live in the UK and the more money you have, the less funding you will receive from your local authority.
Paying for care
How is the financial assessment conducted?
Firstly, your local authority will conduct a means test which will consist of them looking at your savings, income and assets to calculate how much you need to pay towards your residential care. Please note, each person who is assessed is treated as an individual and only their income is taken into account, regardless of if they are married or are living with a partner.
The local authority will add up your income, investments, savings, stocks and shares and equity from your property (if you have one) and subtract any debts including the mortgage. Personal possessions and life insurances policies are excluded.
If you own your own home and move permanently into residential care, its value will be counted towards your capital unless any of the following still live there:
- Your spouse or partner
- A child under 16 you are responsible for
- A close relative aged over 60 or who is disabled
- A younger relative who is incapacitated
- A former partner who you are divorced or estranged, who is a lone parent with a dependent child
Generally, only 50 per cent of any jointly held capital such as a savings account will be counted. This means if you jointly own your home, only your share will be taken into account.
Have you heard of the 12-week property disregard?
Your local authority may disregard the value of your property or the share you own, if you move into a care home permanently, for the first 12 weeks only.
The 12-week period starts from the day you move into a care home. If you sell your property before the 12 weeks have passed, the disregard will stop when it has been sold. However, if you move into a care home temporarily at first but your stay becomes permanent then the 12 weeks start from the date your stay becomes permanent.
This is to give people the opportunity to decide whether they want to sell their home to pay for care, choose to rent it out or apply for a deferred payment agreement. This agreement means that your local authority secures a loan against your home and the money does not have to be paid back until it is sold.
Deprivation of assets
Gifting assets or savings so that you come under the upper threshold and paying for care is known as deprivation of assets. The risk with doing this is that your local authority may still include the savings/assets you have given away in the means test which could mean you have to self-fund your care home place. More information around this can be found in our deprivation of assets blog.
What is the maximum I will have to pay for care home fees?
The UK government announced on 7 September 2020 that from October 2023, no one in England will have to pay more than £86,000 in care costs during their lifetime. Once you have reached the cap, the ongoing care costs will be paid for by your local authority. This will be funded by a 1.25 per cent increase in National Insurance, coming into effect in April 2022.
For more information or advice on financial assessments for care, please get in touch.