‘You Asked’ is a series of insights from the boosst team. You, our clients, have a wonderful ability to ask relevant and thought-provoking questions… which are often (but not always!) related to financial planning. boosst is a trusted source of knowledge and independent advice, so it makes sense that you come to us with a broad range of questions – which can vary from ‘Which car should I buy?” to “What’s the best way to teach our children about money?”.
This ‘You Asked’ post was written by Gabby.
You Asked: How can I help a loved one navigate care in later life?
The topic of ‘funding care in later life’ is one that is regularly raised at our annual planning meetings. It’s not uncommon for the conversation to extend to advice for how clients’ parents (or grandparents!) will need to fund their own care. The whole care system can be hugely confusing – but we hope this insight can help.
In this blog we provide some guidance on areas to consider if you are assisting a family member or friend. Alternatively, if you’re planning for your own care needs, take a look over here: link.
A family member needs to go into care, what are the first steps?
The first step depends upon how your family member has reached the point of needing care. If this has come about by your loved one already being in the NHS system due to their health needs, then you should start by requesting the NHS complete a Continuing Healthcare Checklist. It is vital that this is requested before your loved one is discharged from NHS care, as this is the only way to find out if they are entitled to free care funding. You can learn more about the CHC process here.
The basis for this is that if an individual’s needs are primarily health needs, they are entitled to NHS continuing healthcare funding to meet the cost of their care in full, whatever their financial situation. This can result in an extended stay in hospital with better care, so this option should be explored first before reverting to the Local Authority / Social Services.
If your loved one is still living at home, or in a care home already, then you will need to ask the local council for a ‘Care Needs Assessment’. A social care professional will usually come to meet with your loved one, and will assess their abilities, skills, physical needs and their existing support network. The assessor should be collaborative with the individual by discussing their needs and wishes, plus what they would like to happen next. The assessor may also speak with the GP to get a better understanding of your loved ones’ health.
To prepare for the assessment, it would be good to think about the the areas your loved one will need help with beforehand:
- Washing and dressing
- Keeping medication organised and on-time.
- Preparing meals
- Keeping the house clean and safe
As a trusted family member or friend, you can accompany your loved one at the assessment to provide support and add further input on their needs.
After the assessment, a Care Plan can then be agreed. The Care Plan should include the following:
- Details of your loved ones needs
- How many of these needs will be met by your local council
- The cost to arrange the care that is required.
The Care Plan won’t always suggest a care home. If your loved one is largely independent, they may suggest alterations to the home, adding an emergency alarm or just some added help at home.
How much will the care cost?
How much of the fees you will have to pay depends on your loved ones finances and assets. The local authority will perform a means test to review their savings, assets and income.They will ask about your loved ones earnings, pensions, benefits, savings and property to get a full picture of their finances. The amount of care to be paid is then based upon the their position in relation to the Upper and Lower Capital Limits:
Upper Capital Limit (UCL) = £23,250
Lower Capital Limit (LCL) = £14,250
New Thresholds from October 2023:
Upper Capital Limit (UCL) = £100,000
Lower Capital Limit (LCL) = £20,000
- Above the UCL – they will self fund all of their care
- Between the LCL and UCL – this will be means tested and will be based upon what is affordable from their income. If your loved one also has capital (i.e cash or ISA savings), they will be expected to contribute £1 per week for every £250 of capital held
- Below the LCL – your loved one will no longer contribute from their assets and only pay what they can afford from your income. The rest is funded by the Local Authority
Is the home always included in the Means Test?
If your family member moves permanently into a care home, their share of their Main Residence could be included in their financial assessment and used to fund care after the first 12 weeks. If the home is included, they can choose to make a deferred payment meaning that the council lends them the money and the debt is repaid when they eventually sell the home.
However, the home won’t count as capital if specific people still live there. They include:
- Their spouse
- A close relative who is 60 or over
- A close relative under the age of 16 who they’re legally responsible for
Can I contribute towards the costs for my loved one?
Whilst we do have some clients who assist with care costs for family members, it is important to ensure you are financially secure yourself before offering to do this. The phrase ‘please fit your own oxygen mask before assisting others’ is absolutely relevant here. There is no formal obligation for a family member to assist with funding care, but some families wish to provide a ‘top up’ so that their loved one can have care in a better location or have access to better facilities. These top-up payments will not count towards the new care cap and will still be payable once the cap has been reached – see section on changes to care below.
If this is something you are considering, please speak with your lead planner at boosst before committing to pay a top-up which could be a long term increasing cost that other parties may meet. Please note that if the top up fee can no longer be paid, the local authority have the right to move the individual to a cheaper care home, provided it can still provide for their needs.
Another option to consider is moving a family member into your own home to personally assist with their day-to-day living. This is another option and can often be more cost effective than residential care. It’s also a less intimidating transition for your loved one to make, rather than moving to a strange place without many familiar faces.
Aside from assisting with the costs personally, you could also help the individual with ensuring they are receiving the State support that they are entitled to. The government provide state benefits to certain individuals, and these often continue if the individual moves into care. For example, your loved one will continue to receive their State Pension and any Widow’s pension, plus may still qualify for Personal Independence Payment (daily living component), Disability Living Allowance (care component) and Attendance Allowance etc. You can read more about this here.
I’ve heard there have been changes to care – how does this affect me?
The government has recently announced that from October 2023, no one will have to pay more than £86,000 in care costs during their lifetime. This is part-funded by the 1.25% increase to National Insurance and dividend tax from April 2022.
On the surface, this sounds great, but it’s important to delve into finer detail here….
- The cap is only relevant for ‘Personal Care Costs’. This does not include Daily Living Costs (i.e. rent, food and bills), so the total amount paid by a family once an individual requires care is likely to be substantially higher than £86,000.
- Daily Living Costs will be set nationally at £200 per week which will apply to anyone that receives care in a care home. This is a total annual cost of £10,400 which does not count towards the cap.
- Costs accrued before October 2023 will not count towards the cap.
- If you wish to choose a specific type of accommodation/room (i.e. a premium room or extra furnishings), there will be additional ‘top up’ payments required and these do not count towards the cap.
- The Upper Capital Limit has increased, so individuals are able to have more assets before they must pay for their care in full
- Any nursing and assistance required in your own home will count towards the care cap
For example, if you had assets worth £500,000 you would be expected to fully fund your own care. If you are in residential care for 4 years and the explicit care costs were £30,000pa, you would stop paying for the cost of care in your third year, once you reach the £86,000 cap. However, the Daily Living Costs of £10,400 per annum would continue and you would pay an additional £41,600 over the 4 years.
boosst final takeaways…
- If your loved one is already in the NHS system, ensure you request to complete a Continuing Healthcare Checklist before they are discharged.
- Help your family member to apply for the State Benefits they are entitled to
- If your family member is unlikely to return home, you could consider letting their Main Residence to assist with care home fees. This can then help to fund care costs alongside their State Benefits, State Pension and Occupation Pensions with capital funding any shortfall.
- Once capital reaches a point that the individual cannot pay the care home fees anymore, seek an interest free loan secured against their Main Residence.
- If you’re considering a personal contribution to improve a loved one’s care, please speak to your boosst lead planner. It’s really important that you are financially secure before offering financial help.
- Any top up contribution by yourself or a loved one, will not be included in the care cap. If this can no longer be paid, then they could be moved to a cheaper care home provided it can still provide for their needs.
- The new Care Cap is beneficial if your loved one spends a longer than average time in care, as they are more likely to reach the cap and benefit from a reduced overall cost.
- The £200 per week Daily Living Cost should be seen as the minimum. If your loved one would like a nicer room and better furnishings, then ‘top up’ payments will be required which could dramatically increase the total cost.
If this is something you wish to discuss further, please get in touch with your lead planner.