Care home fees vary greatly depending on several factors, such as:
- Your property value and savings
- Where you live
- What type of care you need
- Who your care home provider is
But, residential care homes are expensive and if you can’t afford them, you’d have to know your legal options. For instance, weekly costs can be between £600 to £1,000 or more!
At the same time, they’re important. With the dramatic growth in the aging population due to significantly higher healthcare standards, more people use care home facilities and the system incurs ever-increasing costs.
Local authorities act more stringently and conduct in-depth research to know who can pay for their residential care.
This blog will provide insights into how to avoid care home fees UK to relieve your stress about the future and enjoy your old age in comfort.
How To Avoid Care Home Fees
You can avoid care home fees in several ways, being informed is the best. If you know the different strategies and implications, you’ll make concrete decisions towards a better future. Let’s study these approaches in depth.
NHS Contributions
The NHS can assume your care fees if you’re entitled to their contributions. This is the case if you require healthcare or have mental health issues.
To find out, your situation needs to be assessed. If you fall under these categories, your care home should be fully funded notwithstanding your financial position.
You must know the NHS criteria to compare it with your care plan. Professional lawyers and counselors can help you understand and map out your eligibility so you can challenge decisions that go against your favour.
For this, you’ll need to collect all your medical records and details of the decisions.
If your claim is declined and you notice your health deteriorates later for which you require assisted services, you may reapply to have your new circumstances assessed.
In cases where you receive nursing and social care, the NHS can provide part of your funding. To be eligible, you need to prove your status by showing an assessment by a registered nurse who will detail the amount of nursing care you require.
In cases where you’re receiving care at your residence or respite care, your spending can be reduced significantly.
Income And State Benefits
Your aim should be to get the maximum income you’re eligible for.
Once your local authority assesses your situation, they’ll determine how much you pay based on your earnings, even if you haven’t received or claimed them. Examples include tariff income, disregarded benefits, and personal expense allowance.
You must also contribute your welfare or social security income towards your care. Be fully aware of your entitlements so you’ll have more disposable income.
The benefits you may receive are retirement pension, pension credit, attendance allowance, disability allowance, and income support.
The National Association of Welfare Rights Organization and Citizens Advice will have more information on your rights.
Capital And Savings
Your local authority determines two things when it’s analysing your financial health. The first is deciding whether you need a care home. This is called a Care Home Assessment.
Secondly, a financial assessment is done to make a report of your financial means. If they cross a certain threshold, you’ll need to self-fund.
In England, for instance, if you have a minimum of £14,250, you’ll have to contribute a certain amount towards your care. In case your assets equal or exceed £23,250, you’ll be required to cover your costs fully.
In many cases, homeowners want to avoid selling their property to fund their care later in life because they’ve worked hard all their lives to accumulate wealth. They’d rather transfer their assets to their children and descendants.
Is The Current Procedure Discriminatory?
Most people think it unjust that if they cross a certain financial threshold, they’ll have to pay in full for their care. They worked hard, paid mortgages and taxes, and saved as much as possible to use their money constructively later only to spend it all on old-age assistance.
On the other hand, those who made no effort to build wealth are now benefiting from this very system. The good news is you can do a fair bit to avoid being bankrupt.
For instance, you can use legal avenues to avoid paying or reducing your residential care fees drastically if you’re still physically fit and don’t foresee a move into a residential care facility shortly.
Care Home Investments
Deliberate investments are a great way to plan out your care home fees. There are a few ways you can make your investments worthwhile.
Prior Funeral Arrangements
Pay in advance for your funeral. This will reduce your savings.
Home Income Plans
You pay the full amount in advance to receive yearly payments you can use to pay for your care home. This is a great solution for people with a low-income bracket.
Insurance Plans
You can purchase insurance plans such as Immediate Care Fee Payment Plans or Long Term Care Insurance by paying in installments or the full amount in one go. This way, you’ll cover your costs and leave your family an inheritance.
A financial advisor can guide and help you understand which plan will suit you best.
Investment bonds
These exempt assets can help protect some of your finances during a future assessment of your residential care fees. They’re considered a life assurance policy and not a capital investment.
Be careful though. If authorities suspect you deliberately bought investment bonds to circumvent the care home fees, you’ll be penalised.
If, however, you prove that this was a part of your financial reorganisation strategy, you’ll be safe from any remarks about capital being depreciated deliberately.
Exempt assets
Certain assets are disregarded when accounting for care home fees which will help you enhance your savings and retain certain properties. These include:
Personal Possessions
These could include paintings, jewelry, and cars. However, if local authorities suspect you purchased them with the intention of a deliberate reduction in your capital, these assets may be seized.
Capital Disregarded For A Certain Time
If you’re a self-employed businessman and work from your care facility, your assets won’t be counted when calculating your fees.
Home And Property
When considering properties for evaluating your care home fees, the following cost exemptions can be made:
- Your assets won’t be considered for the first two weeks of your permanent stay at a care facility.
- Your home’s value will be ignored if your stay is temporary and you’ll be returning to your home in the future.
- Exemption will also be given if your partner or relatives under 16 years or above 60 occupy your house.
- In case you co-own a property with someone other than your spouse, then only your share in the property will be taken into account.
Consider Giving Your Property On Rent
Rental income is a great financial benefit and can go towards your care costs. However, this may not be sufficient and you’ll still need income from other sources to supplement the cost.
Deferred Payments
You can apply for an interest-free loan from your local authority in return for repayment after selling your property. However, the local authority should have the right to claim the asset if the loan isn’t repaid.
Certain local authorities don’t offer this as an option so it’s best to check if yours does.
The two biggest benefits of using this method are:
- You can rent out your property and generate income
- Your property’s value may increase, leaving your family with a considerable inheritance.
Legal Solutions To Protect Your Assets
You can take two important legal routes to secure your property and assets. Consult a reliable financial advisor to help you make decisions based on your situation.
From Joint Tenants To Tenants In Common
As joint tenants, you’ll have an equal share of your property. The amount received when selling the property can be divided equally between the tenants.
If you don’t sell and one of you dies, the property will be owned by the other owner under the right of survivorship and your will won’t be taken into account.
Under tenants in common, you’ll have a share in your property, and at the time of your death, your share can be transferred to the person you stated in your will.
Repayment Of Loans
If a close friend or family member offered you assistance for a fee and you haven’t yet paid them back, you can subtract the amount due from the total value of your assets and communicate this to your local authority. Outstanding dues will depreciate your assets.
Things To Keep In Mind
If you’re conscious of the basics, you’ll avoid making mistakes. There are 5 crucial aspects to keep in mind:
Be Mindful Of Legal Procedures
Most people dread selling their house to use the money for residential care. So they consider many options such as gifting it to their descendants, setting up a trust, or other legal loopholes.
While some methods can work, others need careful investigation and knowledge of complex laws so hiring a specialist is recommended.
Also, preparations for old age should be done early in life. While we’re busy with daily activities when younger, we often forget how important a care home can be.
Are Next Of Kin Responsible For Care Home Fees?
Family members help and take care of you but they can’t and won’t be around 24/7, so you can’t just sit back and think you’ll never have to use care home facilities. They may also not have sufficient resources or simply not want to contribute towards your care.
Don’t Deprive Yourself Of Assets To Avoid Paying Care Home Fees
If you no longer possess a property because you don’t want to pay for a care home, the disposal can be challenged by your local authority, especially if it happened close to or at the time you needed the care. Here are some reasons that make your case ineligible:
- You sold your property to cover the costs of an extravagant holiday or an expensive lifestyle.
- You sold your assets to buy personal possessions that may be exempt from financial assessments.
- You placed the money in a trust when you needed assistance.
- You sold your house to give the money to someone else.
- You transferred ownership of your property to your descendants.
However, the deprivation can be considered genuine if the money was used for understandable things. These include:
- Paying for your funeral.
- Arranging money in cases where your other sources of revenue are too low to complement your lifestyle.
- Repaying loans or debts.
- Paying holiday expenses.
- Providing for your family.
- Needing money for healthcare, e.g. if you need home modifications to assist you with your disability.
You Can’t Gift Your Property Or Asset To Anyone
This will be seen as a deliberate deprivation and local authorities will consider the value of this property when calculating your overall financial health. Rather, convert your possession to a property trust.
Your home ownership is transferred to your descendants or other recipients but you can continue living there until you die.
However, you must prove this wasn’t done to avoid paying your care home fees. There are many reasons why people set up property trusts including:
- Showing affection or love for the recipient(s) during your life.
- Wanting to fulfill certain moral obligations like acknowledging the recipient’s assistance received in various matters. These could be financial contributions made by someone to your lifestyle.
- Avoiding family disputes after your death.
- Passing on the ownership burden to the next generation because owning a property can mean investments in its upkeep, insurance costs, and repair work. All these can be difficult if your other financial sources aren’t sufficient.
- Wanting to avoid dealing with all the paperwork and other legalities.
Seek Legal Advice
Discuss your financial situation with a certified financial advisor. They understand the complex rules, obligations, and new rules for care home payments better than anyone and will help you pick the best way forward.
They’re your best option to protect your assets and help you comprehend how to avoid paying care home fees. If you need further assistance or want to understand how care homes work, we’re here to help!
