A guide to paying for permanent residential care

If you’re worried about how you would pay for permanent residential care for yourself or a member of your family, then you’re not alone. Even if it’s a prospect that’s years away, it’s something that is frequently on the mind of people who acknowledge it could be a possibility in the future.

It’s a fact that most people will have to pay something towards the cost of permanent residential care when they get there. But how much? And how do they work it out? We’ve put together some basic information on how the local authority in your area will carry out assessments, and how you may be expected to contribute.

The main local authority steps

If you are looking at care being arranged by a local authority, then the steps that are taken are:

  • A care needs assessment is conducted by the local authority to work out what sort of help you need.
  • The local authority makes recommendations and decides whether you need residential care in your personalised ‘Care Plan’.
  • The local authority works out a budget to cover the care you need, called a ‘Personal Budget’.
  • They then carry out a means test (financial assessment) to find out whether you have to contribute towards your care home fees, and how much the authority is prepared to pay.

How does the means test work?

The means test will measure your capital (things like savings and property) as well as your income. The amount you have to pay (or whether you have to pay at all) will depend on how much combined capital and income you have.

In some situations, local authorities might assume that your capital gives you a certain level of income that can be used to pay for your fees. Joint accounts are treated as if they are divided equally, so half the amount will count towards your total.

Sometimes your home won’t be included in the means assessment. This usually if you have a partner still living there.

Can I give money away before the assessment?

This is called ‘deprivation of assets’. If the council has reason to believe that you have given away some of your income, property or savings in order to avoid higher costs when it comes to care then they will assess you as if you still have this money.

What does ‘capital’ mean?

Capital refers to the total amount of your property, any shares you have and any savings you have.

If you have more than £23,250 as total capital then you are considered to be self-funding and will have to pay full care fees yourself. If your capital is at between £14,250 and £23,250 then the local authority will consider this an income and take it into account when assessing how much you have to pay. Finally, if your total capital is less than £14,250 then this isn’t included in the means test.

How much will you pay?

When the means test is complete, the local authority will provide you with a written decision. This will cover what you pay, what they pay and how they came to this conclusion. Legally, you can’t be left with less than £24.90 per week after your contribution to fees. This is called your Personal Expenses Allowance.

Choosing a more expensive care home

If you want to live in a more expensive care home than the local authority is prepared to fund, then it is possible. However, you’ll need someone else to make up the difference in funding, known as a top-up or third-party payment. Older people have the right to be offered at least one placement by the local authority that is affordable and available.

Third party payments are an arrangement between the local authority, the person receiving care, and their family. The amount is agreed between all parties, paid to the council and the council pays the extra amount to the home.

How to pay your fees

In the usual circumstances, local authorities pay the full fees to the care home and collect the amount you need to pay directly from you. This is different only when there is a top-up fee (or third-party fee) involved.

What if you run out of money?

If you are self-funding your care (ie, paying the fees yourself), and your total capital dips below the threshold of £23,250 per year, then you can ask the local authority to help.

If possible, you need to get an assessment a few months before the dip happens so that they can arrange one as soon as possible, and you don’t have to use your capital below that amount.

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