How Much Can You Keep Before Paying For Care?

Care home fees can be borne by the state, partially or wholly, depending upon the circumstances of the claimant or they may be self-funded, partially or wholly by those in care. According to estimates, nearly half a million people in the UK need a care home facility, Out of these 50 per cent of care home residents are self-funded while the rest of them are state-funded.

The amount that one pays towards their care costs depends on whether they live in England, Scotland, Northern Ireland or Wales (each country has their capital thresholds that determine the claimant’s contribution as compared to that of the state) as well as the following financial aspects of the claimant:

income
savings
investments
property

How Much Can You Keep Before Paying For Care?

Claimants are permitted to keep a weekly allowance of £24.90 per week for themselves before paying for care home fee. People who are on pension credit will be allowed an additional weekly amount of £5.75.

The good news for claimants is that according to a recent announcement by the UK Government, with effect October 2023 nobody will have to pay more than £ 86,000 as care home fee. Once they have paid the amount, the remaining expense will be borne by the state and funded through their local council authorities.

Sometimes it is advisable for individuals on low income to consider their situation and make a decision whether they will be better off staying home and receiving care (as well as state benefits) or will they be taken care of better in a care home facility. In such cases, they may consider applying for Attendance Allowance or Personal Independence Payments.

Attendance Allowance is a tax-free state benefit applicable to those individuals who have surpassed the state pension age and require supervision due to their health condition.

It is aimed towards providing a monthly allowance to those individuals who need assistance with meeting the extra costs of a disability or the support of a carer due to old age.

There is a general myth about Attendance Allowance that it may not be applicable for individuals who have means of earnings and may either be receiving wages or pension. However, it must be noted that this is not a means-tested benefit; which makes it unrelated to any source of income or savings that the recipient may have.

If the recipient of the Attendance Allowance has a carer looking after them, their carer becomes eligible for Carer’s Allowance. However, the following additional conditions must be met as well:

the person under care is a recipient of Attendance Allowance
the carer spends at least 35 hours per week taking care of the recipient
the carer’s income after tax is less than £128

PIP (Personal Independence Payment) is a benefit intended for people aged 16 years and above; aimed to cover the additional daily costs of living with a long-term disability or illness; be it a physical or mental health condition. It is gradually replacing DLA (Disability Living Allowance) by providing recipients with:

extra money in addition to their prevailing benefits
a reduction in their Council Tax or Road Tax bills
discounts on travel

Claimants may be able to receive a premium on the following benefits as well if they are eligible for PIP:

income support
jobseeker’s allowance
working tax credit
employment and support allowance
pension credit
housing benefit

If the recipient of the Attendance Allowance has a carer looking after them, their carer becomes eligible for Carer’s Allowance. However, the following additional conditions must be met as well:

the person under care is a recipient of Attendance Allowance
the carer spends at least 35 hours per week taking care of the recipient
the carer’s income after tax is less than £128

Through this article, we aim to have a 360-degree view of care home fees, their means of payment and alternative solutions. For this purpose, we will try to answer the following questions:

Who Pays Care Home Fees?
How Are Care Home Fees Paid For?
Can Council Take House To Pay For Care?
Can I Claim Attendance Allowance Instead Of Care Home?

Who Pays Care Home Fees?

Care costs are means-tested. This means that this is a decision taken after a detailed financial assessment of the eligible individual. If someone needs care but is unable to bear the expenses the council takes care of them.

Individuals living in care homes have the option of selling or renting out their unoccupied house to pay for their care home costs. However, if they have a partner or legal dependents living on the premises, the house will not be considered for care home costs.

If someone is not willing to sell their house, there is an option of Deferred Payment Agreement according to which the homeowner signs a formal agreement with their local council. The local council agrees to bear the entire care home expense of the claimant until they are ready to sell their house or the property is sold after the death of the claimant.

If you check your eligibility for the DPA scheme, below is a list of key criteria to be met:

your savings and capital are less than £23,250
you have no other funds to pay for care home expense
you are a homeowner or are able to offer any other asset as security
in case of your home serving as security, it must be unoccupied

In addition to the care home facility, if the claimant needs medicines or general health care, the NHS will be willing to fund both for them under the NHS Continuing Healthcare. To qualify for this scheme, the claimant should have ongoing physical or mental health needs. In certain cases, the NHS may also pay a flat amount for the nursing care of the claimant.

How Are Care Home Fees Paid For?

Care home fees may be funded by either of the following means:

Self-funded
State-funded

In case of self-funded care home costs, the claimant either has income, savings or capital that contribute towards the expense or they may sell or rent out their house to pay for care home bills. Individuals on a low income, low savings or those claimants who do not own a property or those who may not be able to generate sufficient funds from the sale of their house may consider staying in their house and claim Attendance Allowance.

If the state is funding your care home fees, it will be routed through your local council and your benefits such as state pension and pension credit will be used to cover the costs. If you have capital below £23, 850, the state will bear most or in some cases all of your care home expenses.

For more funding options click here how to avoid selling your house for care home fees

Can Council Take House To Pay For Care?

No, the council will not forcefully claim your house to pay for care especially if it is in use of your spouse/partner or any qualifying dependant(s); which include the following:

spouse/civil partner/unmarried partner
a close relative over 60 years of age
a close relative below 16 years of age (legal dependant)
former spouse pr partner if they are a single parent

This is called property disregard.

If a homeowner moves into a care facility indefinitely and there is no claim on the residence of their house (this means that there is no family member or a qualifying dependant living in their house) the council may then seek sales of their property. However, this too does not take place on an immediate basis. Yet, in such situations, the homeowner may not qualify for care costs to be taken care of by the council.

Even if the council bears their expense in the short term, they will recover the expense from the proceeds of the sale of the house. This is called a deferred payment and may be considered when the applicant has a capital of around £23,250 (excluding the value of their house).

Since a financial assessment is carried out when someone applies for a stay in an elderly care home, if a homeowner has other means of income or savings to fund their stay in a care home, there will be no need for their house to be sold. Otherwise, homeowners with empty homes are required to bear their care expenses through the sale of their homes. However, this is only applicable f their stay is permanent.

With care costs in the vicinity of £30 k to £40 k per year, per person, in some cases, it proves to be more feasible for homeowners especially those with little savings to stay in their own property and have a carer to look after them. In such cases, they may be able to claim certain state benefits including attendance allowance.

Can I Claim Attendance Allowance Instead Of Care Home?

To confirm eligibility for Attendance Allowance, individuals are assessed on the below criteria:

State Pension Age: This is the earliest age at which state pension may be received. To check whether an individual has qualified and/or surpassed the bracket to attain Attendance Allowance, a simple click on this link may be helpful Check your State Pension age – GOV.UK (www.gov.uk)

Independence: Individuals who may require help with washing themselves, getting dressed, or who need to be monitored to remain safe during day or night are considered eligible.

Health Needs: In case of any physical or mental illness, disability, or terminal illness that may increase the requirement of being supervised or being taken care of by someone else.

Location: Claimants must be in England at the time of making the claim. Additionally, they must have lived in England for at least 2 of the previous 3 years.

Conclusion:

Since care home fee is means-tested, only those individuals who have sufficient income, savings or capital are expected to bear the complete expense of their care home fees. Individuals who are low on savings or those who may not have assets to serve as a guarantee against deferred payments made by the council on their behalf will be taken care of by the state.

FAQs: How Much Can You Keep Before Paying For Care?

How much can you keep before paying for care in England?

Can a nursing home take everything you own?

No, a nursing home would not forcefully claim your assets. They will inform you of your monthly expense as well as conduct a financial assessment of your income, savings and capital. Based on your financial situation they will advise you whether you will be required to enter a self-funded scheme or the state will be able to fund your care partially or wholly.

What happens to your savings when you go into a nursing home?

As a basic rule, all income and savings of a nursing home resident go to the nursing home for the resident’s care.

Do dementia sufferers have to pay care home fees?

Yes, considering the results of their financial assessment, dementia patients will be expected to pay for their care home fee. The amount that will be due upon them will be calculated post-assessment of their savings, capital and investments.

What is the 5-year lookback rule?

According to this rule, a senior who has applied for Medicaid and is found to be eligible is found to be in possession of gifted assets within a five-year look back term, they may lose their eligibility status for a few months.