Can Care Home Costs be Avoided?

The cost of long term care can be extremely high and seems to be ever increasing. For those paying for their own care, costs can quickly become unmanageable. For many consumers, the costs associated with care can end up wiping out savings, forcing the sale of their lifetime home, or exhausting all capital and income available. There is some financial assistance available to those who qualify through the state’s means test. However, this means test does not always work in everyone’s favour. The test does take into account all financial assets available, including a residence if one is owned. This means that many people do not qualify for full or partial funding from the state and are left to pay for care themselves. Those who are required to pay for their own long term care are referred to as self-funders.

There are a number of costs that go in to overall long term care and these costs can depend on where care is actually received, whether it be in a residential care home setting or in your own home. Costs of care in your own home can include paying for carers, costs of medication, and costs of any necessary medical equipment. Costs of mobility aids or any modifications to the home also need to be considered. Costs of care in a residential home include the care home fees, which vary but could range from about £400 – £900 per week, as well as costs for personal items, trips, and any other necessary needs.

On the whole, long term care can be very expensive, the costs can mount up rapidly, and your life savings may run out sooner than you think. This is simply the reality for those who are required to fund their own care. However, many consumers do end up finding creative and innovative ways to pay for their care, especially if they have given long term care some thought before they actually needed it. It is important to be prepared for such a situation, by planning for care funding. If you are already receiving care and are paying for care, taking out a care plan may be the right long term solution for you. If you do not yet need care but suspect that you might, it is never too early to start thinking about how you will fund it if you do not qualify for any assistance.

If the local authority has arranged for you to enter a care home, it will conduct a means test to assess whether you need to contribute towards paying for some of those care fees. Many consumers start to think about how best to manipulate their financial situation in order to ensure that they qualify for some level of assistance. This deliberate manipulation of finances in order to qualify for benefits is known as asset deprivation. This is a way to reduce your assets by means of careful planning so that you can put your assets to good use, and also qualify for state benefits to pay for your long term care. There are rules in place against deliberate reduction of assets in order to qualify for funding. The most popular way for consumers to lessen or eliminate their assets is to gift away those things that are most valuable, such as their home. Some consumers will gift away their home to their child or other beneficiary. However, deliberately lessening assets in order to qualify for care will not always achieve the desired result. In fact, with the rules that are currently in place, if you are deemed to have deliberately gifted away anything of value for the sole purpose of receiving benefits, you may still be required to contribute to your care. This is regardless of whether or not your new financial picture will be enough for you to pay for care. Of course, it does have to be proven that you gave away property or other assets for the sole reason of qualifying for benefits. However, it may not be a risk worth taking if you are deemed to have done so deliberately.

If you are actually considering transferring some of your assets to someone else ahead of a means test for the cost of long term care, it is important to consult a financial advisor. A professional advisor can help to plan your finances and guide you according to current regulations. They can also give impartial expert advice about the potential advantages and pitfalls of certain steps that you may want to take. A financial advisor can also be helpful to you in regards to the overall general preparations leading up to financing your long term care. It is really never too early to start thinking about how you will pay for care, especially if you suspect that you will need it at some point.