At a glance
- Finding the money to pay for long-term care can be one of the biggest financial worries facing us in later life.
- Your local authority can carry out a means test to see if you are eligible for financial support.
- A financial adviser can help you to understand the process and the long-term picture to ensure you won’t run out of money during your lifetime.
If you need long-term care and have received a care support plan, the next step – if you think you might be eligible for some financial support – is to undergo a financial assessment, also called a ‘means test’.
This is where someone from your local authority will ask about your finances and income to assess your ability to pay for a care home or in-home care and decide who will pay the fees.
How much you will have to pay will depend on:
• What type of care and support you need
• Your own personal circumstances
The thresholds for receiving financial support are generally quite low. If the total value of your assets is above the following amounts, and you do not qualify for NHS support, you’re unlikely to receive any funding from your local authority:
• £23,250 in England and Northern Ireland
• £32,750 in Scotland
• £50,000 in Wales (for residential care) or £24,000 (for in-home care)
You’ll also be expected to use any income you have (for example, from a pension) to pay towards the cost of your care, minus a small amount of money you’re allowed to keep for personal expenses or bills.
What does the means test involve?
The means test will be carried out either at your home or online. Your local council will look at:
• Your earnings, if you have any
• Any money you receive from pensions, both state and private
• Any benefits you receive
• Any savings and investments (if they are held jointly with your partner, they will usually be treated as being divided equally between the two of you and only your share will be considered)
• Any property you own (the value of a jointly owned property will be divided between you according to the shares you have in it)
The value of your possessions or any life-insurance policies won’t be included in the assessment.
If you need care in order to stay in your own home, the means test won’t include the value of your property. The same goes for if you’re moving into residential care but your spouse, partner or a dependent relative will need to remain living in your home.
However, in all other cases, the current market value of your property will be included in the assessment, minus any mortgage or loan you may have on it and minus 10% of its value if there would be costs involved in selling it.
Preparing for the social care means test
Take some time to make sure you have all of the above information to hand, such as bank statements, share certificates, details of your pensions, and so on.
It’s often helpful to ask a trusted relative or friend to support you. They can also be with you during the assessment to make sure you answer everything accurately and give the full picture of your financial situation.
It’s also a good idea to speak to an expert financial adviser. They can help you to understand the full value of all your assets and how they will be taken into consideration in the means test.
What happens after the social care means test?
Your council will let you know how much the care you need will cost and the amount you will need to pay towards it yourself. The three possible outcomes are:
• You have to pay 100% of the cost
• The council will pay 100% of the cost
• The council will make a contribution towards the cost and you will pay the rest.
If you disagree with the result, you can appeal to the council. Also, if your circumstances change at a later date, you can ask the council to review the financial assessment.
Is there a way to avoid paying care home fees?
You may think about giving away some of your property, savings or investments before taking the means test, to ‘hide’ their wealth from the assessor. However, this is called deprivation of assets and is not allowed.
Local authorities are clamping down hard on this. If they believe you have deliberately given away your assets with the aim of avoiding care fees, they will assess you as if you had everything. This could leave you in a terrible situation – where you must fully fund your own care but have given your assets to someone else, who has no obligation to meet the costs of your care needs.
There are very strict guidelines on giving away property and assets. A financial adviser can help you understand what these are, and help make sure you don’t fall foul of the ‘Deprivation of Assets’ rule. We therefore strongly recommend that you do not do this, and always seek financial advice before deciding what to do with any of your assets.
Benefit from expert support
Arranging long-term care can be stressful, whether for yourself or your parents. We’ve teamed up with Care Sourcer who we can refer you to. They have extensive knowledge of the UK care systems, so they can help you understand the support and benefits available to you and find the right care provider too.
We can also help you to understand the long-term picture – whether you’ll pay your own care fees, the council will be funding you or a combination of the two – to ensure you won’t run out of money during your lifetime. So get in touch with us if you’d like to talk these things through.
The services provided by Care Sourcer are separate and distinct to those offered by St. James’s Place.
SJP Approved 10/08/2023