As we age, the prospect of needing long-term care becomes increasingly likely. Unfortunately, many seniors and their families face the difficult decision of selling their homes to pay for that care. Shockingly, new research by Money Mail has revealed that more than 17,000 pensioners were forced to sell their homes to pay for social care last year. That means that 330 elderly residents are taking this desperate step each week, despite Boris Johnson’s promises to fix the social care funding crisis. The scale of this emergency is revealed by the fact that the numbers forced to sell their hard-won homes have soared 45% since 2000. The importance of this issue cannot be overstated; selling a home can be emotionally and financially devastating, especially if the home has sentimental value or is a family heirloom. However, the good news is that there are several ways to avoid selling a home to pay for care. This blog post will explore legal strategies, government programs, and insurance policies that can help seniors and their families protect their homes and assets.
Do I have to pay for my care in later life?
In the UK, whether or not you have to pay for your care in later life will depend on various factors, such as:
- Your income: If your income is above a certain level, you may be expected to contribute towards the cost of your care.
- Your savings and assets: If you have savings and assets above a certain amount (currently £23,250 in England), you may be required to pay for some or all of your care.
- The type of care you require: The cost of care can vary depending on the care you need. For example, residential care homes are generally more expensive than home care services.
- Your health condition: Your health condition can affect the level of care you require and the associated costs.
- The availability of government funding: Depending on your circumstances and the type of care you need, you may be eligible for government funding to help cover the cost of your care.
It is important to note that the rules and regulations around care funding can be complex and subject to change. You should seek advice from a professional advisor or local authority to understand your options and eligibility for care funding.
How much does care cost?
The cost of live-in care typically starts at £900 to £1,400 per week, but it can increase to £2,000 per week. The cost of 24-hour care at home depends on individual needs, the services required, and the chosen provider. When choosing a home care provider, one of the primary considerations is the fees.
The cost of home care services, which may also be referred to as domiciliary care or in-home care, varies depending on location, but the hourly cost of care at home is generally between £20 to £30. Home care can often be less expensive than residential care, depending on the individual’s needs. However, it is essential to note that fees may increase on weekends and bank holidays. For instance, two hours of home care per day at a rate of £25 per hour would cost £350 per week, £1,400 per month, and £16,800 per year.
What is a care needs assessment in the UK?
A care needs assessment is conducted by the local authority in the UK to evaluate an individual’s care needs. The assessment is typically performed when a person requires assistance with daily activities due to illness, disability, or age.
During the assessment, a care specialist from the local authority will visit the individual and ask about their physical and mental health, lifestyle, and environment to determine their care needs. The evaluation aims to identify the level of care required and what type of care and support would be appropriate. The local authority will then decide if the individual is eligible for financial assistance and what support will be provided.
The assessment may result in recommendations for different forms of assistance, such as home adaptations, equipment, personal care, meals, or residential care. A family member or friend may be present during the assessment if desired. The local authority may conduct a separate assessment to determine if the caregiver requires assistance. To apply for an assessment, contact the social care department of the local council or seek assistance from the nearest Citizens Advice Bureau.
What are some strategies to avoid selling your home to pay for care?
As people age, they may face the possibility of needing long-term care, which can be expensive. Unfortunately, many people believe that the only option to cover the costs of care is to sell their homes. However, there are several strategies available to help individuals and families avoid selling their homes to pay for care. These strategies include legal strategies, government programs, and insurance policies. By planning ahead and seeking professional advice, it’s possible to minimize or even eliminate the need to sell a home to pay for care. In this article, we’ll explore some of the most effective strategies to avoid selling your home to pay for care.
Legal strategies are an effective way to protect assets from being counted towards Medicaid eligibility, a government program that pays for long-term care for people with limited income and resources. Here are some examples of legal strategies.
- Setting up a trust: A trust can help protect assets by transferring ownership of the home and other property to the trust. It can effectively avoid Medicaid eligibility requirements while allowing seniors to live in their homes.
- Transferring assets to a spouse or child: Transferring assets to a spouse or child can be another way to protect assets. However, it is essential to be aware of potential tax implications and to work with a professional advisor to ensure the transfer is done correctly.
- Purchasing a life estate: A life estate allows the senior to transfer ownership of the home while retaining the right to live in it for the rest of their life. It can be a good option for seniors who want to stay home but must protect their assets.
- Using annuities: Annuities can convert assets into a stream of income, which can help reduce assets and make the senior eligible for Medicaid. However, it is essential to know the potential tax implications and work with a professional advisor to ensure the annuity is set up correctly.
Pros of legal strategies:
- It can help seniors and their families preserve their assets and financial resources.
- It can provide a sense of security and peace of mind knowing that assets are protected from being used to pay for long-term care.
- It can help individuals qualify for Medicaid benefits and receive the care they need without spending down all their assets.
- It can help avoid the need to sell a home or other valuable assets to pay for long-term care.
Cons of legal strategies:
- High upfront costs: Legal strategies such as setting up a trust or purchasing a life estate can be expensive and may require ongoing maintenance and administration.
- Potential tax implications: Transferring assets to a spouse or child may have tax implications, and annuities may be subject to income tax and penalties if not set up correctly.
- Limited flexibility: Once assets have been transferred into a trust or other legal strategy, they may be difficult or impossible to access or modify. It can limit flexibility in financial planning and may make it difficult to respond to changing circumstances. It is essential to consult a professional advisor to determine which legal strategy best suits individual circumstances.
Several government programs in the UK provide financial assistance for long-term care at home or in a facility. Some of these programs include:
- Deferred Payment Scheme: This program is offered by local authorities and allows individuals to defer payment for their care until later, usually after their death. The local authority will pay for the care and recover the costs from the individual’s estate.
- NHS Continuing Healthcare: This program provides fully funded healthcare for individuals with complex medical needs, regardless of their income or savings.
- Attendance Allowance: This is a benefit paid to individuals who are over sixty-five and need help with personal care because of a physical or mental disability. It is not means-tested and is not based on income or savings.
- Personal Independence Payment: This is a benefit paid to individuals aged 16 to 64 who have a long-term illness or disability and need help with daily living tasks or getting around.
- Council Tax Reduction: This program provides a reduction in council tax for individuals on low incomes or who receive certain benefits.
Insurance policies are contractual agreements in which the policyholder pays regular premiums to receive coverage for a specific event, like long-term care expenses. These policies may be standalone or added to life insurance or annuities and can cover the costs of various long-term care options like nursing home care, assisted living, and in-home care services. Policy options may vary based on the policyholder’s age, health, and other factors, making it crucial to review and compare policies. While different types of insurance policies are available, it’s important to prioritize the ones that best fit your needs. For example, while travel insurance is essential during trips, it’s crucial to ensure it doesn’t harm long-term financial stability. Here are a few examples of insurance policies to consider.
- Long-term care insurance: It covers the cost of long-term care, either in a nursing home or in the individual’s own home. It can cover a range of services, including personal care, nursing care, and therapy.
- Immediate needs annuities: This type of annuity is designed to pay for long-term care immediately. The individual pays a lump sum to an insurance company, which then pays a guaranteed income for life to cover the cost of care.
- Equity release: This is a way of releasing equity from the individual’s home without selling it. The equity can be released as a lump sum or in regular payments and used to pay for long-term care.
- Home reversion plans: This is another way to release equity from the individual’s home. The individual sells a portion of their home to a provider in return for a lump sum or regular payments. They can then remain in their home for the rest of their life, with the provider taking ownership of the portion of the home that was sold.
What to do if savings run out with no income source?
If your savings have run out and you have no immediate source of income, it can be a challenging situation. Here are some steps you can take to manage the situation:
- Prioritize your expenses: Create a budget and prioritize your expenses based on your essential needs, such as housing, food, and utilities. Cut down on discretionary expenses until your financial situation improves.
- Explore alternative income sources: Look for alternative sources of income such as freelancing, selling items online, or taking on odd jobs. These options may not provide a consistent income, but they can help you earn some money in the short term.
- Apply for government assistance: Check if you are eligible for any government assistance programs such as unemployment benefits, food stamps, or housing assistance. If your savings fall below the upper capital limit of £23,250 (or £100,000 from October 2025), contact your local council about three months before your savings will drop below the limit and ask them to reassess your finances. Councils provide funding from the date you contact them.
- Seek help from family and friends: Reach out to family and friends who may be able to provide you with temporary financial assistance or a place to stay until you get back on your feet.
- Consider a loan: If you have a good credit score, you may be able to get a loan from a bank or credit union to cover your immediate expenses. However, be mindful of the interest rates and fees associated with the loan.
Remember, this is a temporary situation, and with careful planning and smart decision-making, you can get back on track.
What can you get for free?
Even if you are paying for your care or have a high income, you may still qualify for free assistance. This assistance can include small equipment or home adaptations that cost less than £1,000 or care provided by the National Health Service (NHS), such as NHS continuing healthcare, NHS-funded nursing care, and care after an illness or hospital discharge.
There are several ways to avoid selling your home to pay for care, such as purchasing long-term care insurance, seeking government assistance, or setting up a trust. We have discussed three solutions to help individuals avoid selling their homes to pay for long-term care in the UK. These solutions include legal strategies, government programs, and insurance policies. However, the best approach depends on everyone’s unique financial situation, health condition, and preferences. Planning and seeking advice from a professional advisor is essential to determine the best course of action. Selling a home to pay for care should be a last resort, and with the right strategies, it can be avoided or minimized. By taking proactive steps and exploring all available options, individuals can protect their assets and maintain financial stability while still receiving the care they need.