Funding Care Home Fees
Funding care home fees, whose responsibility is it?
When it comes to needing long term care many of us are likely to have to share the burden of funding care home fees with the local authority. To qualify for local authority funding for care home fees you will have to pass a means test. The means test will assess your financial assets to determining how much local authority you are able to get. Unless you have very little or no assets, you are likely to have to share the burden of funding care home fees with your local authority.
Funding care home fees, what are the options?
Before taking any steps in privately funding care home fees you should find out exactly what local authority funding or other benefits you are eligible for. This will help you to make an informed decision on the best care home fee plan for your needs.
- Long term care annuity: This is a type of long term care insurance, also known as a immediate need annuity. Such an annuity can be taken out to meet the cost of either care in you own home or the cost of care home fees. In return for a up-front premium you will receive a regular payment to top up the cost of funding your care, either until the end of your life, or a previously agreed fixed term. To qualify for a long term care annuity you must need care immediately. A long term care annuity may hold the option of being index linked.
- Personal savings and investments: You may be able to pay for your care needs directly out of your personal saving or investments. However, this leaves you open to the possibility that whatever fund you are drawing on will be prematurely depleted and you will run out of funds while you still have long term care needs. You may wish to use any savings that you do have to purchase a long term care annuity. There may also be other investment options available to you that you could draw an income from. Investing for an income will give you the opportunity to keep ownership of capital, but is likely to come with an element of risk.
- Equity release: If you are a homeowner, you may want to release equity from your property to help with funding care home fees, and you may be able to do this through a equity release scheme also known as a lifetime mortgage. The released equity may then be used to help you pay for care home fees directly or to invest in a long term care annuity. However, you should also be aware that by releasing equity, although you could be allowed to carry on living in your home, you are relinquishing a percentage of your ownership in your property.
In the past pre-funded long term care plans were also available. Pre-funded long term care plans worked in a similar way to traditional insurance policies, allowing you to insure yourself against the possibility of any future care needs. These products are no longer available, but you may already have one taken out.
Other options may also be available depending on your individual circumstances
Funding care home fees, further advice on your options.
Finding the best way of funding care home fees can be complex. For advice on funding care home fees, or to get the most out of your assets and find the right option for your needs speak to a member of an independent long term care planning advice team, for a fee free no obligation consultation.
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