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New Funding Advice for Residential Care

Getting old is a privilege not everyone gets to experience, but nonetheless we should all be planning for old age to ensure we can be as comfortable and at ease as possible when that time comes. In some cases that can mean residential care in your own home or a residential placement. Most people have concerns and questions about how to find the right situation for them and how they will afford it. There have recently been changes to the way residential care is funded in the UK – an already complex system which leaves many feeling uncertain. These changes affect not only the individuals who may require care, but also their families.

Essentially, new legislation has been implemented to introduce a lifetime cap of ?72,000 on the cost of residential care from April 2016. How this will affect you depends upon your personal circumstances and a number of variables.

The cost of residential care varies dramatically in different parts of the country and depending upon the level and kind of support required. In the Southeast, the average cost of standard residential care is about ?33,000 per annum, going up to about ?45,000 when nursing support is required. The North West is cheaper, with standard care costing about ?25,000 per year and nursing care about ?35,000. However, these average costs can be affected by whether the placement is temporary or permanent and whether a residential home is NHS-run or independent, for example.

Means-Testing

While NHS care in the UK is free, what you will need to pay towards residential care is means-tested, and most people will pay something. If your local authority has decided that you need residential care, whether in your own home or at a residential placement, you will then be means-tested to determine what you can pay and how much funding you are entitled to. Current regulations state that if your total capital is below ?14,250, you will receive maximum funding. A capital fund of between ?14,250 and ?23,250 will entitle you to some assistance, while capital over ?23,250 will require you to self-fund.

When determining your financial status, your income, your home and any other assets will be included. Exceptions include credits and benefits, war widows’ payments, income from savings and Disability Living Allowance. Jointly held capital is also taken into account, which means you will be deemed to own an equal share of any homes or bank accounts with your spouse. What most people fear is having to sell their home to pay for their care. While this is sometimes necessary, an independent financial advisor may be able to recommend better options for you.

The New Lifetime Care Cap

The main change affecting care funding is the ?72,000 lifetime care cap, which essentially means that after this point your care will be funded entirely by the state. The cap applies to care provided either in your own home or a residential placement but does exclude a charge for daily living costs for residential placement, which in 2016 is set at ?230 per week, with a ?12,000 per annum limit. The worst-case scenario, then, is that you will need to find ?72,000 plus ?12,000 every year if you are self-funding.

With a study showing that 96% of over-65s have made no plans or financial provisions for their old-age care, it is always wise to consider getting plans in place to cover potential care needs in the future.

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