Can I protect my home from care fees?

If you need more support with day-to-day activities, or if you’re worried about an older relative in this position, you may be considering either a care home or visits from carers (‘homecare’).

However, the cost of care can be a major concern, and many people are worried about having to sell their home to pay for it.

Here’s what you need to know about care costs, and what the state can and can’t require you to do to cover them.

Do I have to pay for my own care in later life?

Whether or not you’re liable for care costs depends on many factors, including:

• Your current income

• The value of your savings and assets (such as property)

• The level of care you need

• Whether adaptations can be made to your home to help you stay independent – a care needs assessment carried out by your local authority or council social care team will determine this

• If any dependants live in your home.

Paying for care can put a lot of strain on your finances. To protect the most financially vulnerable, the government means tests to decide whether you’ll need to pay for any care you receive.

This means that older or disabled individuals who don’t have savings or assets can still receive the care they need. But if you do have savings or assets, you may be asked to cover all or part of your care costs.

How much does care cost?

As a rule, you can expect the cost of your care to rise as your needs do.

For example, if you or an older relative is relatively well and needs only basic personal care once a day, such as help with showering and dressing, your fees will be lower.

At an average cost of £25 per hour, a daily visit from carers will cost around £9,100 per year.

Residential care is a lot more expensive. The fee will depend on where you live in the UK and the care home you choose, but it averages £5,192 a month or £67,496 a year.

Nursing homes that offer palliative or specialist care for demanding conditions such as dementia can command fees of £81,328 a year on average.

Can I get help with paying for care?

If the means test finds the value of your total assets is less than £23,250, the cost of your care can be subsidised or covered entirely by your local authority.

The upper threshold is £24,000 for home care or £50,000 for residential care in Wales, £35,000 in Scotland, and £23,250 in Northern Ireland.

The crucial point to note is that the means test cannot include the value of your home if you are still going to live there.

Similarly, it can’t be included if certain other people still live there, such as your partner or a child aged under 18. Therefore, you are far more likely to get help with paying for care if you have homecare (i.e. in your own home) rather than move into a care home.

If you need extra care due to a disability, you may be eligible for the personal independence payment (PIP). You can also claim benefits that aren’t means-tested, such as the attendance allowance, to go towards the cost of your care.

The person caring for you can also claim carer’s allowance, which can help to cover their time or expenses like fuel.

If you've had a PIP or other benefit claim rejected and you think the decision is unfair, you can request a mandatory reconsideration.

Even if you’re not eligible for state help, there are ways to make your money go further in covering care costs.

You could purchase an immediate needs annuity with your pension pot or savings, which will cover the costs of your care for as long as you need.

For example, you may be able to buy an annuity for £80,000 and receive a guaranteed £10,000 a year towards your care for as long as you need it.

This could save you and your family money (provided your care costs don’t go up).

This figure is just an illustration; the actual rate you receive would depend on your individual circumstances and current annuity rates.

Will my mum or dad have to sell their home to pay for care?

If your parent needs care, they won’t necessarily have to sell their home to pay for it.

As explained above, the means test (to determine if they get help with care fees) can’t include the value of their home if they are still living there, or if their spouse/civil partner/cohabiting partner or qualifying dependant lives there.

Qualifying dependants include:

• A close relative who is disabled or over 60

• An ex-spouse or partner who is a single parent

• A child under 18

However, if the other occupants of the house are merely tenants, lodgers or adult children (who are under 60 and in good health), the home’s value will be included in the means test.

In this situation, it could either be sold to cover care costs or you could release equity from it.  

You could also opt for a deferred payment agreement, which means up to 80% of the value of your home will be used to pay for your care costs when your house is sold following your death.  

How else can I avoid care home fees?

It can be tricky to protect your assets legally, and it’s always best to seek legal advice from a specialist as soon as you can.

Gifting your home to children or other close family/friends or spending money first is something that many people are tempted to try; however, it’s not a good strategy.

This is called ‘deliberate deprivation of assets’ and simply means that the money you’ve spent will still be included in your means test as if you hadn’t spent it – putting you in a far worse position than before.

Those to whom you have gifted the money could even be chased for your care fees. The local authority has the right to investigate transfers of assets and reverse them if it believes they were made deliberately to avoid care costs. 

To avoid this situation happening, you could also put all or part of your home into a trust, but you’ll need to sort this out many years before you may actually need care to avoid falling foul of deprivation rules.

You’ll also need to ensure there is another primary reason for putting the home into trust. For instance, to ensure it stays in the family and isn’t sold, or to allow one or more of your children to live there.

However, this sort of thing can cause problems of its own.

Therefore, it’s always best to speak to an experienced legal professional specialising in trusts before you act.

Get expert financial advice 

Deciding on the best option for yourself or a relative can be tricky, particularly when you add financial constraints into the mix.

It’s best to seek the advice of a financial adviser with experience in advising on care fees. You’ll usually be able to find a solution that delivers the best possible care while remaining affordable.

Let Unbiased connect you with an expert financial adviser to help you determine how best to minimise your care fees and protect your financial assets.