Understanding how to fund care homes can be overwhelming, especially when faced with complex rules and a maze of information to navigate. Nevertheless, having a solid grasp of the protocols and procedures is critical to making informed decisions.
This blog post explores the essentials of care home funding. We will discuss financial means testing and what you may need to pay.
What is a means test?
A means test is simply a check on your finances to assess how much you will need to contribute to your care home costs. When an individual needs residential care, it isn’t just their health and social care needs that are accounted for, but their financial situation also.
After an initial assessment identifying the type and level of care someone needs, a financial officer from the council will review your finances. They investigate everything from a person’s savings and income to their property and investments. This means the test will help determine if the council will contribute to your care home fees or if you must pay the bill yourself.
What assets are considered?
The assessment looks at various parts of a person’s financial situation, including:
- Savings – Money in your bank accounts, ISAs, or premium bonds.
- Investments – Stocks, shares, or any other investments
- Property – The value of your home or other property, although sometimes your home can be excluded.
- Income – This includes your pension (state, occupational, or private) and any other benefits or regular earnings you receive.
The amount you’re expected to pay depends heavily on what you own. You’ll be responsible for more of the costs if you have significant savings or assets.
Funding thresholds
In England, two primary thresholds decide if you will get assistance from the council:
- If your assets are over £23,250, you will be considered a “self-funder”, meaning you will be expected to pay for your care yourself, and the total costs will fall on you.
- If your assets fall below £14,250, the council will contribute towards your care. While you still need to pitch in, the council will cover the rest (up to a specific limit).
- Finally, if your assets are between £14,250 and £23,250, the council will still help, but your contribution will be based on a sliding scale. For every £250 of your savings above £14,250, you are expected to pay an extra £1 a week towards your care.
”Even if you cover most of your care costs, you can keep a small amount for personal use, known as the Personal Expenses Allowance (PEA). For the next financial year (2024 to 2025), the PEA will increase in line with inflation from its current level of £28.25 per week to £30.15 per week. This is intended to cover everyday expenses like toiletries, haircuts, or small treats. It’s not much, but it is designed to ensure that care home residents retain money for personal spending.
Preparing for means testing
It is important to note that councils have strict rules around transferring savings or property to other people to reduce your financial burden. This is known as deliberate deprivation of assets. If the commission believes that you have purposely given away money or property to avoid paying for care, they will treat you as though you still own those assets. This is known as “notional capital”, and the value of investments will be included in your financial assessment.
Before the council assesses your finances, it’s helpful to gather all the relevant documents in advance. This could include bank statements, details of any investments, property valuations, and information on any pensions or benefits you receive. You may also need to provide evidence of any disability-related expenses, as these could potentially reduce the amount you’re expected to pay.
Once the means test is complete, the council will write to you to let you know how much you need to contribute to your care.
Planning ahead
And just like that, understanding financial assessments and what’s included in a means test doesn’t have to be a mystery. It’s an essential step in planning ahead and can be much simpler than you think.
If you’re unsure about any part of the process, you can always seek advice from your local council. Don’t let the process overwhelm you; take it one step at a time, and you’ll be in a better position to make the right choices for yourself or a loved one.
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