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When your loved one moves into a care home and is self-funding, it’s a relief to know they’re receiving the care they need.
However, the worry about what happens if their money runs out can be a significant concern.
This guide aims to provide a comprehensive overview of what steps to take and what options are available if self-funding for a care home becomes unsustainable.
Understanding Self-Funding in Care Homes
What is Self-Funding?
Self-funding means your loved one pays for their care home fees out of their own pocket. This is typically necessary when they have assets or savings above the threshold set by the government for receiving financial assistance.
How Long Will the Funds Last?
The length of time funds last depends on several factors, including the cost of the care home, the level of care required, and the individual's assets and income. It's essential to regularly review the financial situation to anticipate when funds might run out.
Steps to Take When Money Starts to Run Low
1. Conduct a Financial Assessment
When you foresee that the funds will soon be depleted, it's crucial to conduct a thorough financial assessment. This includes evaluating all assets, income sources, and expenses.
2. Contact the Local Authority
Contact your local authority for a financial assessment. They will determine if your loved one qualifies for local authority funding once their assets fall below the set threshold. This assessment includes looking at savings, property, and other financial resources.
3. Understanding the Thresholds
In England, as of 2024, if your loved one's assets are below £23,250, they may be eligible for some local authority funding. If assets fall below £14,250, the local authority covers the care costs, but your loved one may need to contribute from their income.
4. Local Authority Support
If your loved one qualifies, the local authority will contribute towards the care costs. However, this doesn't mean they will fully cover all expenses. There might be a difference between what the local authority pays and the care home's fees, known as a 'top-up fee.'
Options for Covering the Shortfall
1. Top-Up Fees
Top-up fees can be paid by family members or friends if the local authority's contribution doesn’t cover the full cost of the care home. It's important to ensure these arrangements are sustainable long-term.
2. Equity Release
If your loved one owns property, equity release can be an option to unlock funds. This allows them to access the money tied up in their home to pay for care costs without having to sell the property immediately.
3. Deferred Payment Agreement
A deferred payment agreement (DPA) is an arrangement with the local authority where they pay the care home fees. The amount is repaid later when the property is sold or from the estate. This can provide a temporary solution without having to sell the home straight away.
4. Continuing Healthcare Funding
If your loved one has significant health needs, they might qualify for NHS Continuing Healthcare (CHC) funding. This is a package of care arranged and funded solely by the NHS and is not means-tested.
Preparing for the Future
1. Regular Financial Reviews
Regularly reviewing your loved one’s financial situation can help anticipate and prepare for when funds might run low. This can include reassessing budgets, expenses, and looking for ways to reduce costs.
2. Seek Professional Advice
Consulting with a financial advisor who specialises in elderly care financial planning can provide valuable guidance. They can help explore various financial products, benefits, and strategies to manage care costs effectively.
3. Long-Term Planning
Consider long-term care insurance policies that can cover future care costs. Although these need to be arranged well in advance, they can provide financial security in the long run.
4. Family Discussions
Have open and honest discussions with family members about the financial situation and potential contributions towards care costs. It’s important for everyone involved to be on the same page and prepared for the future.
Running out of funds while self-funding a care home can be a daunting prospect. There are several options and support systems available to manage this transition.
By understanding the steps to take and preparing in advance, you can ensure your loved one continues to receive the care they need without undue financial stress.
For more detailed guidance and support, feel free to get in touch. Our team at Ashberry Care Homes is here to help you navigate these challenges and find the best solutions for your family’s needs.
