Common misconceptions about long-term care
October 2009
Let’s be honest: long-term care is often low on our list of priorities - until we or our loved ones need it urgently.
We also hold off making long-term plans because, quite frankly, we don’t know where to start. There are many widely-held misconceptions about care in later life, which makes it even harder to make adequate plans.
We’ve tried to dispel some of the more common myths.
Myth 1: It’ll never happen to me
The fact is we just don’t know what future long-term care we’ll need. Research shows that our life expectancy is increasing at a faster rate than our ‘healthy life expectancy’. So, even though people are living longer, their quality of life can be reduced – for example from arthritis, the effects of a stroke, dementia or other conditions. Currently, it’s thought that around 60% of 65 year-olds will eventually need high levels of care.*
* Personal Social Services Research Unit projections (July 2009)
Myth 2: I don’t need to worry as my family will take care of me
These days, most families do not live so close to each other. It may become almost a full-time commitment to look after a family member. Many of us wouldn’t want to impose on our loved ones if we need long-term care. Having said that, adult children provide elderly parents with 36 hours of unpaid care each month. If this care was paid for, it would equate to around £39 billion per year.
Three-quarters of respondents in a recent survey say they’d rather look after their parents at home than put them into residential care*. But over time, it becomes harder to manage without professional care and additional financial assistance.
*Liverpool Victoria (LV=) (March 2009)
Myth 3: My health insurance will cover my care costs
Health insurance rarely covers ongoing care or chronic illness. Most plans only cover short-term medical care as you recover from an acute illness or injury.
Myth 4: I have considerable savings that will pay for my care
You could ask: ‘How long is a piece of string?’ The cost of care can be high and you’ll need to have saved a lot of money to cover those expenses. Without careful planning, those savings can disappear very quickly.
SAGA’s research (February 2008) found that care home accommodation currently costs £540 per week on average. That’s around £28,000 a year. A disturbing figure that is set to double within 20 years.
Before you make any decisions on how to finance your care in later life, take specialist advice.
Myth 5: My partner needs care, so all our income will have to pay for his/her care, leaving me with nothing to live on
The local authority means-test only looks at the income and capital of the partner requiring care. The test also takes into account 50% of their pension. If you’re staying at home, this could potentially affect you. The local authority will decide if the person in care can keep more Personal Expenditure Allowance (PEA), which is currently £21.90 per week (2009/10).
Remember that your property won’t be included in the means-test if your partner needs the care and you’re staying behind.
Recent changes to assessment rules have abolished the “Liable Relatives Rule“. This means that couples are no longer legally required to contribute to each others care costs.
Myth 6: I’ll have to sell my property to pay for my care
The good news is, not necessarily. Check with your local authority. If you go into residential care they may include you in the deferred payment scheme. This means that they’ll lend you the money to pay for your care and then charge the cost against the value of your property when it’s eventually sold.
It’s worth remembering, though, that the local authority may limit how much they’ll pay for a care placement.
There are other alternatives. You could earn income by letting out your property, or you could consider equity release schemes if you are receiving care in your own home.
If you can receive care in your own home, ‘domiciliary care’, then the value of your home is disregarded in any local authority means test.
Regardless of what you ultimately decide to do with your property when you need care, it is crucial that you get expert financial advice.
Our feature titled Do I need to sell my home? will give you more detailed information.
You can also download a comprehensive factsheet about the treatment of property in means-testing, from Age Concern's website.
Myth 7: I may as well give my home away to avoid the cost of care
This isn’t a good idea, for many reasons. For example, you may decide to transfer your house to your children. If they get divorced, become insolvent, or default on any loan secured against your property, then the house may have to be sold and you will have to leave.
And even if you do give it away, it won’t necessarily be disregarded from any means-test. Local authorities can go a long way back into your records to see if you’ve transferred your assets to avoid paying for care. If they think you’ve done this, they’ll include the value of the transferred asset in your financial assessment.
What if you decide to give your children the house once you’re in the care system, say six months in? It’s worth remembering that in that circumstance, the local authority can recover any money already paid directly from them.
Another point is that even if the local authority disregards your assets and agrees to pay for your care, you’ll be limited to a care home that the local authority can afford. You may end up somewhere you wouldn’t choose if you were self-funding.
You should always take specialist advice. Property is a valuable asset and you should look at other options to fund your care before deciding to transfer any assets
For further information, see The basics - Using your home to pay for care.
Myth 8: If the state is paying, I don’t have a choice of care home
On the contrary – you do have a choice. The local authority must give you a list of local homes where they can fund your placement. They can’t insist that you move into a particular home, but they do set a limit to the amount they will pay for a care home placement so this will impose some limits on your choice.
When you choose a home, it must meet your assessed needs and shouldn’t cost more than they would usually pay for someone with your care profile.
What if the local authority wants to pay less than the home costs? In that case, they’ll allow a third party to top up the fees. So, if they can, your children could supplement the fees over the long term. But you won’t be allowed to top up the fees using your own capital.
Myth 9: Social services won’t pay for any of my care fees while I’m in the process of selling my former home
If your other asset capital is below £23,000 (2009/10), the local authority will contribute to the cost of the first 12 weeks of your care. After that time, the local authority will recoup the costs of financial assistance from the proceeds when your home is eventually sold.
Our feature Funding care fees - Do I need to sell my home? gives more detailed information about the 12-week Property Disregard Scheme.
Myth 10: I have to pay Council Tax on my empty property
Once you move into a care home and your house is left empty, you should get full exemption from Council Tax until your property is sold.
Myth 11: Once I’m in care, I won’t receive benefits anymore
Benefits are often overlooked. If you’re paying for your care yourself, there’s a good chance you can claim Attendance Allowance. This is a non-means-tested, non-taxable benefit, paid weekly. The rate does vary, depending on what care is needed. If you need day or night care, the lower rate of £47.10 applies. If you need care by day and night then the higher rate of £70.35 applies (2009/10).
See The basics - Financial help that is not means-tested.
You can also find out more information about care homes and benefits on the Directgov website.
