Local authorities in England are legally obliged to carry out a care needs assessment to establish the type and amount of care you need. But you’ll also have to undertake a means test to decide who pays your care fees.
To meet their legal obligations, your local authority must:
There are similar arrangements that apply for Wales, Scotland and Northern Ireland. And, in Northern Ireland, it’s the local health and social care trust that will carry out your social care needs assessment.
Every local authority now provides an information and advice service about care and support for adults and support for carers. You can use this resource for free – and it can help you create your own care funding plan.
Local authorities also have a responsibility to consider whether they should signpost you to independent information and advice. And if they do signpost you, they should also explain why independent financial advice may be beneficial for you.
You can start by asking your local authority to assess your care needs. They’ll then carry out an assessment to determine:
You can receive care either in your own home or in a residential setting. This residential care could be in sheltered accommodation or a care home.
Your local authority must involve you and listen to you throughout the planning process. They must also give you information in a way that’s meaningful for you – so that you understand it. And they have to give you time to consider all your options.
It’s a good idea to have a family member or friend with you for your care needs assessment. And it’s also good if they can support you through this planning process.
You may need help to plan and make decisions but have no family or friends who can help. If this is the case, your local authority will provide an independent advocate for you. This advocate will be a person who can help make sure the right decisions are made for you.
As part of the planning process, you and your local authority will look at:
The resulting plan will be an agreement between you and your local authority regarding the support you’ll get from them. Your care plan will also include details of the support you’ll get from family, friends and your local community.
Make sure a family member, a friend or your advocate is there to share what’s discussed during your assessment. When it comes to planning care for the elderly, it’s vital this extra support is in place throughout the process.
Your care and support plan is designed to put you in control of your care. It covers:
As part of creating the care and support plan, your local authority will carry out a financial assessment. This is also known as a ‘means test’.
This means test will help decide how much, if anything, you’ll need to pay towards your care costs. You can find out more information about the means test below.
You’ll be given a written copy of your personal care and support plan. Your local authority has a duty to review your plan at least every 12 months. This is to make sure it continues to meet your needs – and you continue to meet your care objectives.
Your local authority may recommend care in a residential setting for you. If they recommend residential care, they have a duty to help make sure suitable care is made available to you.
It’s always a good idea to get a care needs assessment, even if you think you don’t need one. You should get one even if you know you’re going to pay for the cost of your care.
If you are paying for your care, there may be other help you can get that the assessment will highlight. Your circumstances might not be as clear cut as you think they are. That’s why your care needs assessment can help you create the best care funding plan to fit you.
If your care needs change at any point, you can get another free care needs assessment from your local authority. You should always do this, as you may find you’re entitled to extra help.
To arrange your free care needs assessment, you can contact the Adult Social Services Department of your local authority.
If you live in Northern Ireland, contact your Health and Social Care Trust. They’ll be able to arrange your care needs assessment and means test.
You may have to wait for a medical and financial assessment, depending on where you live.
It’s important not to rush the process. It can take a bit of time to determine your specific care needs and how they’ll be paid for.
Your care needs assessment should cover all areas of your life such as:
To help the assessment process run as quickly and smoothly as possible, have the following information ready:
To get the most from your care needs assessment:
When they’re assessing if you’re eligible for getting support with paying your care fees, your local authority will consider:
You can be eligible to get support from your local authority with paying for care if:
The specified daily activities relating to the eligibility criteria for getting local authority funding with care costs are:
Your local authority must decide if your inability to achieve any of these specified outcomes impacts on your wellbeing. They must assess if your inability to achieve any of the specified outcomes impacts on:
There are nine aspects of wellbeing:
If you have a carer, they may also be eligible for support in their own right. That’s why they should also ask for a care needs assessment.
When assessing a carer, the local authority looks at the impact the carer’s needs for support have on their wellbeing. The local authority considers the following aspects of wellbeing:
Your local authority will carry out a financial assessment - also known as a means test – when they’ve:
If you want to receive help towards the cost of your care fees, you have to have this means test.
They’ll use the same process to work out how much you’ll need to pay whether you’re receiving your care:
Your local authority will want to know how much money you have access to. This will help them work out if you need financial help.
The means test is only used to determine the financial contribution your local authority will have to make.
Local authorities must still help you make decisions about how you want your care needs to be met. They also have to prepare a care and support plan for you, irrespective of whether they’re providing financial support.
First, your local authority will work out the reasonable cost for your care.
Then they’ll look at your ability to pay for, or contribute to, the care cost. They’ll do this by assessing your income as well as the value of your financial assets, such as your:
They usually divide jointly-held assets equally – and only your share will be considered.
You’ll generally be expected to use your income to contribute towards the cost of your care. Before any care fee payments are made, you’re entitled to keep a personal expense allowance. And, if you’re receiving home care there’s a minimum income guarantee to cover your residential living costs.
If you don't have enough income to cover the cost of your care, they’ll look at the value of your savings and assets to complete the assessment.
You can choose not to have a means test. However, it’s worthwhile doing it, in case you run out of money – or your future care needs increase. Also, you won’t be considered for any local authority funding unless you’ve had a care needs assessment and means test.
There are three possibilities that will result from your means test.
1. You’re entitled to local authority funding for care and support free of charge.
2. You have to pay something towards your care costs.
3. You have to pay for all of your care costs yourself.
Means testing involves looking at most savings and assets held in your name, including:
If you have jointly held savings and assets, say with your spouse, their value will usually be divided by two. This will be done to calculate your share for your means test.
Pensions and annuities are generally treated as income for your means test.
If you’re below the qualifying age for Pension Credit, only funds withdrawn from your pension savings will be assessed. Once your age qualifies you for Pension Credit, all your pensions are assessed for the means test. This applies whether pensions are vested (in other words, you have accessed your pension) or unvested, in the following ways:
Some of your assets won’t be included in your means test, such as:
Some forms of income are disregarded from the means test, including:
Some people try to avoid paying for care themselves by giving away their property and savings. Doing this to avoid care home fees – and other care costs – is also known as deliberate deprivation of assets. However, local authorities are increasingly clamping down on this behaviour.
The Care and Support Statutory (CASS) guidance was published in October 2014. This determines how local authorities assess your ability to pay for your social care costs.
You’re unlikely to receive local authority funding for the cost of your care if you have combined assets worth over:
If your assets fall below the regional upper threshold in the future, your situation can be reassessed. However, you’ll need to ask for this reassessment from your local authority.
The means test also uses lower thresholds to determine when your local authority will pay for your social care. They’ll pay your social care costs (up to your personal-budget level) when the value of your assets falls below:
If you’re living in Wales and receiving care at home the thresholds are reduced to £24,000.
The value of your assets may fall between the upper and lower thresholds. If it does, you’ll have to contribute £1 for each £250 of assets above the lower level. As the upper and lower thresholds are the same in Wales, this doesn’t apply to those receiving care in Wales.
|Lower threshold||Upper threshold|
|Wales||Residential: £40,000 Non-residential: £24,000||Residential: £40,000 Non-residential: £24,000|
According to Laing and Buisson, 56% of people who need care have to part or fully fund it themselves.
You’re expected to contribute your income towards the cost of your social care. However local authorities must make sure you keep back a minimum amount to cover your personal expenses. This is called your personal expense allowance and it varies depending on where you live.
In Scotland, if you’ve been assessed as needing personal care and are 65 or older you get it free. If you’ve been assessed as needing nursing care, it’s also free – regardless of your age.
In Scotland, you can choose to receive personal care from:
Your local authority will pay care home fees of £174 a week direct to your care home if:
This amount of £174 a week is the allowance for the tax year 2018/19.
As your local authority pays this amount to your care home, it will reduce the care home fees you pay. These payments aren’t subject to income tax.
In Scotland, if your local authority decides you need nursing care, they can pay your care provider a contribution. They’ll do this if you’re living in either:
This amount of £79 a week is the allowance for the tax year 2018/19.
As your local authority pays this direct to your nursing or care home, it’ll reduce the care home fees you pay. These payments the local authority makes aren’t subject to income tax.
Your local authority may not cover all of your care costs. This might still be the case if the value of your assets is below the lower threshold.
There are two instances where this can happen.
1. You’re paying more for your eligible care needs than your local authority would pay for that care (personal budget). Your eligible care needs will be stated in your care and support plan. In this scenario, a third party such as a relative or friend could be expected to make up the difference.
2. The care package arranged for you is more extensive than what’s outlined in your care and support plan. In this case, the additional cost (independent personal budget) will need to be met by a third party.
Owning your home is one of the major reasons you may fail to qualify for support towards your care costs. However, there are circumstances when the value of your home is excluded from your means test.
Your home will be excluded from your means test if it continues to be the main home for:
A relative can be considered incapacitated if any of the following apply:
Yes, you can, if you and your spouse own your property as tenants-in-common rather than joint tenants. In this case, each half can be passed on to someone else (such as children) rather than each other.
Doing this may mean half the property value can be excluded from the means test after one of you dies. You’ll have to get some legal advice to confirm this.
You may be asked detailed questions about your current and past property ownership for your means test.
Local authorities are aware of people attempting to get rid of property to reduce the value of their assets. This is known as deprivation of assets. Bequeathing a property or putting it in trust can also be viewed as a deliberate attempt to reduce your capital.
In this case, your property may still be included in your means test, at your local authority’s discretion.
For the first 12 weeks of your residential care, your local authority will pay for your care home fees. After that, they’ll consider the value of your home to assess how much you should contribute to your care home fees. This is known as ‘the 12-week property disregard’.
This 12-week property disregard can give you breathing space to decide whether you want to stay in care permanently. It can also relieve you of the pressure of having to sell up straightaway to fund your care home fees.
The 12-week property disregard scheme is for homeowners without enough savings, income or assets to cover their full care costs.
If your assets are valued as higher than the upper threshold, you’re not entitled to go on the disregard scheme. You’re also only eligible when you’ve had a care needs assessment by your local authority.
You can only be on the scheme for a total of 12 weeks in any 52-week period.
You move into a care home, leave residential care after six weeks but return within a year. This means you can only go back on the scheme for another six weeks.
Your stay in the care home may have been temporary to begin with. If this is the case, the 12 weeks run from the date it was decided that your care is permanent.
You may have initially paid your care home fees without help from the authority. In this case, the 12-week disregard applies from the date you subsequently qualified for financial assistance. This will only apply if your property hasn’t been sold.
You’ll have to pay the full cost of your care home fees straightaway if:
In this case, your local authority will cancel its contract with you, and you’ll have to make a private arrangement.
After 12 weeks, the value of your home is included in your means test. At this point, your contribution towards your care home fees will be recalculated.
It’s likely that you’ll then have to pay the full cost of your care home fees. However, the increase may be treated as a deferred payment.
If you’re eligible for a deferred payment, your local authority will make up any shortfall until your property is sold. When your property is sold, you’ll repay the balance in full.
Consider taking independent care fees advice before making your final decision on how you’re paying for care.
There are times when your local authority may exclude some of your assets or income from your means test. For example, if your spouse or partner can’t afford to run the household without contributions from your income or savings.
This is another reason why having a means test is a good idea.
If you’re receiving care in your own home, you’ll still have your normal daily living costs to consider.
The means test takes this into account. You must be left with sufficient funds to pay your living costs such as bills and food. This is the minimum income guarantee.
|Weekly minimum income guarantee 2018/19|
|You’re single and have reached the qualifying age for Pension Credit||£189.00|
|You’re single, have reached the qualifying age for Pension Credit and you’re a carer||£232.25|
|You have a spouse or partner and one of you has reached the qualifying age for Pension Credit||£144.30|
Your care fees may leave you with a weekly income that’s less than the minimum income guarantee. If this is the case, you can ask your local authority to review your care fees.
You can ask for a disability addition of £40.35 a week to be added to your minimum income guarantee if:
However, your local authority may not agree with this interpretation of the charging regulations.
In England, your local authority won’t pay for home care if it costs more than a care home.
In Scotland, there’s no means test for over-65s, as personal care is free for this age group. However, you’ll still be charged for additional services such as:
In Wales, authorities should cap charges for non-residential social costs care at £80 a week. This cap on charges doesn’t include services that have a flat rate charge, such as 'meals on wheels'. These services are charged separately to any capped charge for care at home.
To arrange your free means test, you can contact the adult social services department of your local authority.
If you live in Northern Ireland, you can contact your Health and Social Care Trust.
There may be a wait for your means test, depending on where you live. It’s important not to rush the process as the outcome will help decide who’ll be paying for care for you.
Before you have your means test, make sure you’ve got all the details of how much money you have. This includes:
A Deferred Payment Agreement delays paying your care home fees until you either sell your home or pass away – using your property as collateral.
You can consider this option if you live in residential care. And you can choose this regardless of whether you’re paying all or part of your care home fees.
A Deferred Payment Agreement helps you fund the cost of your care home fees without having to sell your home.
Instead of paying your care home fees as you receive the care, your local authority defers payment until you die. When you die, your home is sold. The balance of the care home fees (plus interest) is then repaid from the proceeds.
To qualify for a care home fees Deferred Payment Agreement you must:
A deferred payment agreement can’t be used to pay for short stays (also known as respite) in a care home or nursing home.
Your local authority has to offer you a Deferred Payment Agreement when:
Your local authority must also tell you about the scheme and how it works if:
Local authorities are encouraged to offer the scheme to anyone they think would benefit who doesn’t fully meet the criteria.
For example, your local authority is encouraged to offer you a Deferred Payment Agreement, if:
In principle, you should be able to defer your full care home fees, including any top-ups. However, to make sure the deferral’s sustainable, local authorities have discretion over the amount people are permitted to top up.
Local authorities should accept any top-up deemed to be reasonable – once they’ve considered affordability, sustainability and available equity.
The Care Act also outlines a framework for recovering any debts that result from paying for care. These are debts that may have resulted from your local authority paying for your eligible care and support needs.
In the first instance, your local authority should offer you a Deferred Payment Agreement, where possible. If you reject this, they can make a claim to the County Court for a judgment to recover a debt.
Your local authority may refuse to enter into a Deferred Payment Agreement despite you being eligible, if:
The equity limit is the amount that can be deferred and will depend on the value of your property. Local authorities must instruct a valuation of the property and the cost of this valuation may be passed to you to pay. You can have your own valuation carried out as well. If the two valuations are significantly different, you’ll need to agree a value before going ahead with the Deferred Payment Agreement.
The equity limit is calculated by:
The equity limit provides a cushion against falls in house prices and accrued interest charges (see below).
As your debt reaches 70% of your equity limit, the local authority should revisit your situation.
Since 1 April 2015, local authorities can charge interest from the start of the agreement. However, the interest rate mustn’t exceed the maximum amount specified in regulations.
The maximum interest rate charged is based on the gilt rate plus 0.15%. The gilt rates are published by the Office of Budget Responsibility (OBR). This is reviewed twice a year. It applies from 1 January to 30 June and from 1 July to 31 December each year.
Interest is added on a compound basis. It then accrues on the amount deferred, even if the equity limit is reached.
Interest still applies during breaks in care - and after the person who has the deferred agreement dies. The interest will carry on being added until the deferred amount is fully repaid.
You can repay a deferred payment at any time. You can also make partial repayments.
When you die, the executor of your estate should arrange repayment of the money owed to the local authority. This should usually be done within 90 days.
Interest will carry on being added to the debt until the deferred amount is fully repaid.
Before you choose a Deferred Payment Agreement to pay your care fees, your local authority should mention regulated financial advice. They should also be able to help you find independent financial advisers who are qualified and accredited.
A financial adviser can help you consider whether equity release or another care fees funding solution would be better for you.
A means test determines whether you pay your care costs or if they're paid for by the state.
Some people consider giving away their money and property so they can qualify for state support. This is known as deprivation of assets.
Deprivation of assets doesn't guarantee you’ll receive state support. Local authorities are increasingly employing ‘care home fees avoidance officers’ to help clamp down on such moves.
There are schemes which promise to help you avoid selling your home or reduce your assets to pay for care. We recommend you treat these with extreme caution.
Your home is usually your largest asset. It can also be the main asset people consider giving away.
However, doing this won’t necessarily remove the value of your property from your means test. When your local authority carries out your means test, to see if you’re eligible for state support, they’ll ask if:
If you don’t currently own a property but you did previously, your local authority will look into your history. They’ll investigate whether you gave your property away to avoid paying for care.
If their findings show you gave your property away, they’ll treat it as if you still own it.
In this scenario, the value of your property will be added to your other assets for your means test. You then won’t get any funding until this amount is depleted by care costs to below the lower means test limit.
There’s no time limits on how far a local authority can go back when they’re considering deliberate deprivation of assets. If you gave your property away, your local authority can ask the new owners to pay towards your care fees.
Local authorities will also look for other possible examples of deprivation of assets, such as:
Asset protection trusts work by putting property into a trust for someone else, for example friends and family. This means the property is no longer held in the name of the person seeking care.
Putting money into investment bonds with a life assurance element, is one of the most common ways people try to protect their assets. This is because they’re technically non-income producing insurance products and are therefore exempt from the care fees mean-testing process. However local authorities will include bond income within the means test.
People often try to reduce the amount in their own bank accounts by giving away cash to friends and family. This can be to help friends and family pay off debts - or create a deposit for their own home.
For some, the easiest way to reduce their capital is to spend it.
Whatever method you may use to try to protect or reduce your capital before you need care, there are risks. These risks apply whether you eventually need care at home or in a care home.
If it’s considered that you’ve deliberately deprived yourself of your assets, these assets can be regarded as ‘notional capital’. This means they’ll still be taken into account when deciding on level of assets available.
If it’s considered that you’ve deliberately transferred your assets to others, your local authority can also seek to reclaim them.
Previously this applied if the deliberate deprivation occurred within six months of you approaching the local authority for care funding. However, local authorities are now looking further back than six months. They can refuse to fund your care fees if you gave away your property over six months before applying for help.
Deprivation of assets can have other consequences beyond being ‘found out’ by the local authority. If you need long-term residential care and you’ve given away the majority of your assets, you may struggle financially. Once an asset has been transferred, the new owner has complete control over it.
Giving away your home can cause other problems too. For example, you may want to give your home to your children and carry on living there. However, if they’re then declared bankrupt - or they divorce - they might have to sell the property. This could potentially make you homeless.
With so much at stake, it's wise to take specialist care fees advice. This will help you to make informed decisions about your care funding options. It’s a good idea to find a local, qualified care fees adviser.
You may have heard of a ‘lifetime cap’ regarding how much people pay in care fees. Currently there are rumours but no firm plans to introduce a cap on care fees paid over someone’s lifetime.
The Care Act 2014 intended to limit how much people paid towards the cost of their care. However, this cap implementation was then delayed to 2020. After that, at the end of 2017, the government announced it won’t implement a cap on care costs in 2020. Instead, the government promised a fresh review of the future system of social care for elderly people. Their proposals are due to be published towards the end of 2018.
The calculator shown below was designed to help people understand how the proposed lifetime care cap would have affected them financially. However, with no firm plans for a cap as yet, you shouldn’t use this calculator to consider how to pay for care costs.
Only costs incurred after the care cap had been introduced would have counted towards the limit. All care costs paid out before this point would have been disregarded. This calculator shows how the care cap would have worked if it had been introduced.
Use our Care cap calculator to find out more.
Use our directory of specialist care fees advisers to find expert advice in your area.