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Paying for Live-in Care

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There are several ways to pay for your live-in care.

Own Income from investments and savings

You may receive sufficient income from pensions and existing savings and investments to pay for care in full or as a top up.  If you have savings or investments, speak to a financial advisor, it might be that they can improve the income that you receive from your savings and investments which will help to pay more of the costs.  Savings and Investments

Care Fees Plans (as known as Immediate Needs Annuities)

In return for a once-off lump sum, you receive a guaranteed tax free income for life to cover the cost of your care, provided that it is paid directly to the care provider. This can offer considerable peace of mind knowing that your care cost is covered until you die.  If there is any money left over, you and your family save it or invest it and can plan for inheritance tax.  See Care Fees Plan page

Family Contribution 

Your family may be able to cover some or all of the cost, or the difference in cost, as a top up. If this is not an option, you will have to use your savings or investments, or equity release schemes. 

Equity Release

Equity Release can either be through a lifetime mortgage or a home reversion plan. As long as someone is still resident at the property, this enables funds to be released while still allowing the home to be retained (however, the debt has to be cleared on your death). 

Lifetime Mortgages - These are special types of loans, usually designed to run for the rest of your life. You borrow money secured against the value of your home to give you a lump sum now or a regular income; you do not make mortgage repayments to the lender. The loan and accrued interest is repaid to the lender when you die or you move into a residential care home. You continue to own your own home. 

Home Reversion Plans - These schemes involve the sale of all or part of your home to a reversion company in return for a cash sum or regular income and the right to live rent-free in your home for the rest of your life. After you die, the house is sold and the value of the proportion of your home that you have sold is paid to the reversion company. 

For further informnation see Equity Release page>>>

Care Fees Plans or Immediate Needs Annuities

What is it?

Immediate Needs Annuities or Care Feeds Plans are insurance plans exclusively for individuals who are at the point where care is needed, whether this care is being provided in the client’s own home, or in a registered nursing or care home. 

A lump sum is used to purchase a guaranteed level of income, payable for the remainder of the individual’s lifetime, this income is referred to as an ‘annuity’. The cost of the annuity is determined for each person individually following an assessment of their health. This assessment will include any medical conditions and whether or not they have difficulty with tasks such as dressing themselves, or climbing stairs, tasks which are sometimes referred to as ‘activities of daily living’. For this reason, annuities tend only to be suitable for individuals who, following assessment, are thought to have some degree of reduced life expectancy. 

The monthly income from the annuity is paid directly to the care provider, and so is not considered part of the client’s personal income, which means that the payment is completely tax free. 

One of the main benefits of buying an Immediate Needs Annuity is that it will provide a guaranteed level of income for the client’s life, irrespective of how long they live. This means that even if they live longer than expected the income will continue. On the other hand, if death occurs earlier than expected then the overall cost may have been higher than had the care been paid for directly. However, for many families, this risk is outweighed by the advantages of certainty and peace of mind that the rest of the estate is protected from the impact of care fees. This is a matter of individual choice, made after being aware of all the other options. 

Advantages Disadvantages Ways to plan against the disadvantages
• A lump sum is used to purchase the annuity which guarantees to pay a specifed level of income for the remainder of the individual’s lifetime, giving peace of mind.
• The annuity can be used to cover the cost of care received in the individual’s own home, or in a registered care or nursing home.
• The annuity is paid on a monthly basis directly to the registered care provider and, as such, is not regarded as personal income. Payments are therefore made on a completely tax- free basis.
• Medical examinations are not required. Underwriting is based on a report obtained from the individual’s GP and, if they are already receiving care, from the care provider.
• Once established the annuity is not subject to future reviews i.e. the level of income is guaranteed for life.
• Establishing the annuity will not a ect the client’s entitlement to Attendance Allowance or registered nursing care contributions.
• If death occurs during the early years the amount paid may be substantially more than the amount of income received.
• The annuity will not necessarily cover increases in the cost of an individual’s care. Increases in care costs depend on a number of factors, including the individual’s on-going medical conditions and in ation in the cost of care provision.
• Once established the annuity cannot be altered in any way and there is no cash-in value at any time.
• Due to the annuity’s tax free status the amount of income payable must not exceed the amount of care fees payable to the care provider.
• Income paid to the care provider will a ect any means tested bene ts such as Pension Credit but not bene ts awarded because of disability such as Attendance Allowance.
• An immediate needs annuity is only suitable for individuals who have at least some degree of reduced life expectancy.
• Capital Protection can be included to provide a potential return to the individual’s estate on death.
• Optional increases in the level of income can be included to help cover the cost of future increases in care fees or if more care is needed.
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