Living in a Care Home: What Happens if the Money Runs Out?
Jen Workman2021-02-18T10:02:21+00:00February 17th, 2021|
8 mins read
Around 418,000 elderly people live in care homes in the UK, which represents about 4% of people over 65. There can be huge benefits to moving into a care home or nursing home, especially for elderly people who require regular care. Many residents also enjoy the social element of this type of accommodation.
Of course, making the decision to move into a care home isn’t simply a matter of choosing a home and reserving a room. The process of moving into residential care usually involves the local social care team who will assess the needs of the elderly person in question to ensure a suitable placement can be found.
As part of this process, the social care team will also carry out a financial assessment to determine who will be responsible for paying the care home fees.
Who pays care home fees?
Full time residential care is a big expense. The question of who will be responsible for paying for it depends on a number of factors.
If the elderly person is moving into a care home due to a disability or a complex health condition, they may qualify for NHS continuing healthcare, which means that the full cost of their residential care will be covered by the NHS.
However, most elderly people will not qualify to have their care covered in this way. In these cases, who pays for care will depend solely on a financial assessment.
In general terms, any individual in England who has more than £23,250 in savings will be responsible for paying for their own care, which is known as ‘self-funding.’ Individuals who own their own home may also fall into this category, though there are exceptions to this, such as if their spouse, partner or other dependent is still living in the house.
If the individual in question has less than £23,250 in savings and is not a homeowner (or if their spouse, partner or dependant is still living in the house) their local city council will be responsible for paying for all or part of their care. (Elderly people who have between £14,250 and £23,250 in savings will usually qualify for partial financial support.)
The elderly person will be awarded a ‘personal budget’ which can be paid to them or directly to the care home of their choice.
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If the council is covering the cost of residential care for an elderly person, they will provide a list of available care homes that will be affordable with that person’s personal budget.
It may be that the elderly person would prefer a different (more expensive) residential home, or that they would like to ‘upgrade’ the package offered by the council-approved home (such as opting for a bigger room or a nicer view).
Top up fees should not be paid by the elderly person themselves, as they are not considered to have the money to do so if they are eligible for full council funding.
What happens if you are no longer able to pay?
A care home is likely to be a long term solution. Even if an elderly person moved into a home with significantly more than £23,250 in savings, they may find these savings don’t last as long as they need them to.
In situations where an elderly person’s savings drop beneath the £23,250 threshold (or £14,250 if they have previously been receiving partial funding), another financial assessment will be needed.
At this point, the council will likely agree to start funding the individual’s care. Though this may sound like it solves the problem… it’s important to remember that the personal budget offered by the council may not cover the fees the elderly person has been paying in their existing care home. This may create a situation where there is a shortfall between what the council is prepared to pay and what the care home is prepared to accept.
A similar issue might arise if top up fees have been involved and the elderly individual’s family members are no longer able to pay them.
Could an elderly person be evicted from a care home if they’re no longer able to pay?
Almost everyone will agree that evicting elderly and vulnerable people from their care home is not in their best interest. Because of this, this is a situation that everyone involved will likely be keen to avoid.
What exactly happens in these situations will depend on the contract the elderly person and their family have with the residential care facility. Some contracts may say that the home will accept council contributions as payment in full if/when the elderly person runs out of money. Others will offer a grace period while residents make other arrangements.
Of course, there will be occasions where a home is no longer able to accommodate a resident should they revert to council contribution payment level. In these cases, you may be able to renegotiate with the care home. For example, it may be possible for the individual to move to a smaller or shared room in order to cover the shortfall.
In other cases, there will be no alternative than for the elderly person to move to a care home that will be fully covered by their personal budget from the council. If this happens, everyone involved should work together to ensure the transition is as smooth as possible.
Is there anything you can do to prevent this?
The most effective way to avoid this situation is to carefully plan in advance. When setting out to choose a care facility, it’s important to carefully consider the available finances and determine whether each option will be affordable long term. Obviously these things are not always predictable, but some careful number crunching could help to avoid unpleasant situations later on. It might be wise to consult with a financial advisor who has experience with this. We recommend choosing an advisor who is a member of the Society of Later Life Advisors (SOLA).
It’s also really important to read any contracts you are given by the council and your chosen care home very carefully. Pay close attention to whether or not assurances are given to residents who find themselves in this situation in the future. You could consider asking a specialist solicitor to help you with this, specifically a solicitor who is a full accredited member of Solicitors for the Elderly (SFE).
Once an elderly person has moved into a care home, it’s important to continue to monitor their financial situation carefully. This means you will have plenty of notice if finances are going to dip below the savings threshold and will be able to act accordingly to arrange a new financial assessment.
Finally, we’d suggest that you monitor the elderly person’s health and ask for another needs assessment if there are any significant changes. Deteriorating health could mean that the elderly person is entitled to additional care funding.
How Roche Legal can help
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If you would like guidance about any aspect of care home fees or care home top up fees, or if you are concerned about somebody who may no longer have capacity to make their own decisions, please do not hesitate to get in touch with us.