Dementia care – how do I pay for it?

Written by Zenya Smith 19/02/24

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Dementia Care

Unfortunately, dementia care isn’t usually free, so working out how you’ll cover the cost of care is an important step on your journey. 

In this article, we’ll look at some of the ways people fund dementia care, and where that money goes.

 

Do I have to pay for dementia care? 

Unlike medical care through the NHS, social care isn’t free in the UK. Some people do qualify for funding support from their local council or the NHS, but this is dependant on the level of care they need. 

Most people receiving dementia care are paying for it themselves. According to a co-authored report by the Alzheimer’s Society and the Care Policy and Evaluation Centre (CPEC), In England alone, the Government pays around £5.2 billion in dementia care costs a year, while people with dementia and their families pay around £8.3 billion. 

Unfortunately, people with dementia may end up paying more for care than people with other illnesses or medical conditions. This is because dementia doesn’t get better, and people rely on social care to sustain their quality of life rather than medical treatment – which would be covered by the NHS. 

It’s why it’s always worth applying for funding if you have dementia. Dementia is a progressive condition, so while you or a loved one may not be eligible now, you may be in the future. 

 

What is the cost of dementia care in the UK?

The cost of dementia care can vary wildly depending on the following factors –

  • The level of care you need. For example someone who only needs occasional support with cooking or getting dressed will likely pay less than someone who needs full-time care and supervision or specialist nursing care such as PEG feeding. 
  • The type of care. Whether you choose to move into a care home, or be cared for in your own home. 
  • Your financial situation. If you have less money in the bank and fewer personal assets, you’ll get more of your costs covered for you by the local council.
  • Where you live. Care can cost more in some regions of the UK, for example London is usually more expensive than the North of England.

 

It’s estimated that dementia care can cost a total of between £100,000 and £500,000. 

 

In Scotland? 

If you’re in Scotland the Government will offer funding toward the cost of any personal care you require. Since 2002, everyone in Scotland over the age of 65 has been entitled to free personal care if they are assessed as requiring it by their local social work department. You’ll get a flat rate of just over £200 a week to put towards your care costs. Find out more here.

Direct costs of dementia care

As mentioned, different types of care have different costs, lets look at some examples now. 

Cost of care homes 

Most care homes are set up to cater to people with dementia. They’ll provide care home residents with their own room, and have support staff available to help with washing and dressing, taking medicines
and going to the toilet. Meals are cooked for residents, and usually served in a communal dining room. Most homes have a range of lounge and garden spaces, and offer a schedule of social activities for residents too. 

Some care homes will have a separate unit  – usually a dedicated floor or wing for people in the later stages of dementia who are frail or experience more severe symptoms. Here care staff will usually be highly skilled in dementia care, and nurses are also on hand 24/7. 

As of January 2024, the average cost of a care homes was estimated to be £928 a week, but could reach £2000+ depending on needs. 

You may choose a specialist dementia care home instead. These facilities only cater to people with dementia and have been designed to maximise independence while ensuring residents are safe and secure. The layout of the buildings are easier to navigate, and doors carpets and corridors are often in bold, distinct colours to make it easier for residents to work out where they are. Staff are all trained in dementia care, and activities focus on reminiscence and complementary dementia therapies, such as music and singalongs and art. 

As of January 2024, dedicated dementia care home fees could amount to between £1,037 and £3000+ a week. 

Residential care fees will usually include both direct costs i.e the cost of the care itself, and additional services like housekeeping, utilities and catering.

 

The cost of home based care 

The cheapest home care option is visiting care (sometimes called hourly care, or domiciliary care). This involves a professional carer visiting you or your loved one at home at agreed times. Some people only require a few visits a week to help with things around the home or offer companionship, while others need multiple visits each day to help with cooking meals, showering, and following a restful bedtime routine. 

The price of visiting care varies a lot depending on your level of need and the provider you choose, many providers charge around £23 to £34 per hour. Some providers may charge a higher rate if there aren’t may carers available in the local area and they have to travel from further afield. 

Live-in care means having an experienced carer move into a spare room in your home. They’ll live with you – offering support in any areas you need throughout the day, and sleeping when you sleep during the night. Their goal is to help you stay as comfortable and independent as possible in your own home. It’s a popular choice for people with mid-late stage dementia as it ensures someone is there 24/7 to prevent wandering and accidents, and offer reassurance. Live-in care can cost between £900 and £2000+ a week, depending on the factors we’ve mentioned above.

What are the indirect costs of dementia care

There are indirect costs to consider too, these are often less obvious. 

If you’re a family member providing unpaid care to a loved one with dementia, you’ll likely be investing a lot of time. This may lead to fewer available working hours or lost wages if you’re balancing your care responsibilities with a job. In itself, the informal carer burden in the UK saves the government millions in care funding every year. 

Dementia care can come with other costs – travel to and from memory clinics, doctors appointments and day centres, adapting the home to make it more dementia friendly, and replacing day to day items around the home to increase contrast can all add up. 

 

What happens if you can’t afford dementia care? 

Local authority funding

The social services department of your local authority will carry out a free needs assessment. This is a comprehensive assessment of your daily life and what you find difficult, usually completed in person by a social worker. If this identifies you require professional dementia care, you can then ask for a financial assessment. If your assets total less than £23,250, you’ll be entitled to some level of financial support from the local authority. You can request this in the form of a direct payment and then choose your own care provider, or let the local authority choose and pay a provider on your behalf. 

The amount of local authority funding you’ll receive will reflect how much the council thinks is adequate to meet your needs, often benchmarked against the care providers they use. This means if you choose to receive your funding as a direct payment and choose your own provider, you may find your funding amount may not be enough to cover the full costs. This means you’ll be responsible for making up the shortfall. 

People with dementia don’t automatically qualify for funding, however if your symptoms are impacting your ability to do everyday tasks, risking your safety, or having a major impact on your quality of life you’ll most likely be eligible for some level of funding. 

 

NHS Continuing Healthcare 

NHS Continuing Healthcare (CHC) is a fully funded package of care that some people can claim due to a disability, accident or illness. If eligible you won’t need to pay a penny toward the cost of your care. 

Much like local authority funding an assessor will meet with you and go through specific questions to understand your health needs and whether you could benefit from professional support. 

However, unlike a local authority care assessment that looks at your care needs i.e such as your ability to keep your home clean or socialise, the NHS assessment only looks at your primary health needs. These are instances when your illness or condition means you need regular help, for example if you need support with breathing, are at risk of injury, or need help with medication. 

Again, unfortunately having a dementia diagnosis doesn’t mean you’ll qualify for Continuing Healthcare. Whether you get it or not depends on the complexity, intensity of your symptoms, as well as how unpredictable they are. 

NHS-funded nursing care

NHS-Funded Nursing Care is a completely different funding stream that ONLY covers the nursing element of any care you receive.

It’s really important to ensure you apply for NHS Continuing Care first, and don’t accidentally end up applying for funded nursing care because of bad advice. This could result in you paying thousands of pounds in care fees that you could have had covered.

That said, if you find you’re not eligible for Continuing Healthcare, applying for NHS-Funded Nursing Care is often the next logical step. This can be worth £209.19 to be £287.78 per week, depending on your needs. A significant amount towards your total care costs.

 

The following are complex financial products. It’s important to consult a financial adviser before making a decision about how to pay for dementia live-in care.

Savings, pensions or loans

If you’re not eligible for funding and need to pay for care yourself you may be able to use your savings or a pension. If more money is needed you may wish to take out a loan from a building society or bank. In the short term, this may be useful so that you can continue to live independently in your own environment while you consider other longer-term options for funding.

Equity release

Using your property to release some equity to pay for private care is a popular solution. You’ll continue to live in your home and access some of its value at the same time. This is a tax-free way of funding in-home care. There are two main methods of releasing the equity in your loved one’s home; reversion plans and lifetime mortgages.

A reversion plan

In this type of equity release, some or all of the property is sold to the reversion company. You’ll still be entitled to live in the home rent-free for as long as they need, and the company is recompensed when it’s sold. This includes benefitting in any increase in the property’s value at that point.

The reversion company will usually pay between 30 and 60 percent of the property’s value, but this depends on factors such as your health and age. If they expect to have to wait a long time for a return on their investment, the offer will likely be lower.

A lifetime mortgage

A lifetime mortgage is a loan based on the property value. The mortgage is repaid when the owner of the property dies, and it’s sold. However, the property owner’s beneficiaries will retain any surplus money should the property have increased in value when it’s sold. Conversely, if the home’s value does not meet the amount that needs to be repaid to the mortgage company, beneficiaries would be liable to cover this unless they have arranged a no-negative equity guarantee. If this is in place then any outstanding balance owed on the mortgage is wiped.

The major advantages of lifetime mortgages are that the person’s family may still benefit from the sale of the property if it sells for more than the outstanding loan amount and that the equity released is tax-free.

It is always advisable to take professional advice before deciding which financial option is the best in your individual circumstances.

A care annuity

Dementia care or elderly care can be paid for by a care annuity, an insurance policy that provides a guaranteed income to fund care for the life of the individual. It’s bought with a lump sum invested in the company.

A care annuity can also be called an ‘immediate care plan’, an ‘immediate need care fee payment plan’ or an ‘immediate needs annuity’. Care annuities can be index-linked providing protection against inflation. In some cases, it’s possible to arrange capital protection so that if you pass earlier than expected, some of the fees become repayable. Buying a care annuity also makes sense for people who want to lessen their exposure to inheritance tax, because it will reduce the amount their estate is worth.

It’s not the ideal solution for everyone who wants to fund home care, especially if the need for care turns out to be temporary. Essentially a care annuity is a best-guess assessment of how long care will be needed, and as such, it is possible to lose money on it.

Speak to SOLLA 

Elder is an affiliate member of SOLLA –The Society of Later Life Advisers. They help older people and their families in finding trusted accredited financial advisers who are experienced in working with and understanding financial needs in later life.

To find out more or to find an accredited adviser near you visit their website. 

Learn more about dementia care

Take a look at more Elder guides on living with and caring for dementia. 

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