Private Home Care Funding – Options and Advice

One of the biggest concerns families face when arranging care for an elderly loved one is how to pay for it. If you find out that your parent isn’t eligible for local authority funded care (perhaps because they have savings above the threshold or income that puts them out of range), you fall into the “self-funder” category. This means you’ll be arranging and paying for care privately. The costs of home care – whether it’s a carer visiting daily or a full-time live-in carer – can add up significantly. But don’t panic: with careful planning and knowledge of available resources, you can make private funding of care manageable. In this article, we will discuss various options for funding home care out-of-pocket, from using savings and pensions to tapping into benefits and financial products like equity release or annuities. We’ll also share tips on budgeting and controlling costs while still ensuring your loved one gets the support they need.

Understand the Costs of Home Care

First, it’s useful to have a ballpark idea of what home care costs privately, so you can plan accordingly:

Hourly Visiting Care: In the UK, hourly rates for caregivers from an agency typically range from £20 to £30 per hour (the higher end often in the Southeast or for shorter visits). If you hire directly (say through an introductory service or privately), you might pay the carer’s wage which could be around £15–£18/hour, plus potentially some fees if using an intro platform. So, four 1-hour visits per day could be roughly £80-£120 a day (£560-£840 a week) if through an agency.

Live-in Care: For a single person, a live-in caregiver might cost around £800 to £1,200 per week when arranged privately (some high-end or nurse-qualified carers may cost more). Agencies often quote in the £1,000+ range per week, whereas an introductory service might find self-employed live-in carers around £800-£900/week. Note that live-in care requires providing the caregiver with accommodation and meals in the home as well.

Additional Expenses: Beyond paying caregivers, consider other related costs: increased utility bills (with someone at home all day, heating etc.), home adaptations or equipment, maybe a care agency one-off assessment fee, etc. If your loved one needs incontinence products or special nutrition, those are extra. Factor these into your budget.

Knowing the likely monthly burn rate for care helps determine how long existing funds will last and whether you need to bring in additional funding sources.

For example, if Mum has £50,000 in savings and needs a live-in carer (~£4,000 a month), that savings would last just over a year on its own. That’s why it’s crucial to maximize use of other resources and plan for the long haul.

Tap into Benefits and Entitlements First

Before diving into personal finances or complex financial products, make sure you are claiming any state benefits and entitlements that can help with care costs:

Attendance Allowance (AA): This is a tax-free benefit for people over 65 who need help with personal care due to illness or disability. It’s not means-tested, so income/savings don’t matter . There are two rates (currently around £68 and £101 per week) depending on if help is needed day or night, or both. While AA won’t cover full care costs, it can contribute a few hundred pounds a month, which helps. Use it towards paying for a carer or respite. To get AA, you fill out a form detailing the care needs – be thorough and assume worst days scenario. If awarded, you can also potentially get more Pension Credit (if on that) or reductions in Council Tax (via Severe Mental Impairment discount, etc., if applicable).

Carer’s Allowance: If you or another family member has cut work hours or stopped working to care for someone at least 35 hours a week, you may claim Carer’s Allowance (~£76/week). Note, you can’t get this if you earn above a certain amount or are over State Pension age (or rather you can, but it offsets pension). Carer’s Allowance won’t pay for professional care, but it compensates the family carer a bit.

Pension Credit: If your loved one’s income is low, ensure they’re claiming Pension Credit. Aside from boosting income, getting it can passport to other help (like council tax reduction, free dental, etc.).

Disability benefits (under 65): If by chance you’re caring for someone under 65 who needs care (maybe an early-onset condition), they’d claim Personal Independence Payment (PIP) instead of AA. Similar idea.

NHS Continuing Healthcare (CHC): We discussed this in Article 5 – if eligible, that’s full funding. Even if unlikely, consider requesting an assessment if needs are very high, because if by chance they qualify, care could be free .

Council Tax Discounts: If your loved one lives alone and has a diagnosis like dementia (or severe cognitive impairment), they might be eligible to be disregarded for council tax, which along with sole occupancy 25% discount could equal a 100% exemption in some cases. Each council has forms for this – requires a doctor’s certification of severe mental impairment. This saves money which can go towards care. If living with someone, could still get SMI disregard so only one adult counted.

Local council support for adaptations: As mentioned in Article 13, small home adaptations under £1,000 are provided free if recommended by council OT . And Disabled Facilities Grants can fund larger adaptations (means-tested). If your loved one might need a stairlift, wheelchair ramp, etc., use those programs rather than paying privately – it’s effectively funding that saves your care budget for actual care hours.

Every bit helps. Getting AA, for example, could cover maybe 5-6 hours of home care a week. That might be an extra bath visit or a sitter so you can rest, etc.

Using Income and Savings Wisely

After benefits, the primary source of funding care is often the person’s income and savings:

State Pension and Other Income: Typically, the person’s pension(s) and any investment income will go first towards care bills. Set up those to pay into an account that’s used for care expenses. If the person has annuities or rental income, that too. Essentially, calculate monthly income versus care costs to see the shortfall.

Savings and Investments: For short to medium term, drawing on savings may be straightforward. For example, using cash savings or selling off easily liquidated investments (stocks, bonds) to fund care for a while. It’s usually advisable to use accessible funds first before considering more drastic measures like selling property. If there are significant investments, talk to a financial advisor about the most tax-efficient way to draw them down for care.

Careful Budgeting: Look at other expenditures that could be trimmed now that care is in place. For example, if an older person has a car but no longer drives due to having a carer, you could sell the car and save on insurance/maintenance – those savings can funnel into care. Cancel subscriptions not needed. Every £10 saved is a bit towards the care bill.

Prioritize Needs: You might not afford all possible care right away, so prioritize essential hours. Maybe you can manage evenings, so you pay for morning help only. Or you opt for a live-in carer (covering 24/7 basic needs) and drop expensive multiple daily visits, which sometimes is more cost-effective if needing many hours (we can help compare if live-in might be cheaper than, say, 4 separate visits adding up to 6 hours daily).

An important consideration: make the money last. It may be tempting to pour in tons of care early on, but if the person’s needs might increase, preserve some funds for later when 24/7 care might be essential. Use just enough care to keep them safe and well and adjust as needed. If you overspend and deplete assets too soon, the person might then fall on council funding but perhaps with fewer choices.

Speaking of which: once savings drop to the low £20k’s, definitely contact the council to reassess for funding support . You don’t want to wait till money is gone; it takes time to arrange new funding.

Considering Housing Wealth:
Equity Release or Letting Property

For many older people, a significant asset is their home. If your loved one owns a house and is receiving care at home, that house is not counted by the council for means testing (as long as they live in it). But it can be a resource to fund care:

Equity Release (Lifetime Mortgage): This is a financial product allowing homeowners (usually over 55) to borrow against the value of their home, with no repayments until the house is sold (interest rolls up). For example, you could take a lump sum or monthly drawdown secured on the house to pay for care. This can provide needed cash flow without having to sell the home or move. However, equity release will reduce the inheritance value as interest accumulates, and setup can have fees. It’s important to talk to a specialist advisor who is a member of the Equity Release Council to ensure it’s suitable. Equity release can be a good solution for those determined to stay at home but who are cash-poor and house-rich.

Downsizing or Selling and Moving in with Family: Sometimes families decide to sell the parent’s home and either have them move to a smaller place or in with a family member, using sale proceeds to fund care. If moving in with you, you could then hire carers to come to your home for them. This is a big decision emotionally, but financially, selling a larger home can free up capital to fund years of care. Keep in mind if they move in with you and you become their main home, their contribution to household costs could be considered.

Letting the Property: If the person has moved into a care home or in with you (so not living in their own home), rather than leave the property empty or sell immediately, you might consider renting it out. Rental income could offset some care fees. However, if they still live in it and just have carers coming, you obviously can’t rent it out. But I mention in case of intermediate situations like temporarily in care home.

Deferred Payment Agreement (if relevant): If eventually the person did move to a care home and still owned a home, councils offer deferred payment (a loan against the home value) so you don’t have to sell the house immediately to pay fees. But again, for home care, that’s not in play since the home isn’t counted and they won’t fund until savings are low.

Using housing wealth is often how people afford long stretches of care. Just ensure to get professional advice so you understand implications (for example, equity release might limit the ability to later rent out or could have early repayment penalties if circumstances change).

Annuities and Insurance Products for Care

There are specific financial products designed to fund care

Immediate Needs Annuities (Care Annuities): These are offered by some insurers: you pay a one-time lump sum (premium) and they guarantee to pay a regular income towards care fees for the rest of the person’s life. It’s like buying a pension specifically for care. The amount of the lump sum depends on the person’s age and health (they medically underwrite – ironically, poorer health means cheaper annuity because they expect to pay out for fewer years). For example, you might pay £100k to get an annuity that pays £10k/year towards care fees for life. If the person lives longer than expected, this protects from running out of money, as the insurer covers however long. If they die early, the insurer keeps the remaining money (though some annuities have refund or capital protection options at extra cost).

Pros: Peace of mind that care costs (or a large portion of them) are covered for life, no matter how long. It turns an unpredictable expense into a fixed one.

Cons: It requires a large upfront payment and if the person passes away soon after, the money could be largely lost (unless you had a protection feature). Also, not many providers offer these and you need an expert financial advisor to set it up.

Long-Term Care Insurance: Policies that one might have purchased earlier in life to cover care costs now. These aren’t very common nowadays in the UK (not like in some other countries), but if by chance your loved one bought insurance that covers domiciliary care, now is the time to claim it.

Life Insurance with Accelerated Benefits: In some cases, if an older person has a life insurance policy, some modern ones allow taking some funds early in cases of serious illness or needing care. Check the terms of any policies.

Savings/Investment Drawdown Plans: If the person has a pension drawdown, you could allocate an increased withdrawal for care costs. Or consider rearranging investments to more income-generating ones to help feed into care payments.

Savings/Investment Drawdown Plans: If the person has a pension drawdown, you could allocate an increased withdrawal for care costs. Or consider rearranging investments to more income-generating ones to help feed into care payments.

All these options typically require advice from a financial advisor specialized in elder care planning. An advisor can help weigh an annuity versus drawing down investments or using equity release. Some advisors have a CF8 qualification (Certified in Long Term Care Insurance). Given the complexity, and potential large sums, professional advice is highly recommended to avoid missteps.

Family Contributions and Agreements

Sometimes family members pitch in financially:

Siblings might agree to each pay a share of costs to preserve inheritance later or just out of willingness. If multiple children can each chip in a bit monthly, that can fill a funding gap.

If one child lives with the parent and thus saves on their own living costs (like no rent), perhaps they contribute by providing more care or helping financially in lieu of rent.

Be cautious with family arrangements: It’s good to put any agreement in writing to avoid future misunderstandings or feelings of unfairness. For example, if one family member provides a lot of care unpaid (saving money), perhaps the parent’s will could compensate them more – but discuss openly. Or if one pays a big chunk for years, how will that be treated later? It can be sensitive, but clarity helps maintain family harmony.

Also, note that giving money to the elderly person to fund their care could potentially be considered deprivation of assets from the giver’s perspective if that giver later needed means-tested benefits, etc. But usually it’s fine; more relevant is not to give away the elder’s money to others if they might need funding, as councils may see that as trying to avoid care costs.

Creative Approaches to Reduce Costs

If funds are tight, consider some creative solutions:

Shared Living or Carer Share: If two elderly people in the same area both need part-time care, sometimes families arrange for one carer to serve both, e.g., live in with one but also assist the neighbor for some hours, splitting costs (this requires coordination and a willing carer, but can save money).

Adult Family Placement / Homeshare: There are homeshare schemes where a younger person lives with the elderly person free or low rent in exchange for some support/companionship (not full personal care though). Not a complete solution, but can supplement care hours.

Technology Aids: Use technology to reduce human care hours where possible – e.g., an automatic medication dispenser might remove the need for a carer visit just to give pills. Telecare (fall alarms, sensors) can reduce the need for constant supervision if risk is manageable, thus maybe avoiding a night sitter.

Day Centres: If the elder can go to a day care center once or twice a week, that provides care and meals during the day at much lower cost than a carer at home, and it gives family respite. Many areas have subsidized rates for day centres.

Respite Stays: Occasionally using a respite stay in a care home for a week or two can give the family or the budget a breather (for example, instead of paying a live-in carer non-stop, maybe every couple of months, the person stays in a home for a week which might be cheaper than one-on-one care, while the carer takes a break). This requires the person being okay with it though.

Keep Reviewing the Plan

Financing care isn’t a one-time set-and-forget. Circumstances change:

The level of care might need to increase, raising costs – plan ahead for that.

Conversely, if an elder’s condition stabilizes or improves, you might reduce paid care for a while to conserve funds.

Reassess benefits periodically (e.g., if needs increase, move from lower AA rate to higher).

If your loved one’s savings reach the council threshold, engage the council early for partial funding. As of now, once assets hit around £23,250, they’ll start to contribute on a sliding scale, and below ~£14,250 they cover care (with pension income contribution) .

Stay organized: keep track of care expenses, invoices, etc. Not only for your own budgeting, but in case you need to prove costs (for example, if applying for any charitable grants or when dealing with the council later).

Speaking of charitable grants, there are some charities that offer grants for specific needs or to certain professionals (like if your parent was in a certain industry, their benevolent fund might help). Turn2Us is a site to search for grants. These are usually small one-offs for equipment or short respite, but worth a look.

How Prime Eldercare Supports Self-Funders

At Prime Eldercare, many of our clients are self-funders looking for cost-effective yet high-quality care solutions:

Matching the Right Care Package: We help determine whether a live-in carer might be more economical than many hourly visits, or vice versa, for your situation. Our expertise can ensure you’re not over-paying for a setup that could be done differently. We can provide guidance on average costs, discuss splitting a carer between needs, etc.

Transparent Pricing: As an introductory agency, we typically charge a flat fee or small ongoing fee, and you pay the carer’s wages directly. This often is cheaper than paying agency hourly rates that include overheads. We aim to save clients 15-30% compared to traditional agency costs, which over months and years is substantial.

Flexible Arrangements: We understand finances can be fluid. If you need to reduce hours for a while or find a temporary solution until a benefit comes through, we work with you. Because you directly employ or contract with the carer, you also have flexibility to adjust the plan (with appropriate notice or negotiation with the carer). We can also assist with finding respite carers for short-term needs so that you don’t have to keep a full-timer on payroll during hospital stays, etc.

Advice and Resources: We aren’t financial advisors, but we’re well-versed in what other clients have done. We can share references to trusted financial advisors, or informational resources on things like Attendance Allowance or CHC (like our other articles). Our goal is to make sure you’re aware of all avenues, as we want the care to be sustainable for as long as needed.

Conclusion

Funding care privately can be daunting, but by leveraging all available benefits, carefully using assets, and considering financial products and family support, you can create a sustainable plan. It often ends up being a patchwork of sources – a bit from pension, a bit from savings interest, some from Attendance Allowance, maybe a contribution from family – that together cover the monthly bills.

The key is to plan early. If you foresee care needs, start thinking about funding before crisis hits. And involve your loved one in decisions if they’re able – it’s their money and life, after all.

Finally, don’t sacrifice quality out of fear of costs. There are ways to economize, but ensure your loved one’s essential needs are met. Sometimes spending a bit more on good care can prevent costlier issues (like falls leading to hospitalization).

If you’d like help navigating care options and their costs, or to find an excellent carer within your budget, Prime Eldercare is here to help. Contact us to discuss your situation. We can work out a care arrangement that provides great value for money and, most importantly, keeps your loved one safe and comfortable.

(For a wider look at navigating both private and public funding, check out Guide 3: Funding Care in the UK – A Comprehensive Guide, which our team has compiled to help families understand council means tests, NHS funding, and private funding strategies in one place.)