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Planning for long term care

14/06/2019 … Author:

The concern of being able to pay for care cannot be underestimated. We know it can weigh heavily on people. With no clear picture as to how much the government will spend on social care and at what level any cap might be set, and consequently with no clarity on what the state will pay for and what individuals will have to fund themselves, it is more difficult to effectively plan ahead for the provision of care, should it be needed, as well as for matters such as passing on of wealth to beneficiaries.

Without these clear guidelines, the wealth management and insurance industries have greater difficulty structuring solutions that will help people in their planning.

Long term care funding is a major issue for the country and for a growing mass of people who may be in need of these resources. We can only hope that by the next Budget, the uncertainty around Brexit will be over and the Government can turn its attention to major challenges for the nation such as social care funding.

The need for advice

The Government has made it clear that people should seek professional advice when choosing how to finance their long-term care, saying: “in most cases it’s crucial to do so”.

Funding long-term care can be complicated; having someone there with experience to explain elements like the costs and the risks involved is essential to ensure appropriate action is taken.

An Independent Financial Adviser can help maximise the income for meeting care costs while, as far as possible, preserving original capital, with inheritance in mind.

There are different types and levels of care, depending on the needs of the individual. These range from domiciliary care in an individual’s own home, through residential care to full-time nursing in a care home. Determining which of these are required will affect what is received and so the costs an individual may need to pay.

The Money Advice Service indicates that provision of 24-hour live-in care at home could cost from around £50,000 a year. In comparison, it estimates the average cost of a care home place in the UK at around £30,000 a year, and £40,000 if nursing care is required. The costs will depend on where you live in the country.

Some medical conditions, which require full time nursing, can come under full NHS funding. Criteria can be strict. Where someone is assessed as needing to live in a care home permanently, there can be an initial 12 weeks of free care to give people time to think about their future before making any final decisions and before the local authority can include the value of a property in the financial assessment.

Care funding assessment

The first step when someone needs care is for a needs assessment to be undertaken. This ascertains the type of help needed and is followed by a financial assessment.

The latter looks at areas such as regular income from:

  • Pensions, benefits or earnings;
  • Capital, such as cash savings and investments, land and property (including a person’s home and overseas property),
  • Business assets.

It is worth noting that savings in joint accounts are viewed as being owned 50:50 and might be included in the assessment.

In respect of whether an individual will have to pay for or contribute to their own care, there are three key savings threshold figures for local authority funding in 2019/20. In England, if a person has savings and assets worth in excess of £23,250 they will have to pay full fees. If they have less than £14,250, the local council will pay; and for savings and assets between those figures payment will be a mix of funding from the local council and the individual. Figures differ slightly for Wales, Scotland and Northern Ireland.

Just how much an individual might have to pay will depend on a number of factors, including the value of their savings, assets and income, what local authority or NHS funding they might be entitled to, and what level of help and support they need, which will be affected by their health and mobility.

It is important to be aware that most people find they have to pay for some or all of their own care.

Local councils take a dim view of people who pass on their assets or transfer ownership of their property to someone else in order to avoid paying the full cost of their care. This is called ‘deprivation of assets’. Where councils believe this has happened, they will include the value of the assets in their financial assessment.

Having a care needs assessment is crucial, even if initially savings are too high to get help with funding, so that down the line if savings fall below the threshold, the authority will pay for the right kind of help. 

Planning ahead for care can help reduce any anxiety you may have about getting older. It can also give you peace of mind about how you’ll manage your care needs in the future.

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