|The Costs of Providing Care
Fees in Care Homes vary
considerably. These days the cheapest is probably approaching £550 per week, rising to twice that depending on the
facilities and accommodation required, and the area of the country.
In fact many prefer to receive long term care in their
own home but this may also require a significant income to fund depending on
the number of hours required.
What Does the Government Provide?
In April 1993 the Community Care Act came into force in the UK. It removed
responsibility for assessing needs and paying for care from the Department of Social
Security to local authorities with limited and varied budgets. Therefore,
the amount of support
provided will depend on where you live as well as your personal circumstances.
Local authorities' social services departments means test individuals in order to determine whether financial
assistance will be granted. The rules are quite complicated but broadly if
you have assets over £23,000 (not including your main property) you won't
receive any assistance towards care home fees.
Once assets fall below this level,
the local authority will pay part or all of the fees. The means test will also take the main residence
(home) into consideration after three months.
If the elderly person has a spouse living with them, the home is discounted from the
means test. However, when the person left at home dies or needs care themselves then
the local authority can put a charge on the home with interest.
Many people wonder about the feasibility of transferring ownership of property and capital
to their children, so that its value cannot be eroded by care costs or be taken into
account as part of their capital for assessment purposes. However, if a local authority
suspects that assets were disposed of with the intention of avoiding the cost of the care,
they can pursue both the person who disposed of the assets and the recipient with no time
limit. A court will decide on the intention behind the transfer.
Methods of Private Funding
Long Term Care insurance can be expensive but you don't have to cover the
whole cost of care. So you could calculate what you could afford to pay out
of your income, including state benefits, and use Long Term Care Insurance
to cover the shortfall.
A long term care plan typically pays out benefits when a number of ADLs
(Activities of Daily Living, such as washing and dressing) cannot be
performed. Different insurers have different definition of these ADLs. It is
also possible with some policies to get partial benefits when a smaller
number of ADLs can't be performed.
Insurance and Investment Plans
There are a number of innovative products that provide long term care
coupled with the prospect of long term capital growth via a wide selection
of investment funds. Benefits are paid on broadly similar criteria to those
for insurance plans.
For many elderly people it will be too late to buy insurance. In these
cases it may be worth considering an annuity. An annuity guarantees to pay a
certain income for life in return for a lump sum payment. Several insurers
are prepared to offer higher incomes for impaired lives, that is if the life
assured’s medical condition indicates they have a lower than average life
expectancy. Competitive quotations should be obtained from all providers.