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Planning Retirement Online

Long Term Care in laterlife

What is long term care?


Long Term Care is the provision of personal and nursing care for people who are unable to look after themselves without some form of help for the foreseeable future. It applies to conditions which are only likely to get worse as distinct from acute care which is required for the short-term and will relieve the underlying condition. Long term care may be provided in your own home or in residential or nursing care home.

Please note that the Government is proposing to introduce changes to long term care funding in 2016, based on a modified version of proposals in the Dilnot review. This will include reducing the maximum amount anyone has to pay.

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

Insurance Plans

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.

Immediate Provision

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.


By taking out long term care insurance, you will be protecting your estate and possibly improving your quality of life in your later years. Whilst recent changes have improved State provision, many people will still face problems financing care and most importantly will have to sell their house to pay for their long term care costs.

If you are interested in long term care, the arrangements are often complex and the help of a specialist advisor is recommended. Also, take a look at our Guide to Caring for Elderly Parents, which will provide you with useful information and links to other sources of information.




Retirement Planning - General guidance, Retirement Pension Planning, Inheritance Tax Planning - General guidance, Equity Release, Long Term Care, Making a Will, Annuities, Finding a Financial Adviser

Take a look at our overall section on retirement planning too.

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