A simple guide to funding long term care

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A simple guide to funding long term care

Funding long term care can be extremely stressful and confusing with the overwhelming amount of laws, rules and products that surrounds the subject. However it is important that care and consideration is taken when planning to finance long term care in order to ensure that you do not unnecessarily pay for care that would otherwise be funded by the government, and that the care you are required to pay for is funded in the most suitable and cost effective way for your circumstance. It is our job as financial planners to help you through this process, making it as simple and as stress free as possible.

NHS Continuing Healthcare

If you have a disability or complex medical problem, you might qualify for free NHS continuing healthcare (CHC). However it should be noted that in order to receive NHS continuing healthcare, you must be suffering from a medical condition, those who simply struggle with mobility due to frailty will not be eligible.

As a guide, ‘eligible’ health needs might include:

  • Terminal illnesses

  • Rapidly deteriorating health

  • Long-term medical conditions

  • Physical or mental disabilities

  • Behavioural or cognitive disorders

  • Complex medical conditions that need additional care and support

NHS continuing healthcare covers personal care and healthcare costs, such as paying for specialist therapy or help with bathing or dressing. It might also include accommodation if your care is provided in a care home, or support for carers if you’re being looked after at home.

Local Authority Funding

Long term care can be entirely or partially funded by your local council, providing that you are eligible.

If you are eligible, the Local Authority will fund your care home costs. However if you choose (and are able) to remain in your own home, the Local Authority will provide funding for the following:

  • Meals

  • Carers

  • Transport

  • Home modifications

  • Equipment that helps with the tasks of daily living

To be eligible to receive Local Authority funding, your assets must amount to less than £23,250 including your main home unless your home is jointly owned with your spouse who lives in the property. In this case, your home is disregarded from the financial assessment for as long as your spouse remains living in it after you have moved into residential care. 

Claiming benefits

If your requirement for care and medical assistance is great enough, you will be eligible to receive the following benefits:

  • Attendance Allowance

  • Disability living allowance

  • Personal Independence Payment (which is replacing Disability Living Allowance)

These benefits are not means tested, and therefore you could be eligible to receive them regardless of your income or savings.

Self funding

Depending on your circumstances you might not qualify to receive any of the funding stated above.   Even if you do, the amount you receive might not be enough to completely cover your care costs either at home or in a care home. In this case you will need to explore the options available for self funding your care.

The most common option is to buy an immediate needs annuity. This type of product is designed to help if you need care straightaway. In return for investing a lump sum you get a guaranteed income for life, which will be used to fund ongoing costs of care. The cost of this product is based on the insurance company’s assessment of how long you are likely to receive care, and how much income you require to fund it. The cost is therefore influenced by the following factors:

  • Your age

  • Current annuity rates

  • the level of income you need

  • Your life expectancy

  • The state of your health

For an extra cost you can also put in a special clause (known as capital protection). This allows your family to get some of the lump sum payment back if you were to die early.

Other ways to free up capital to fund care costs include (but are not limited to) downsizing your main residence and equity release, both of which can be suitable in the appropriate circumstances.

If you would like to discuss further the options available to you regarding long term care, please contact Richard Higgs on (0117) 3636211 or richard@haroldstephens.co.uk

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