Care Fees Planning
Whilst Financial Planning in Later Life can have many strands, such as utilising assets for the appropriate Pension or Investment Planning; Equity Release or Inheritance Tax Planning requirements a person may have, meeting the cost of Long Term Care is a growing issue for many people in the UK and, in the absence of any NHS/Local Authority financial support for a person's Health/Social Care needs, they (or their legal representatives) will need to consider how best to use their existing financial provisions (i.e. income and capital) to meet the cost of care required.
The options for funding Long Term Care are varied and, depending on your circumstances, can often be complicated so, should you or a loved one need to pay for care at home, or in a care home, it's important to know the facts.
Unfortunately, whilst not usually something that is addressed until the point of actual need, many still choose not to seek appropriate independent financial advice until it is too late, in other words, when funds are low, or have been exhausted, so any options that may have existed are severely limited or no longer available.
Furthermore, whilst many advisers are qualified to help with the Investment or Pension concerns a person may have in later life, only those suitably qualified to advise on Long Term Care, can fully advise on the options available to those who are looking to fund the cost of their own care, or for that of a loved one.
Expert Long Term Care advice is crucial to ensure the most appropriate outcome and can provide peace of mind to those needing care, and their family or legal representatives.
Using the Independent Financial Planning, Guidance and Advice available from a Retirement & Later Life Advice Specialist, it may be possible, not only to meet the initial cost of Long Term Care but also, to ensure funding for the longer term and, possibly (in part at least), honour any legacy plans.
If you have any questions, or wish to book an appointment, please do get in touch but, in the interim, you may find it useful to read a Beginner's guide » to Long Term Care (Money Advice Service) » and to read our 10 myths about sourcing and paying for Long Term Care below.
Funding Care Fees
10 common myths when sourcing and paying for care
1. It's free!
Well only sometimes. Firstly, if you don't already, you'll need to understand the difference between 'social' and 'health' care. Social care is best described as care needed to help with activities of daily living (washing, eating, mobility etc). It is the responsibility of your local authority who will assess the needs you have, and they will also assess how much you are able to pay towards the care you need. If someone in need of social care owns a house or has much in the way of savings, the chances are they'll have to pay for all or at least some of their social care. On the other hand, Health care is where your needs are of a medical nature, and this is the responsibility of the NHS. So if your primary need is for health care, this is currently free at the point of need.
2. Information in respect of care from my Local Authority or Clinical Commissioning Group (GP) will always be accurate, so why do I need to speak to anyone else?
These organisations always start from the position of aiming to treat the public fairly and they seek to provide accurate information.
However, the current complexities of our social and health care services and the related funding challenges they face, mean that unfortunately it's a bit of a post-code lottery when it comes to how reliable the information and advice given is.
That's why we believe it's so important that our clients have access to expert, independent advice to help them navigate the social and health care systems from the start, establishing a clear pathway and joined up approach to ensure they get the best care available and any help with funding to which they are entitled.
3. If I run out of money, the State will pick up my social care costs
Again, only in some circumstances, and you'll potentially limit your choices.
Your local authority has a statutory responsibility to identify what are called 'eligible' needs. They must provide care sufficient to meet those needs, and they must pay for this care if you run out of money (i.e. both your income and assets are below the financial thresholds).
However, if your care needs do not meet the eligibility criteria, the local authority is not obliged to pay for them. If they do meet the criteria, you might find that the amount the local authority will pay gives you limited or no choice as to where you receive care, and how the care is delivered, unless a family member or other benefactor is prepared to pay the difference between what the local authority will pay and the cost of your choice of care provision (this is known as a 'third party top up').
4. I hear that if I gift my assets to loved ones, the State will pick up my care costs
Beware! If you deprive yourself of assets by gifting them or disposing of them in some other way, where the main or significant purpose in doing so is to avoid paying for care and making the local authority pay instead, your actions are likely to fall foul of a rule known as 'deliberate deprivation of assets'.
Local Authorities have extensive powers to look into whether this rule applies to your past actions. If they decide that you have deliberately given your assets or income away then when they are assessing your eligibility for financial support they will ask you to pay the amount that you would have paid had you never given those assets away.
5. I'm told it's not worth applying for free NHS Continuing Health Care (CHC)
Where your care need is primarily health related and severe (known as a 'primary health need') you might be eligible for free NHS CHC, which will cover all the costs of your care, including your accommodation if you need to be in a care or nursing home.
Many people are wrongly told that they shouldn't bother applying as they won't qualify. For example, it is not unusual for NHS CHC assessment to be denied on the basis that dementia is never a 'primary health need' but this isn't always the case.
If you are assessed for NHS CHS, and told that you will not receive it, you would be well advised to quote relevant case history and law. The use of this has resulted in many successful appeals to date, and this is an example of why professional advice is so important.
6. Attendance Allowance (AA) isn't paid when receiving care in a residential care home
Again, it depends on your personal circumstances. Specifically, whether you pay for your social care or the local authority does.
If you are a 'self-funder' (paying you own residential care fees) AA will usually continue to be paid to you. If your local authority is contributing towards your care costs, AA will usually be paid for the first 28 days (if you were already entitled to receive it before moving into a care home).
7. Care in my own home will be more expensive than in a residential care home
Not always. For one thing, receiving care at home will mean you won't have to pay the accommodation costs that you would in a residential care home.
Furthermore, if more than one person needs care in the same home, 'live in care' or full-time care can often work out significantly cheaper than both people going into residential care.
8. I will have to sell my home to pay for the care that I need
Not necessarily. The rules concerning property and care are lengthy and complex, but it's important to understand that if you, or a dependant (including a spouse or civil partner), are still living in the property, then its value will be disregarded by the Local Authority when they assess your ability to pay for your care.
In any event, if your other assets and investments fall below £23,250, your Local Authority should disregard the value of your property for 12 weeks after an assessment, or until the property sells, if sooner.
9. If I lose mental capacity, my spouse/civil partner can make necessary decisions on my behalf
Unfortunately, this is something many assume to be the case. If you haven't established an official Lasting, or have an existing Enduring, Power of Attorney, then in many cases you spouse or partner will not be able to fulfil your wishes or make decisions on your behalf.
This can become especially problematic where you own property or assets jointly and they need to be sold to pay for care fees.
And it is not something for those in later life, pretty much EVERYONE should have a Lasting Power of Attorney so, if you haven't done this piece of planning, please seek appropriate legal advice as soon as you can.
10. If I have to pay for my own care, I don't need a financial adviser
The importance of advice from a regulated, suitably experienced and qualified financial adviser is often underestimated.
For example, did you know they are the only people who are legally allowed to advise on ALL of the ways you might consider in order to pay for your care. Significantly, only they can advise you on the only way that is currently available to guarantee the payment of your care fees for life (often referred to as an Immediate Care Annuity or Care Plan) which, for many, provides valuable peace of mind.