What is long term care?

As we live longer, the number of people requiring long-term care is steadily rising. Up to 70 per cent of people who live beyond the age of 85 will at some point require assistance with daily tasks. Social care is intended to provide help with the activities of daily living. These include washing, dressing, eating, mobility and toileting. Some people receive care in their own home (known as residential or domiciliary care). Others may spend many years in a nursing home, leading to significantly higher bills. 

What financial help is available from the government?

Those who request care will be assessed by their local authority. Care is means tested, meaning both income and capital (property, savings and investments) will be looked at when deciding how much a person should contribute. Under current rules in England, those with assets or capital worth more than £23,250 are expected to fund their own care. The local authority will fund care for those with less than £14,250; however they may still expect you to contribute any income you receive. If your capital is somewhere in between you will likely receive some help from the local authority. 

Care can be eye-wateringly expensive. The average nursing home cost for the individual is £1,535 per week across the UK. Without proper financial planning, individuals with assets above the £23,250 threshold are often forced to sell property or use savings to fund their care. 

However, there are certain options you may wish to consider when it comes to financial planning for long-term care.

Protecting your home and savings

If a spouse, civil partner or another dependent relative lives in your home, its value won’t be included in the means test. Other exemptions may apply if a disabled relative lives there.

NHS healthcare

If your care needs are primarily health-related (severe medical conditions), the NHS may fund your care in full, regardless of your financial situation. 

Care annuities (a type of insurance you buy when entering care)

In exchange for an upfront sum, the insurer will guarantee payments for life to the care provider. This can provide peace of mind in the knowledge that you won’t ever run out of money for care. 

Local authority funding and top-ups

If you qualify for local authority support, but want a more expensive care home than the state is willing to fund, a family member can top up the fees voluntarily.

Lasting Power of Attorney (LPA)

It’s worth thinking about what could happen if you eventually lose the capacity to make decisions over your affairs. Without an LPA, if you lose capacity relatives may need to go to the Court of Protection to be appointed a deputy. This can be a costly and slow process. By contrast, setting up an LPA while you still have mental capacity can reduce family stress (and costs) later on. 

A common misconception

Gifting or trusts can be suitable options when it comes to protecting family wealth. However, it is not always applicable to funding your care. A common misconception is that by gifting something away more than seven years ago, the local authority will disregard it when assessing your capital. Unfortunately, while this can apply to inheritance tax, there is no fixed ‘look-back’ period when it comes to care. In other words, if the local authority believes that you have given away assets for the purposes of avoiding care fees, they can treat you as if you still owned them. 

Long-term care can be a complex issue so it’s important to speak to a specialist advisor.

Here at FiveWays we can guide you through the process and ensure you’re in the best position when it comes to planning any future care needs.