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Strategic planning anticipates a range of eventualities: some we want to happen, some we fear will happen, and some we plan to make happen, our options are greater for the planning.

Long Term Care

Why Speak with Finesco regarding Long Term Care Planning ? Recent articles in the popular press suggest that the UK is facing a ticking demographic time-bomb thanks to an ageing population. Government figures suggest an increase in the number of people aged 85 plus. In 1983, there were just over 600,000 people in the UK aged 85 and over. Since then the number has more than doubled to 1.3 million in 2008.

Developments in medical science mean more of us will live longer. By 2033, the number of people aged 85 plus is projected to more than double again to reach 3.2 million, and to account for 5% of the total population. While a welcome statistic for many, the pressure it will put on the public purse cannot be neglected. This of course raises the question of “what funding is available for long term care” ?

Of the 40% of people self-funding their care, only a tiny proportion actually get expert financial advice. Getting advice regarding appropriate Long Term Care Planning makes sense, not just because it is a looming issue that will not go away, but it allows Finesco to offer expertise in other areas, adding value to you as a client.

There are relatively very few advisers providing Long Term Care advice or indeed qualified to advise in this very specialised field. This situation is not helped by the view of some politicians and regulators thinking long term care products, like equity release products, are just there to rip off the elderly.

However, taking appropriate independent advice can ensure you can be kept in the homes you want and do not run out of money.

Capital Limits for Means Testing purposes

Recent statistics suggest 40% of people going into residential care are self-funded. With the average cost of a private care home with nursing staff reaching £664 a week, and a lack of support from the state, many elderly people are being forced to sell their homes or turn to savings intended for their children’s inheritance to cover care costs. Otherwise, the family can be faced with the bill.

Adults must currently undergo a means test before they move into a nursing home for long-term care. The levels of allowable capital differ depending on which part of the UK you are resident.

In England, capital of £14,000 or less is disregarded. If capital exceeds £23,000 then the individual must fund the whole cost of care.

The lower limit in Scotland is £13,750 and the upper limit is £22,500.

In Wales, the lower limit is £20,750 and the upper is £22,000. 

Non Means Tested Funding for Nursing Care

A little known fact is that some individuals may benefit from free long term care, but this is only where the primary need is for health care, which is NHS fully funded. The downside of course is that the individual does not have aright to chose the home providing the NHS funded care, although their wishes should be taken into account.

In England, Wales and Northern Ireland some NHS funding is available towards the costs of nursing care provided in nursing and care homes. This can help to reduce the fees payable by those who partially or fully fund their care.

In England a registered nurse will carry out the assessment. Assuming the individual requires nursing care, the NHS will contribute a flat rate of £106.30 per week (revised annually) towards the cost. Some individuals may benefit from an additional payment but only if they were assed as requiring the higher rate of nursing care prior to 1st October 2007.

In Wales, the contribution paid to the care home is a flat rate of £119.66 per week (revised annually).

Similar rules apply to Northern Ireland. The nursing care contribution is normally a flat rate of up to £100 per week.

More generous provision applies in Scotland. This is subject to a needs assessment, which is carried out by the relevant local authority. If the individual aged over 65 and is self funding or partially self funding long term care, they benefit from a contribution towards the cost of both personal and nursing care. The contribution for personal care for over 65’s is £153.00 per week. An additional £69.00 per week is available to individuals of all ages requiring nursing care. This gives the under 65’s a maximum of £69.00 per week and those over 65 a maximum of £222.00 per week.

All statements concerning the tax treatment of products and their benefits are based on our understanding of current law and HMRC practices both of which are subject to change in the future. Levels and bases of reliefs from taxation are also subject to change.”

Marion M Roughan Cert PFS
Date of article: 29th January 2010

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