Specialist Care Fees Advice


How Do I Fund the Cost of Care?

Paying for care is a subject few people have any expertise or knowledge of; it is a specialist and Complex area and many more families are facing this challenge every year.

One of the problems for the current generation of elderly people is that they were brought up believing that the State would look after them "from cradle to grave."

This is not the case though, and as far as long term care costs are concerned, in general the State only pays for the least wealthy. The size of the contribution depends on the assessment of your wealth by a means test.

Care Plan a Case Study...

Several years ago, Pamela Earnshaw's mother had a stroke and began suffering from then undiagnosed Alzheimer's.

Her health deteriorated and she began receiving Local Authority care in the form of assistance with taking medication and meals. Pamela paid for this care out her mother's funds.

After a fall Pamela put in place an at-home care package through the Local Authority. Eventually Pamela decided her mother would be better off receiving care in a care home.

In mid-2003 Pamela and her brothers sold their parents' house in order to help fund the care home. Their parents had split ownership of the house in their will, so half of it went towards her mother's care.

The Local Authority provided funding for the care home while the house was being sold.

Having discussed the options with her Financial Adviser, Pamela now funds her mother's care in part from the income of a Partnership Immediate Care Plan purchased in October 2003.

"It's saved us money in the long term. It's a help and an assurance that you're never going to run out of money."

Hands

Is a long term care plan right for me?

You can use any lump sum you have available to buy a long term care plan from a specialist provider.

The company which provides the plan in turn offers to pay out money to help fund your care fees' for as long as it is needed.

If you need to go into care now or in the near future, you may wish to consider an immediate funding long term care plan.

With this type of care funding plan, payments from the plan to you or your care provider start immediately and continue for the rest of your life.

Immediate funding long term care plans may include a money-back guarantee, offering to pay back some of the lump sum used to buy the plan if you die within the first six months.

Further capital protection of your lump sum can be provided for a further up front payment.

*Partnership statistics 2010

How much will a long term care plan cost?

A care plan will guarantee a specific level of income to help pay for care fees for the rest of the individual's life.

The cost will depend on:
  • The health of the individual reduces the cost depending on the severity of the condition/illness.
  • The age of the individual's Generally, the older the individual the cheaper the plan although this will be taken into consideration with their health status.
  • The cost of the care home fees 'The Long Term Care Plan cost will rise in line with the care home fees'.
  • The average cost of a care plan of £85,000 may appear to be on the high side, but when set against average annual nursing care home fees of £37,000 this represents just over two years worth of fees.
  • With this in mind it should be noted that the average length of stay in a care home for a "self-funder" is 4 years and that 1 in 10 live 8 years or more.*

When does a long term care plan make sense?

It is always sensible to get a quote for a long terms care plan and especially if you need to be absolutely sure of guaranteed payments to help fund long term care until you die. It will give you certainty and peace of mind.

For a single, lump sum payment you can take out a care plan now and defer your income payments for up to five years. The advantage of this is that it reduces your premium without compromising the amount of income your care plan will eventually pay.

Tax benefits of long term care plans

Income tax
If money paid out by the long term care plan goes directly to a Care Quality Commission (CQC) registered care home or other care provider, there is no income tax to pay on it.

Inheritance tax
By using your money to buy a long term care plan, it will no longer be included as part of your estate for inheritance tax (IHT) purposes.

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