Advice on care
Impartial Care Fee Advisers

Advice on care

Experts in paying for care

FAQ's

These Frequently Asked Questions are designed to provide a better understanding on the subject of Long Term Care and Fees Planning. Please click on any of interest and you will be taken to the answer. New FAQs will be added regularly and if you have a question that you have been unable to find a quick answer to below, we are available to answer your question on 01476 589567 and through our contact form.

 


Will the Care Act mean my mother’s care home fees will be paid by the Government?

I seem to recall that the Government was going to introduce changes to the way care fee is funded. What’s happened to this and won’t this mean my mother’s care fees will be met by the Local Authority?

The Care Act was introduced into England with a lot of publicity surrounding the fact that it would significantly change how long term care would be both dealt with and reduce the amount people might need to pay for their own care, by:- Increasing England’s current upper capital threshold used in any means testing from £23,250 to either £27,000 (when the value of property is not included) or £118,000 (when the value of property is included) and would also increase the lower threshold to £17,000.

Create a cap on how much any individual will have to pay for their own care, and the figure quoted would be £72,000

Introduce an improved Universal Deferred Payments Scheme so that all homeowners who’s non- property capital didn’t exceed £23,250 (2016/17), could avoid having to sell their property immediately to pay for care and instead ask the Local Authority to pay them on their behalf as a loan secured against the property and that this debt would only need to be eventually repaid (plus interest) once the property was finally sold,

by April 2016.

However, only the new Universal Deferred Payments Scheme was ever implemented and all the others were deferred until April 2020 at the earliest. So if your mother has over £23,250 in non-property capital, not much has changed and she will still need to pay for her own care unless she is judged to be so ill or in need of ongoing healthcare that she may qualify for free NHS Continuing Healthcare

Even if all of these changes are finally introduced as planned in 2020, you shouldn’t automatically infer from this that your mother could then cease paying. This is because:-

First her level of care must be formerly assessed as necessary and appropriate. If you , or your mother, have simply chosen to move into a care home for safety reasons etc., you won’t receive any help.

The care fees paid by your mother will only start to count towards any cap of £72,000, from the date the cap is implemented, and therefore will not count any fees paid up to that date. Even then, unless the rules get further changed, it wouldn’t be your mother’s total fees that would count towards this cap, instead it would only be allowable costs which would count. Allowable cost were only ever going to be; - the difference between what you’re your mother’s Local Authority would be willing to spend (and this is quite often much lower than actual fees paid) minus an element to cover her food and accommodation costs – often referred to as the “Hotel Costs”. Even when any cap is reached your mother’s Local Authority will still only pay the maximum they are prepared to pay (minus whatever the allowable deduction for “hotel costs” is by then). So this may still never be anywhere near what your mother is currently paying. Any difference would then have to be met by family or you may be forced to move her to cheaper accommodation.

Not only this but even if the Upper Capital Threshold is increased to £118,000 as planned, the lower capital threshold will only increase marginally to £17,000. Why this is important is that if your mother’s assessable capital is, at the time, below £118,000 the Local Authority will then add to her existing pensionable and benefit income, something referred to as “tariff income”. This is an additional theoretical income which they deem she should be receiving on any remaining which is greater than this lower Capital Threshold of £17,000. It is calculated at the fixed rate of £1 per week extra “tariff” income for every £250 of capital over £17,000. Therefore if you mothers capital is still considerably in excess of £17,000 this “tariff income” taken together with her ordinary pensionable and benefit income may well exceed the maximum her Local authority is willing to pay for the care needed. This would mean that she would still need to keep paying for her own care.

So apart from if you haven’t already sold her home and you could utilise the new Universal Deferred Payments Scheme, as the plans stand at present, depending on just how much income, remaining capital your mother has, as well as how much her care fees are at the time of any final implementation, you may well find that she still needs to pay for her own care for some appreciable time even when the act is implemented

As there is no certainty over whether, or when, the plans will be implemented and your mother would seem as though she needs to pay for her own care, you might like to read more about how care fee annuities can provide certainty of care for your mother and help to prevent total exhaustion of her savings.


What is a Long Term Care Annuity?

When my mother, aged 87, entered her current care home, we were asked whether we had a long term care annuity.

Q. Can you please explain what a Long term Care Annuity is and how much one would cost?

A. A Long term care annuity, also referred to as a care fees annuity, is a way of buying a guaranteed income for life to meet ongoing care fees. In return for paying one single payment to specialist long term care provider, they will guarantee to pay an income for the rest of your mother's life no matter how long she remains living in her care home. They can therefore be a very good way of guaranteeing care fees can continue to be met no matter how long your mother remains in care for. To help people better understand what they do, providers of such plans have started to escribe them now as care fee funding plans or care plans for short.

Care fee funding plans are currently available for people needing care now and who are aged between 60 and usually 101 at age of purchase, (although once arranged any income they provide does continue indefinitely without any upper age limit). They are not only available when you enter a care home but can be purchased whenever someone actually needs care and wherever that care is to be received, so can be used to pay for private carers at home. They are also portable so even if you buy one to meet care fees at home they will continue to pay care fees in a care home and likewise if one is purchased on entry into a residential care home they will continue to pay even if a change of care home is required because nursing care becomes necessary.

Care Fee Funding Plans can be purchased with a range of options including escalation so that the income they provided will increase each year with such increases occurring at the same time just when being able to and can even be arranged so that the first (and every subsequent increase) can happen in the month the care home puts all their residents fees up, even though this may be only a few months after purchasing the annuity. Whilst this income can have either a set increase each month ( ranging from between 0.5%p.a and normally max of 10%) they do not allow for any stepped increase in care fees such as if a move up to more expensive nursing care is needed.

Should your mother require this and such care fees are more expensive you can always buy a top up plan at a later date when due to age and by the very nature of needing nursing care, health is worse, the premiums should be cheaper. You can find out more about care fee annuities here.

Hopefully this has helped answer the question, "What is a long term care annuity", but as far as "how much one would cost?" this is impossible to answer here as each one is individually priced and will be based what health issues and history your mother has had.

We would, however, be happy to get you medically underwritten quotes from ALL providers FREE OF CHARGE and without obligation if you simply complete our Quote Request Form.


What is an Immediate Needs Annuity?

An immediate needs annuity is a plan offered by specialist long term care annuity providers to provide a guaranteed indefinite income (either with or without increases each year) to meet ongoing care fees. As such, they are also referred to as Care Fee Annuities but to try and better describe what they do, some providers are now calling them Care Fee Funding Plans or Care Plans for short.

Where the term Immediate Needs Annuity is useful however, is the fact that such Care Fee Funding Plans are only available once a need for care arises. They are not an insurance against just the possibility of needing care in the future.

Care Fee Annuities are, however, available to anyone currently needing care, wherever that care is to be received – at home, or in a care home. The income they provide is currently paid tax free, providing it is paid directly from the insurer to a registered care provider, whether that's a care agency providing care at home, or a care home.

You can find out more about immediate needs annuities by visiting Care Fees Annuity


How much do care fee annuities cost?

This is impossible to answer here as each one is individually priced and will be based what health issues and history the person needing care has.

We would, however, be happy to get you medically underwritten quotes from ALL providers FREE OF CHARGE and without obligation if you simply complete our Quote Request Form and we will send a simple medical form for you to complete and return which we will then send off for you and obtain the quotes.

Q. Can a care fees plan be purchased whilst in a care home?

My father aged 91 has now been in his care home for several years and is very happy where he is. I am now becoming concerned that his money will not last and I do not want to have to move him simply because his money runs out. I have heard about care fee annuities, but can they still be purchased even though he has now been living in his current care home for some time?

A. The simple answer is yes it doesn't matter how long your father has been residing in a care home.

Indeed the older someone is and therefore, the shorter their life expectancy is deemed to be, the cheaper the premium is likely to be. There is no problem whether an applicant is living at home, or is already in a care home. Indeed most care fee annuities are purchased for parents only once they have moved into a care home.

The only problem you may encounter is whether or not your father will still have sufficient money to purchase such a plan if you leave it too long as his current care fees will continue to eat away at his savings until a care plan is set up. Unfortunately some people leave it too late and the costs of care fees have eroded money too much. So we would recommend that you at least obtain quotes on a care fees annuity or funding plan as soon as possible.

As impartial care fee advisers, we would be happy to obtain accurate quotes from all care fee annuity providers for you FREE OF CHARGE and without obligation - simply by you completing our simple Quote Request Form when we will send you a simple medical form to complete, sign and return to us when we will do the rest.


How do you get quotes on care fee annuities?

Q. How do you get quotes on care fee annuities?

I have been told that providers will not give quotes directly is this correct? If so how do I get quotes on long term care annuities?

A. That's correct – Care Fee annuities or long term care annuity providers do not offer quotes directly to customers.. This is partly because; they first need to obtain medical information before quoting and all providers of such long term care annuities have agreed to use one medical referee who will write and obtain just one medical report from the GP and care home and supply all providers with the same information received.

It is also because the Financial Conduct Authority (formerly FSA) insist that advising on long term care is a specialist are of financial advice requiring in depth knowledge of not only the care system but also benefit entitlement and advisers offering such advice must hold specialist qualifications.

Being a leading national care fees adviser since 2004, we hold those qualifications and can obtain the very best long term care annuity quotes from all providers easily for you FREE OF CHARGE and without obligation – simply complete our Quote Request Form and we will send you the simple medical form to complete, sign and return to us and we do the rest. Once all quotes have been received we will produce your complimentary comparison and send it to you.


Will care fee plans continue to pay out if needs improve or a move to a different care home is needed or later qualify for free NHS Continuing Healthcare?

Q. Will care fee funding plans continue to pay out if needs improve or a move to a different care home is needed or later qualify for free NHS Continuing Healthcare?

If our mother's health improves and she leaves her care home to either stay with family/friends or alternatively wants, or needs to move care home, will the care plan still continue to pay out?

A. Yes care fee funding plans are portable, so no matter what type of care your mother is receiving when the plan starts, the income provided will continue - no matter where she receives her care, either a different care home or indeed because she can move in with friends/family. The only point to watch is that should she no longer receive care from a registered care providers (such as a care home or care agency) or qualifies for free NHS Care whilst the income would continue to be paid into her bank account, it will no longer be free of tax. However, whilst the current basic rate of tax is 20% (2016/17), like any other annuity, should the income from a care fees funding plan be paid directly to the persons bank account, tax would only be due on any interest element the provider adds to capital the applicant paid to buy the plan. Therefore, although the current basic rate of tax is 20% (2016/17), the tax paid will not be 20% of the full amount of monthly benefit provided – only on a small proportion of each monthly instalment.

To find out more about care fee annuities visit Care Fees Annuity.


What happens if a care fees plan provider goes out of business?

Q. What happens if a care fees annuity provider goes out of business?

A. Now that Partnership Assurance and Just Retirement have merged there are only two care fee annuity, or long term care annuity providers – Partnership Assurance and Friends Life and all are well established firms with many years experience in offering annuities, so the chances of this happening are small. However for your added peace of mind should something happen and any of them become unable to continue to meet their liabilities, you are covered for up to 90% of any outstanding liability by the Financial services Compensation Scheme (FSCS).

For more reassurance and to find out more about the FSCS visit Financial Services Compensation Scheme.


Do long term care annuities offer any capital protection against early death?

Q. Do long term care annuities offer any capital protection against early death?

I have heard about how long term care annuities provide a guaranteed income for life to pay for care fees, but can you please explain what happens if my mother were to die quite quickly after taking one out, say within the first year? Is there any capital protection and refund paid in such an event or do I you lose everything?

A. Long term care annuities or care fee annuities can be arranged with either no early death capital protection or with some protection for a little extra cost.

In the event of choosing an unprotected care fee plan and your mother dying in the first year you do have to accept that you lose any balance of premium paid. However, one of the care fee funding plan providers does offer some limited decreasing capital protection in the first 6 months even where no additional extra protection has been selected.

If you would like some longer peace of mind, with all providers you can chose to pay extra to give you some longer term capital protection – when you can chose to protect either 25% 50% or 75% of the increased premium. How this then works is that whatever percentage of protection you opt for becomes the initial protected amount and then whatever has been paid out in terms of benefits to pay for care fees by time of death is deducted from the initial amount. Any balance (depends on when death occurs) is then refunded.

This balance would then form part of the estate.

Let’s look at an example to see how this works in practice.

If you opt for a protection of 50% on a level annuity offering £18,000 and this protected annuity in total then costs £90,000, the initial protected amount is 50% of £90,000 or £45,000. However as the benefit of £18,000 would provide a monthly benefit of £1500 (simply £18,000 divided by 12), if death occurred after 10 months the refund would be £30,000 ( £45,000 (initially protected) minus £15,000 benefit paid out (10x the monthly benefit).

However if death occurred in month 24, the refund would be only £ 9,000 (£45,000 initially protected minus £36,000 benefits paid to date). Obviously after a certain period, no refund would apply and what capital protection you have paid for will become pointless.


How much would such capital protected annuities cost?

The cost for such capital protected annuities are all individually priced, based on individual health records and needs. To get a FREE accurate medically underwritten quote without obligation, on both protected and non- protected plans, simply complete our Quote Request Form and we will send out a simple medical questionnaire for completing, signing and returning to us and we will do the rest.


What is the current capital threshold for long term care in England?

Q. What is the current capital threshold for long term care in England?

A. As at 2016/17 the Upper capital threshold, above which anyone has to pay for their own long term care (providing they do not qualify for free care under the NHS Continuing Healthcare) is just £23,250 in England.

The lower capital threshold, below which you should be entitled to maximum local authority funding, is just £14,250. Please note in both thresholds "capital" includes both your own and 50% of any jointly held savings and investments including deposits in banks and building societies as well as current accounts; ISA's, Shares, Unit Trusts or other collective investment accounts, National Savings and Government Bonds and buy to let properties. After the first 12 weeks of permanent care, it even includes the house if your spouse (if applicable) is not going to remain living in the property and no other family member aged either under 16 or over 60 (or any age if disabled) is to remain living in it.

Anyone with capital below £23,250 ( 2016/17) but above £14,250 will have any assessable capital which is above £14,250 converted into theoretical or "tariff income" at the rate of £1 per week for every £250 of capital above the lower threshold. This is then added to your ordinary income from pensions etc and if the resulting combined income exceeds what the local authority is prepared to pay you will deemed to be a self-funder and need to fund your own care.

This is where professional care fees advice from an impartial care fees adviser such as ourselves can help as we will look at what other funding options you may have. You can find out more about how we can help or to book an appointment for one of our care fee consultants to visit you simply by visiting our dedicated care fees advice page.


What is the current capital threshold for long term care in Scotland?

Q. What is the current capital threshold for long term care in Scotland?

A. As at 2016/17 the Upper capital threshold, above which anyone living in Scotland and who doesn't qualifying for free care under the NHS Continuing Healthcare, has to pay for the their own long term care is just £26,250.

Unlike in England however, Scottish residents are only means tested for the accommodation and food sometimes referred to a "Hotel" costs. Anyone who needs care and is over 65 receives a Personal Care Contribution worth currently £171 per week (2016/17). Likewise if nursing care is required and is received in a nursing home they also receive an additional £78 per week (2015/16).

The lower capital threshold, below which you should be entitled to maximum local authority funding towards the "hotel fees", is just £16,250.

Please note in both thresholds "capital" includes both your own and 50% of any jointly held savings and investments including deposits in banks and building societies as well as current accounts; ISA's, Shares, Unit Trusts or other collective investment accounts, National Savings and Government Bonds and buy to let properties.

After the first 12 weeks of permanent care, it even includes the house if your spouse (if applicable) is not going to remain living in the property and no other family member aged either under 16 or over 60 (or any age if disabled) is to remain living in it.

Anyone with capital below £26,250 (2016/17) but above £16,250 will have any assessable capital which is above £16,250 converted into theoretical or "tariff income" at the rate of £1 per week for every £250 of capital above the lower threshold. This is then added to your ordinary income from pensions etc and if the resulting combined income exceeds what the local authority is prepared to pay for your accommodation costs, you will deemed to be a self-funder and need to fund your own care.

This is where professional care fees advice from an impartial care fees adviser such as ourselves can help as we will look at what other funding options you may have. To find out more about paying for care if you need to be a "self-funder" visit paying for care.


What is the current capital threshold for long term care in Wales?

Q. What is the current capital threshold for long term care in Wales?

A. As of 2016/17 the Upper capital threshold, above which anyone living in Wales (and who doesn't qualifying for free care under the NHS Continuing Healthcare), has to pay for their own long term care is £24,000.There is no different lower capital threshold figure in Wales, unlike in England.

If you live in Wales and your capital exceeds £24,000 you will be deemed to be a self-funder and need to fund your own care.

This is where professional care fees advice from an impartial care fees adviser such as ourselves can help as we will look at what other funding options you may have. You can find out more about how we can help or to book an appointment for one of our care fee consultants to visit you simply by visiting our dedicated care fees advice page.


What is deliberate deprivation of assets?

Q. Can you please explain what deliberate deprivation of assets is regarding long term care as I have been told that I could get caught by it if I transferred money away to my children before going into care is this correct?

A. Deliberate Deprivation is where you either: Transfer money or ownership of assets (including your home) away to someone else or to go on an untypical spending spree. Even invest money into otherwise exempt investments such as Single premium investment bonds at time care could have been foreseen, and the Local Authority when conducting a Means Test deem this has been done with the intention of depriving yourself of capital or assets so that it is not counted as your capital when they look at your finances to see if you or they have to pay for your long term care. To find out more about when the Local Authority would pay visit our State Funding page.

Most importantly there is no time limit to how long they can look back to see if you may have deprived yourself of capital and they do not have to prove it was done deliberately on suspect it, the onus is on you to prove otherwise. One thing is certain however and that is if the transfer of assets or spending occurred within 6 months of needing care it will certainly be deemed deliberate. The lengths to which any local authority will go to decide whether any deprivation has occurred will vary with each local authority but one thing that is for sure is that with current financial constraints local authorities will no doubt start to look for more closely.

There are more myths about deliberate deprivation than any other aspect of long term care.

More than Seven Years is OK – not necessarily! The most common myth is that any such transfer you might do will not be counted as deliberate deprivation of assets providing it is down more than 7 years ago just like for making gifts for Inheritance Tax purposes. As described earlier, the facts are that when looking for cases of deliberate deprivation there are no set time limits and Local Authorities can look back as long as they want. However they do have to feel that the primary reason was to deliberately deprive so if there was a genuine more important reason why any gift was done e.g. transferring own business shares to younger more able family members as a conscious business succession strategy or IHT planning would be OK and not deemed as deliberate deprivation.

Likewise if any investment or transfer is done well in advance of any signs (such as initial diagnosis of an life-long degenerative problem such as parkinsons disease, or early events of receiving home help) should stand a good chance of being deemed not deliberate deprivation of assets.

Q. What happens if a transfer or spending is deemed deliberate?

A. If the point is question arose as a result of transferring capital/assets and it happened within 6 months of needing care they would expect it to be handed back. If this was impossible or the transfer happened more than 6 months before care is needed, they would deem the asset to still be yours when doing the Means Test and therefore you may still have to pay your own care fees (or more importantly whoever you transferred the assets to), may have to help you meet the fees, but either way you will still need to meet your own care fees and the Local Authority will not help, until your assets (including the transferred value) falls below the upper capital threshold.

Depending on what percentage of total capital such transfers may account for, this could leave your continued funding of your LTC in the hands of whoever you transferred the money to, and could not be guaranteed especially if whoever you transferred the capital to got divorced or went bankrupt lost capacity themselves or even died before you.

Even though you may have to pay for care if receiving good care is important clearly you may prefer not to leave it to chance that any transfer may get caught. This is when good quality care fees advice then becomes essential. You can find out more about how we can help or to book an appointment for one of our care fee consultants to visit you simply by visiting our dedicated care fees advice page.


The means test for long term care, what is it?

Q. The means test for long term care, what is it?

Can you please explain what is included in the means test carried out by local authorities when needing Long Term Care?

A. Should your needs be deemed mainly social care and not qualify for free NHS Continuing Healthcare, your Local Authority is compelled to do a financial assessment Means Test to see if they have to help towards your care fees or whether you would have to pay for it yourself.

To read more about what this means test considers and just how little capital and savings you need before having to pay for own fees, visit Will I need to pay for my own care?


Would giving my house away to my children help avoid paying for long term care?

Q. Would giving my house away to my children help avoid paying for long term care?

I am concerned that I may need long term care in the future, should I transfer my house to my children to avoid having to pay for my care?

A. Whilst we cannot enter into any individual personal advice or make any specific recommendations without first establishing all your facts, in most cases we would urge clients to think twice before transferring any ownership of your home (other than to any recognised approved commercial home reversion equity release company) as first you may not ever need care and even if you do, such transfer of ownership could at best still be deemed as deliberate deprivation if care is required and at worst could mean:

Your continued occupation of your own home will be then put at risk.

What you need to think about apart from trying to avoid for paying for something which may never happen, is what would happen if your children fell out with you, or worse became bankrupt (when your home would be counted as their asset) or got divorced (when any "in-law" may want a large slice of its value possibly forcing your child to sell it from under you)?

Similarly if you do give it away and do not pay a commercial rent to whoever you transfer it to, not only could the transfer fail as far as trying to avoid paying for care is concerned, but if you have an Inheritance Tax Liability (IHT) it will be deemed as a "Gift with Reservation" (meaning you still gain a benefit from it i.e. being able to live in it rent free) and will thus still be added back into your estate on death and therefore counted in any IHT calculation.

Clearly much has to be considered but on balance, as you have no immediate need for care you may wish to think seriously about doing this and look at other acceptable ways of mitigating the value of your home in any means test. Certainly if you haven't already done so, ensure you have made Powers of Attorney and seek professional care fees advice from us when required.

Further information on Powers of Attorney can found on our dedicated Powers of Attorney page.

   

Contact us

Head Office Address:
Advice on Care
267 Barrowby Road, Grantham, Lincolnshire, NG31 8NR

Southern Regional Office Address:
Advice on Care
Abbey House, 1650 Arlington Business Park, Theale, Reading, Berks, RG7 4SA

Telephone: 01476 589 567
Email: info@adviceoncare.co.uk

Accreditations

solla

Financial News

Our Digital Magazine

To receive every issue of our magazine by email, simply register your name and email address in the form below.

The information contained in this web site is for general information only and is not financial, investment or tax advice. It is also subject to the UK regulatory regime and is therefore restricted to consumers based in the UK. If you would like to discuss a particular issue or generally ask us how we can advise on your particular situation then please contact us.

Advice on Care is a trading style of Keith Hargraves who is an appointed representative of Intrinsic Financial Planning Limited and Intrinsic Mortgage Planning Limited, which are authorised and regulated by the Financial Conduct Authority. Intrinsic Financial Planning Limited and Intrinsic Mortgage Planning Limited are entered on the FCA register (http://www.fca.org.uk/register/) under reference 440703 and 440718.

© Copyright 2014 Advice on Care. Website Design by Goldmine Media.