Paying for Long Term Care

Outline - Basic Points

1. Long Term Care, which primarily requires nursing, is free and provided by the NHS.
   
   
2. Whereas long term care that primarily requires personal or social care, rather than nursing, is the responsibility of the Local Authority in which the person lives or lived prior to the need arising, and is means tested. This means that the Local Authority will conduct a thorough investigation into your financial position and depending on the results can ask you to pay either for all of the cost of your long term care or at least make a contribution towards it.

For more information about how they assess whether or not you will need to pay for long term care, click here.

For those who are assessed as requiring care and having to pay for it themselves, or are responsible for paying for someone else’s long term care, the main concern will not be so much the actual weekly cost, but how long will care be required for and therefore will the available money last?

Innevitably the main financial question will be how can this care be best funded to ensure both continuity of care and preserve as much capital as possible.

For those who do not qualify for the free care or the "Deferred Payments Scheme", there are basically two main choices:

1. Investing to provide the required income in an attempt to preserve as much capital as possible. This obviously, has the inherent danger that capital could run out before the need for long term care finishes.
2. Using avalable capital to buy an Immediate Needs Care Annuity (often also referred to as a Long Term Care Insurance) to ensure that the shortfall is guaranteed to be met for the rest of the person’s lifetime.

Which way is best will in turn depend on, amongst other things:

1. Your attitude to investment risk. - Unless life expectancy is particularly short, capital is very large or you do not mind how much of the available capital is consumed, the cost of long term care would often mean anyone considering investments would require a higher risk profile than just putting it on demand in an instant access account. Such deposits in turn may not be able to provide the shortfall in care costs required leading to capital erosion and possibly exhaustion over time. Buying a Long Term Care insurance on the otherhand should guarantee continuity of care, but could lead to some considerable loss should death occur quite soon after the annuity is taken, unless some capital protection is also paid for and provided.
2. Your own view as to how long care will be required for.
3. Your preference for simplicity – an investment approach will need regular reviewing and decisions to be made to ensure how best to preserve capital – whereas an annuity or Long term care Insurance if set up right should continue to meet the costs of long term care for the rest of their lives without much involvement.
4. The cost of an immediate needs annuity or perhaps more importantly the percentage of any capital it requires. If an immediate needs Long Term Care Annuity only consumes a relatively small percentage of the estate or cost just sufficiently to reduce any estate below the applicable Inheritance Tax threshold (£325,000 - 2009/10) then you may feel this would be the best option.
5. However perhaps the main factor should be whether continuity of care is more important than simply trying to preserve as much capital as possible. If so, there can be fewer better ways than an immediate needs Long Term Care Insurance or annuity.

Being independent long term care funding specialists, Advice on Care can offer either method. Indeed where sufficient capital is left we can even offer a combination of the two methods. This would then give the benefit that any investment return achieved can help meet the cost of purchasing the original annuity..

To find out more about either method please now click on either of the following links.