Long-term Care Funding
by Beacon Wealth Management
September 2022
Long Term Care Funding
How much does care cost?
Unfortunately, there is no fixed amount for the cost of care. It varies depending on the problem. There are many factors to consider, two important ones being: the type of care needed, and the location for treatment.
Financial Assistance
Providers will then take into account: the problem you are suffering with; where you live and your financial situation, i.e., your income, personal savings and any assets. They will also consider any government payments, e.g., Attendance Allowance (AA), Disability Living Allowance (DLA), Personal Independence Payment (PIP).
NHS Assistance
The medical condition needs to be reviewed by the NHS through a ‘care needs assessment’. Medical care can be fully covered by the NHS regardless of where it is given and some cases are covered by ‘continuing healthcare’.
Personal Funding
Once you have determined what treatment is needed and where it will take place, you can plan for the costs accordingly. You will need to consider if any NHS funding is being contributed.
Deductions
You will need to deduct receipts of state and/or personal pensions, and any government benefits, e.g., AA, DLA, and PIP (if applicable) to calculate any shortfall.
Property Disregard
There are certain criteria that you would have to meet in order to qualify for the ‘property disregard’ scheme. This provides the first twelve weeks of care for free, if your savings are below £23,250.
The Balance
Financing your shortfall will depend on your personal assets and what form they take: property, investment, and on your wishes. Perhaps you may wish to pass down the family home, rather than sell it? If so, this is something else to consider.
However, if you are anticipating the need for short-term care, you may consider other options such as Equity Releases, Investments, Rental income, and immediate care plans.
Three Important Figures
If your assets and/or savings are over £23,250 -you pay full fees.
If your assets and/or savings are £14,250 -£23,250 -you are means tested and pay some of the costs.
If your capital is below £14,250 -you pay from means tested income, but the majority is paid by the local council.
Deprivation of assets
If you are thinking “to avoid paying, I will just give my assets and savings away”, think again. This is called a ‘deprivation of assets’ and it is illegal. However, there are things that you can do legally, with ‘prior proper planning’. Certain assets are disregarded by means of testing, allowing the wealth to be passed on, Beacon Wealth Management can assist you with this.
Conclusion
Unfortunately, once long-term care seems like a reality, it is usually too late to avoid. It is an incredibly difficult and emotional time that will eventually affect many of us. So, take my advice, review financing these costs with an experienced financial adviser. Unless planned properly, this could be very expensive, with very expensive mistakes.