Following on from arguably one of Mrs May’s most divisive election mandates the ‘Dementia Tax’ it is worthwhile understanding what long term care is and how it is currently assessed and funded for those of us living in Sussex.
What is long term care?
Is the provision of personal and nursing care for people who are unable to look after themselves without some form of help for the foreseeable future. It applies to chronic conditions that are only likely to get worse. Long term care may be provided in your own home or in residential or a nursing care home.
So what does the government provide?
In April 1993 The Community Care Act came into force in the UK. It removed responsibility for assessing needs and paying for care from the Department of Social Security to local authorities with limited and varied budgets. Therefore the amount of support provided will depend on where you live as well as your personal circumstances.
Local authorities’ social services departments means test individuals in order to determine whether financial assistance will be granted. The rules are quite complicated but broadly if you have assets over £23,250 (not including your main property) you will not receive any assistance towards care home fees.
Once assets fall below this level, the local authority will pay part or all of the fees. This means test will also take the main residence (home) into consideration after 3 months. Interestingly this is worse than the proposal that Mrs May presented, unless you choose to have your care funded at home.
Methods of Private Funding
Immediate Care Annuity – Long Term Care insurance pays a tax free income for life to the patients care provider in exchange for a lump sum payment. The annuity can be capital protected in the event of death in the short term. These can often be used in conjunction with the patients other income such as pensions and investments in order to plug shortfall in the income and thereby help to protect as much capital for benefices as well as ensuring certainty of tenure for the patient. In addition they can also be a useful measure of anticipated life expectancy.
Maximise Savings – It is important to maximise income from existing investments and to ensure that these are held tax efficiently where possible. Most pensioners’ do not have sufficient pension income to cover their full care home fees and will need to rely on their capital to produce income to meet care home fee shortfalls.
By Ivan Lyons, Director, Investment Solutions, Worthing
Contact Investment Solutions: Grafton House, 26 Grafton Road, Worthing, BN11 1QT. 01903 214640 or send an email to Ivan at: firstname.lastname@example.org or visit www.investment-solutions.co.uk