Long Term Care

Long Term Care PlanningThe reality for all of us is that we are living longer and the NHS and social services will not be able to pay for all of us to have the kind of care we hope for.

Who Is Going To Pay For Your Long Term Care?

You may be surprised to know that even if the total value of your assets is below the means tested threshold your local authority or trust will still expect you to contribute some of your income to your care. This makes it vitally important to plan for your long term care and the care of family members and loved ones.

In 2014 Quality Watch, an independent research organisation set up by the Nuffield Trust and the Health Foundation reported “Home and day care spending by councils has fallen by almost a third, equating to £618 million (real terms, net current expenditure, comparing 2013/14 to 2009/10). The result is that 82,000 fewer older adults receive home care (an 18% reduction) and the number receiving day care has almost halved (around 46,000 people).”1

The Government will of course do its best to provide long term care but we will have more choice of the type of care we receive and who provides it if we can fund more of our care ourselves. Again you may be surprised to know that the Government expects individuals to pay for accommodation, regardless of whether a care home charges for this separately.

If your savings and assets are above £23,250 in England you will normally be expected to pay for the full cost of long term care.  You also need to know about deprivation of assets.  This is when someone deliberately transfers assets to someone else so they can avoid paying for the full cost of their care, and if you do this the assets may still be taken into account in a means test.

The Money Advice Service website2 that says “People often have to make quick and difficult decisions about their own or a loved one’s care needs. Thinking about the options in advance will help in the long run.”

Not every Adviser can give advice on long term care planning. They have to be specifically qualified to give this type of advice. At Four Oaks Financial Services several of our Advisers are qualified and Advisers without this qualification are working towards it.  At Four Oaks we see this as an essential qualification for all our Advisers.  You can also have access to a Chartered Financial Planner.

What Will Long Term Care Planning Typically Provide?

Long term care planning can provide the money you or a loved one will need to pay for care. Typically helping you pay for things like assistance with the basic activities of daily life such as getting out of bed, getting dressed, washing, bathing and going to the toilet. You can receive care in your own home, in residential homes or nursing homes.

Our qualified financial advisers will advise you on long term care as part of a holistic review of your pensions, investments and savings, retirement planning and estate planning.

The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.

Your Long Term Care Options

Here are some of the long term care choices you can discuss with one of our qualified advisers:

  • Immediate needs annuities that pay a guaranteed income for life to help cover the costs of care fees in exchange for a one-off lump sum payment, if you have immediate care needs
  • Long term care planning advice
  • Enhanced annuities – you can use your pension to buy an enhanced annuity (also known as an impaired life annuity) if you have a health problem, a long-term illness, if you are overweight or if you smoke. Annuity providers use full medical underwriting to get a more accurate individual price depending upon your circumstances. People with medical conditions including Parkinson’s disease and multiple sclerosis, or those who have had a major organ transplant are likely to be eligible for an enhanced annuity
  • Equity release plans – give you the ability to get a cash lump sum as a loan secured on your home – these can be used if you are looking to fund a care plan now or in the near future
  • Savings and investments – give you the opportunity to plan ahead and ensure your savings and assets are in place for your care needs

The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.

To understand the features and risks of your financial planning, ask for a personalised illustration.

What Long Term Care Funding The State Provides

Government state benefits will continue to provide some help, but may not pay for the full cost of long term care.

In England and Wales, for example, you can receive means tested state assistance, which depends on your savings and assets. For instance, if your savings and assets are above £23,250 in England you will normally be expected to pay for the full cost of long term care yourself. In this case long term care insurance could be of great benefit to you.

If you are already retired, or nearing retirement, it makes good sense to take advice from a financial adviser to ensure that you have the basics in place – for example, arranging your will or a power of attorney.  It also makes sense to ensure your savings, investments and other assets are reviewed in case you or your partner may need long term care in the future.

If you are of working age, you are in the best position to plan for your future care needs.  Saving while you earn through investments or savings plans, ISAs, national savings accounts and your pension will help with the cost of long term care should you need it in later life.

The value of pensions and investments and the income they produce can fall as well as rise. You may get back less than you invested.

Estate Planning is not regulated by the Financial Conduct Authority

1Source information from Quality Watch http://www.qualitywatch.org.uk/blog/another-year-cuts-social-care

2Source information from The Money Advice Service https://www.moneyadviceservice.org.uk/en/articles/how-to-fund-your-long-term-care-a-beginners-guide

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