The Definitive Guide to Pension Annuities by FuneralGuide.co.uk

Long Term Care Costs 


How much does assisted care cost these days? 
Did you know local council and NHS may be able to help? 
What are the benefits available for long term care?
Can I self fund home care, do I need to sell my home? 

Summary: Costs of Long Term Care 

When you woke up this morning, the first thing you though of wasn't what you're doing tomorrow at the same time. Life is normal like that. Which is why as a twenty or thirty year old you're probably not wondering how you might fund long term care costs when you're 80 years old. Herein lies the problem, retirement is one thing, getting a pension sorted another but making considerations for home care assistance is quite another. 

It's a little bit different if you have a long term disability and are approaching retirement age. You have been quite used to applying for those top up benefits while working all your life. Your main objective will be to continue that lifestyle that have grown accustomed to, rather than let old age get in the way of the achievements you have made. There are many more situations retirement with care throws up over and above the usual golden handshake. 

  • Do you downsize or adapt your home further to meet demands of growing old, stair lift, bathroom attachments, ramp to your front door. 
  • Do you consider moving into a care home, what will the costs be for that, will you have to sell assets? 
  • If you remain at home, perhaps you need a carer either for certain situations like bathing or 24/7 and a live in carer? 

How Do You Pay For Long Term Care? 

We are not about to suggest you give away all your assets before you get too old that all your assets get spent on care for you during your senior years. Though when it comes to being financially astute, you are going to have to consider ways to make the most of current assets if you wish to leave something to your children in the form of inheritance. 

It would be quite correct to use the sale of assets to pay for your own long term care, but equally you've put into the system for decades and there are other ways for you to get some money back, additional support and from unexpected places. On top of local authority funding be sure you are getting ALL the benefits you are entitled to from the government.

Within this section you will find details about  

  • NHS Continuing Healthcare Scheme: Otherwise termed CHC, there is additional funding available from the health system
  • Planning for long term care or saving some pension income payments / investment in case you need it
  • Have you gained access to as much local authority funding as you are entitled too
  • Buying into long term care insurance: Is there an annuity or other financial product that can be contributed to and enacted should you need long term care and will it meet those costs?
  • Hiding assets: We don't have to be proud here, you have assets and you don't wish them to be lost simply because government rules on caring for yourself may change at some point in the future.

How Much Will It Actually Cost?


Unless you have worked in the care industry you are probably going to find some of the following costs associated with long term care a little bit of a shock. If you remain at home and need a carer fora few hours each day, to wash up, clean, help you bathe, make your bed, put away the shopping that was delivered and help you with medicine and changing clothes, you can wipe out your basic pension in one go.

That's not what you wish to hear. A carer for just two hours a day, at an average of £15 an hour multiplied by the days in a year, works out at over £11,000 annually. The options for long term care reduce drastically if you do not consider it might be a possible need in the future when you calculate what to do with your pension pot income. Spending 25% tax free and drawing down on a guaranteed income, these ideas are confused by the proposition of long term care costs.

The carer is just the beginning of the costs, and while they form the largest part if you wish to remain as independent as possible the home you own is going to need changing. You may need to add an external key safe box so your carers can let themselves in. A ramp may need to be built to your front door so you can gain access either by mobility chair or on foot with walking frame or stick. then there are adoptions inside the home, rails in the a bathroom and perhaps modifications made so you can reach cabinets, open drawers and a stair left to get to upper floors.

On top of the carer costing £11,000 a year minimum annually for a few hours a day, it may cost several thousand pounds to make your home safer for you. Outside the home you may need to buy a mobility scooter, pay for transport to and from your home and may need hospital visits. The cost may be too much for a part time carer or live in support and you consider a care home instead. An option which could cost in excess of £30,000 a year.

At some point, unless you are very fortunate not to have worry about money or have more family than the little old woman in the shoe to help you each day, you are going to have to make some serious decisions. Additional funding may make those decisions easier to handle. Consider NHS continuing care, local authority funding and government benefits. Talk to advice centres such as CAB, Help the Aged and local support groups that deal specifically with the disease or mobility problem to see what solutions they have for financial and regular support.

Your Local Authority


You're going to be reading quite a few of these websites aimed at the generations which are facing retirement and looking to cash in on their pensions, buy into annuities and invest in shares that extend your pension income. What you don't want to read is that you've lost the ability to do anything yourself and you have to grovel to the government to ask for help. Even asking the local council is a bit above you.

You're proud but there's a period of realisation to come that will make you look at the stark truth of the situation. Long term care costs real money. As a tax payer yourself for forty or more years you know society has a responsibility to its elders but so to do we for ourselves. You know how to play ball but you'll also realise you have to take your new disability on the chin. Your house, your money, your income and expenditure, any other assets are going to come under scrutiny.

Very few of us escape the need some form of support in our silver years, even if it's the last few months before we dwindle up the glass staircase. Your local council is equipped with the means to provide you with aid and support but it tends not be for everyone. They do pick and choose and any home care will be connected to means testing. A Local Authority Care Costs Calculator can you help you figure out what amount could be offered but do realise they will take into account the severity of the disability and the total costs of your assets.

There are two ways to look at local authority supported care costs, they are much less expensive than going direct to a care vendor. As the council with a ready amount of money has negotiated better care deals with local and national providers. This means even if you have to contribute to your own care, with the council making up the bulk of the payment, you're financially better off. They key is to ensure you are under the threshold for receiving that support.

A care needs assessment won't be nice. It's your life in reflection, to think you work all your life to end up in this situation, needing long term care and to pay for it, may need to sell your home or go hand in hand to the council. But your care is important and necessary. The government's Care Act 2014 means and means tested application will ensure you are treated humanely and respected and that your care is utmost, regardless of any local council penny pinching. It is said to be unlike the other disastrous means testing the government has overseen in the past.

It is noted that the most vulnerable and the least amount of income and assets will be on the list for care first. This may entitle you to home care support or nursing home care, which you may or may not have to contribute anything against. It will be on an individual basis as to whether you get to retain your home should you wish to accept their local authority funding in exchange for long term care costs being covered. You are, at present allowed to retain a minimum of £14,250 in assets. There are also thresholds such as having less than £23,500 will allow you some form for financial aid. *These amounts may change annually.

The NHS


Because not everyone is ill with a disability, not all are well informed about the services available from the NHS when it comes to log term care costs and the support which can be offered to you. The local authority therefore needs not to be the first port of call, or the last. it may be possible to receive financial assistance from the NHS Continuing Healthcare (CHC) programme. Rather than simply being means tested, it's based on your health.

One could argue that any test that involves making you look like a test subject mouse is a little embarrassing, however this money needs to be well spent and placed in the correct quarters. We've all argued for that so here's the situation. It is medically related but not age related, and a continuing care package can be presented to anyone suffering after an accident, illness, disability or with disease where a certain set of criteria has been met.

The criteria for attaining funding from NHS Continuing Healthcare (CHC) programme falls into several categories such as the help that may be required, the seriousness of complications and how unpredictable the situation may become if the correct support is not offered i.e. can your situation be worsened. You will be under the microscope during the review and everything from behaviour, being psychologically sound, to a full medical assessment including breathing, mobility, cognition and whether you need specific medication adhered, all will be reviewed.

It can be a complicated process that will begin with a local NHS Clinical Commissioning Group and end after a 28 day review period at which you will know whether you have been accepted. There is a Fast-track assessment available for those with deteriorating conditions or your life is in danger if you don't have care. If you are not accepted for CHC, you may be eligible for NHS-funded nursing care - similar to Local authority costs where a contribution is made by the NHS. This can either result in care at home or nursing care in a care home.

Benefits


When people talk about care, it is often far too easy to forget the millions of people who end up being carers for family, friends or loved ones. These are an army of under appreciated people who for once, the government have not forgotten about. Therefore when we discuss benefits available to offset long term care costs, we are not just talking about costs to cover care but benefits for carers too.

While still not easy to attain and nor should they be, there is a range of benefits you can claim if require long term care or this is obviously going to extend into retirement, and also benefits available if you're carer for someone else. You may be shocked to find that even right now, someone who is accepting benefits who is also making a contribution, is doing so based on the entire range of benefits available without being in receipt of all those benefits.

It's a strange quirk of the system that unless you apply, you don't get but the system still factors in what you should be getting. But without those benefits being present in the sum, your own contributions to long term care costs could be higher than they should be. You need to consider the British benefit system to be as complicated as seeking a solicitor to fight a law suit. Visit the Citizens Advice Bureau or a specialist to discover the full range of benefits you should be receiving. You can also expect to receive discounts on council tax.

POP, DLA, AA and CA or Personal Independence Payments, Disability Living Allowance, Attendance Allowance, Carerís Allowance are just an handful of named benefits on offer for long term care costs supplied by government and outside of Local Authority and NHS offers you may receive. Not all require means testing, some are simply handed to those who have the pre-requisite documentation from a doctor or relevant history. Be sure to seek all information before you subject yourself to mean testing which may take into account held assets. If you can receive funding for long term care costs on certain benefits and receive the correct level of care without selling assets that has to be the better option.

Self Funding

Receiving long term care is not just about getting it. you'll find even after a few days research that there are many different types of care, some seemingly better than others and the difference will nearly always be the cost. So what can you do to boost that level of care? Do you need to self fund or do you simply wish to? If youhave an asset in which you live, selling your home need not be the only answer.

Retirement is not the gift the government means it to be otherwise they would give us five years of it before we start working. Self funded long term care comes about in a variety of ways:

  • No Benefits: You know the value of your assets, you have done well for yourself and you know the care you need. It will be the very best and you can self fund it, at least once over and still enjoy life.
  • On Benefits: You have an house you live on but have surveyed the lay of the land and found you can receive certain benefits without selling your home or downsizing. These will help you pay for the care you need.
  • More Benefits: You require more state assistance and the only way is to relinquish some of your assets to be able to receive longer financial support towards long term care costs.

Unfortunately a lot of the population are the type who will need to approach the council for local authority funding or ask for government assistance while in receipt of a large financial asset, and a fewer amount will need NHS continuing healthcare offerings. What options do you actually have for self funding long term care?

Add Up Your Savings And Investments

It's nice that some people can reach retirement age and have cash fluid options. Not everybody does but if you have ISAs, shares or other types of investment. Perhaps even a healthy sum in a bank savings account or something hiding in Switzerland, then you can choose to release some of these funds to help pay for future long term care. Money, being what it is, means you could probably pay ten years up front on a care home and invest the rest so as to ensure a profit is made to pay the next ten years. You may also own art, antiques or a business which may come into any financial equation.

Insurance Annuity - Immediate Needs

What is an immediate needs annuity? Well it's an insurance product that works similar to a pensions annuity except it is for care. It's a fantastic way to escape the tax on a normal annuity on the remaining 75%, but only if the payments are going directly to a care home provider. If you are 60 years of age, wish to escape the 75% tax and have a doctor recommendation - as it is medically approved, then it could be an option. Though payments are foxed, should care costs rise, outside of pegged inflation, you will have to match the difference yourself.

Get The Equity Release Flyer Out!

Always get financial advice before you make a decision that involves a large amount of money and obviously your own home. Equity release, as you may already know, involves selling your home to a company and in return you get to stay in it for the rest of your life and the company gets it when you die. Or a similar arrangement. So to swap it for an holiday in the Seychelles is probably not a sound idea.

However, is it a much better idea when it's s swap for cash and staying home while receiving home care support, while receiving those benefits you couldn't get while owning your own home? Everyone's situation is different so again, seek financial advice. The problem with this way into long term care and paying the costs is that you'll receive a lower price on the home's value and bang, there's goes any inheritance worth.

You also don't need the full extent of your health, disability, illness and how long certain effects will take to materialise. For instance, if you go the equity release route and you can no longer receive care at home and need to move to a nursing home, you'll lose the house a lot sooner or you'll need to find the money to pay back the loan with no doubt increased interest. Would it still have been worth it?

Do You Really Need To Sell Your Home?

Funding long term care costs by selling your own house seems a little drastic. it won't be for everyone but if you're moving to India or Spain to live out the next 25 years in an assisted living retirement village, perhaps you're gaining more than you're losing. And you're not actually losing anything, it's the sale of an house yes but what are you doing with the money?

If you live in a big house that once was home to your children too, it can get costly maintaining it, repairs, also cleaning.Those stairs, stair lift or have no stairs? You may actually consider selling a five bedroom house and buying a bungalow instead. Just remember, if you buy into bungalows in areas where tons of other older people ate moving, you probably not getting the best market value. Consider location, home care services or cost of retirement homes and contact with friends and family.

Whether you choose equity release to pay for home care or an holiday, sell a few assets and gather savings to lump in on a private nursing home or apartment in a residential retirement village or downsize, always get financial advice and don't make a decision too quickly, even if long term care costs are needed.

Insurance

As much as we have written and understood about long term care cost funding, the surprising element is that there isn't an actual insurance product in existence that provides for a payout upon needing long term care or admittance to a nursing home. Whether that's because it's difficult to ascertain eligibility or because the cost of care cannot meet premiums required and its eventuality while is as certain as death, is much more expensive than dying and the period of time for payments indeterminate.

I think we answered that question well. Is there a long term insurance plan for care, no. The government is trying to get insurance companies to find interest in a new solution and there was one for a while. The closest you can get to having care taken care of via insurance is a Immediate Needs Annuity. You'll need to be over 60 and meed medical criteria to be able to fund it. But like an annuity it is irreversible and long term may not meet all your care home costs even if it is inflation related.

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