The Rules Around Long Term Care Planning
No one likes to think of a time when they lose their independence. But it could happen to all of us at some point, some sooner than others. The problem with not thinking about it is that you could end up facing the bill for your care costs later in life, with no real idea of how you are going to pay for it. After all, long-term care is a major expense, and it can decimate your savings account faster than you realise. But with a little forward planning you can prevent this, and make sure both you and your wider family are well cared for.
The Basic Rules
First off you have the basic rules. In essence, the government states that most people with more than £23,250 in capital will be responsible for paying their own care costs. People who have less than this amount in capital can seek financial support from the local authority, and the help offered varies from council to council. However, if it’s nursing and health care that’s needed, rather than residential, then the NHS may contribute towards the costs of care, or in some cases even cover them completely. The level of help you receive does somewhat depend on the schemes your local authority has on offer, but if you fall below that capital threshold, there will be something available for you.
The Outliers
Of course, the term ‘capital’ is quite broad, and for the purposes of care costs there are a few things it doesn’t cover. These things fall outside of the means test for home-based care entirely, and for the first 12 weeks of residential care. The main thing to note is the value of your home. If you need residential care, then this value is excluded for the first 12 weeks only. After that it’s likely that the value of your home will be taken into account, unless your spouse is still living there. Since in many cases the home may need to be sold to cover the costs of care, local authorities have a provision of short term support, which can cover care costs in the immediate future so that you can properly market and sell your house, rather than rushing the purchase and potentially losing a chunk of value because of it.
There are some other assets that fall outside of the means test, but these tend to be more specific, so this is something you should seek individual guidance on from a financial planner. Taking the advice of a professional means you can ensure no assets are being deliberately moved to avoid the means test, since local authorities have the power to recover and claim them if they are. Similarly if any assets are gifted away before the care being needed, the council will try to include any unjustified gifts, and they will attempt to demonstrate why the gift was made to avoid care costs. So it’s important you take care when planning how to fund your care and avoid getting into trouble.
Why Plan To Pay?
On average, residential care can cost around £1,000 per week, sometimes more depending on the type of home you choose. When faced with this figure, it’s no surprise that so many people look to avoid paying for care themselves. Not all care homes charge at this level, and by doing a little research you should be able to find one that fits your budget. However, this kind of charge can wipe out your savings pretty fast, and many worry about being able to afford the length of care they may need.
But when we’re asked what the best strategy for avoiding paying for care is, we tend to say there isn’t one. We believe it’s best to be in control of the quality of your own care package, rather than having to rely on the council for support, who can then make decisions as to where they can afford to place you or your loved one. After all, local authorities can trim care to the barest minimum, while families do have the ability to top up council funding to improve the quality of care if they want to. So rather than looking to avoid paying entirely, it’s best to plan your care options in advance, including how you will fund them, and what your options are.
At Chilvester Financial we specialise in helping you plan for the future – and that includes the care of you and your loved ones. In fact, we’ve published a short booklet that gives you more information on long-term care planning, the issues you might run into and the options you have. So if you would like a copy to read through, or you’d like to speak to us directly about planning for you or your loved ones, just contact us today.