Long Term Care
It’s a well-known fact that the UK population is getting older. According to ONS data1, the number of UK residents aged 65 and over will hit 24% by 2042, up from 18% in 2016.
With increased life expectancy, it’s advisable, wherever possible, to factor potential care costs into any financial plans you have for the future.
Is government support available?
The support you may be entitled to varies across the UK.
In England and Northern Ireland, any funding is currently based on the following capital limits:
- Under £14,250: you will be entitled to local authority support. You won’t have to contribute from your capital, but you will be expected to contribute from income in excess of the personal expenses allowance (PEA) which is currently £24.90 per week.
- Between £14,250 and £23,250: you will be entitled to some local authority support. You will have to contribute some capital (£1 per week for every £250 of capital between the lower and upper threshold), as well as income in excess of the PEA.
- Over £23,250: you will be obliged to pay for the full cost of your care.
The capital limits differ in Scotland, as shown below:
- Under £17,500: you will be entitled to the maximum level of local authority support. You won’t be expected to contribute from your capital, but you will be expected to use your income to help fund your costs.
- Between £17,500 and £28,000: you will have to contribute £1 per week for every £250 of capital between the lower and upper threshold and you will be expected to use your income to help fund your costs.
- Over £28,000: you will be obliged to pay for the full cost of your care. If you have under £28,000 in capital, but your income is considered sufficient to fund your care, you will also have to pay all of your fees.
If you live in Wales, a capital limit of £24,000 applies to non-residential care, and a limit of £50,000 applies if you need to have residential care. You will also be expected to contribute all your income in excess of £28.50 per week (the PEA).
What does a means test include?
When a local authority performs a means test, most of your assets and savings are treated as capital but your home is excluded under the following circumstances:
- Your spouse or civil partner still resides in the property
- A disabled relative resides in the property
- A relative aged 60 or over resides in the property
- A child aged under 16 resides in the property
- The person is in the first 12 weeks of requiring long-term care
- Their care needs are only temporary
Will giving my property away exclude it from the means test?
The local authority is entitled to question whether or not you have transferred your property specifically to avoid it being included in the means test. There is no time limit for this.
How much will long-term care cost?
Costs vary greatly according to a wide range of circumstances – for instance, whether you receive at-home or residential care, as well as the level of support you require.
A 2018 study by healthcare experts LaingBuisson2 shines a light on the estimated cost of care, which can range from:
- £27,000 to £39,000 per year for care home residents
- £35,000 to £55,000 per year for nursing care
Remember, these estimated figures don’t include ‘extras’ such as trips out, haircuts, etc., so make sure you understand exactly what the care fees cover.
Will there be a cap on long-term care?
The Care Act, passed in 2014, proposed a £72,000 cap on care costs which was set to be introduced in 2016. However, the introduction of the cap was suspended pending the publication of a government Green Paper discussing the issue.
Planning for the cost of long-term care
Our advisers can assist you in planning for the potential expense of long-term care, tailoring our advice to your individual circumstances.
We can advise on the various funding solutions available to you, from purchasing an annuity (lifetime income) or raising capital through equity release, to planning ahead by making investments that can pay an income to fund your care. You could use one of these options, or a combination of all three.
If you’re facing the prospect of paying for your, or a loved one’s, care, then let us help you make the best choices. Just get in touch.
The value of investments may fall as well as rise. You may get back less than you originally invested.
Think carefully before securing other debts against your home. Equity released from your home will be secured against it. To understand the features and risks, ask for a personalised illustration.