Planning for your long-term care
October 2009
Here are a few points to bear in mind if you’re starting to plan for your long-term care, particularly before a means-test.
Seek specialist advice
Talking to a specialist adviser about your care options and how you can pay for them will be invaluable – especially if you’re keen to stay financially independent and perhaps leave a legacy.
Your property
If the property is occupied by your spouse or partner, it will not be included in a means-test.
Ownership Make sure you and your spouse (partner) own your property as tenants in common rather than a joint tenancy. This will allow you to make a Will, which means that when one partner dies, their share of the house goes to the beneficiaries named in their Will [often the children].
Otherwise, the deceased partner’s share of the property passes automatically to the partner in care where it will form part of the surviving partner’s assessable income and it will be used to fund any residential care they may need.
12-week property disregard The property is disregarded for 12 weeks from the moment that somebody permanently enters residential care. A person is eligible for this disregard if, after carrying out an assessment, the council confirms that an applicant is in need of permanent residential accommodation and takes over the arrangements for it or an applicant does not have income or other assets sufficient to cover the costs of care.
Council Tax If you move into a care home and your property is left empty, then you should receive full exemption from Council Tax until it's sold. If your partner remains in the home, they can change their status to single person occupancy for Council Tax purposes at their local council offices.
Boost your income
Many people don’t claim benefits when they move into care. So it’s worth making sure you know about all the benefits you are entitled to. They include:
Attendance Allowance A tax-free allowance that is not means-tested. If you need care by day or night, you’re entitled to the lower rate of £47.10* per week. If you need care by day and night, you’re entitled to the higher rate of £70.35* per week. This is available if you are funding your own care
Pension Credit You may be able to claim Pension Credit with the Attendance Allowance while your property is on the market. To estimate how much credit you may be entitled to, use the calculator on the Directgov website.
NHS continuing healthcare this is a package of care arranged and funded entirely by the NHS to meet physical and/or mental health needs that have arisen as a result of disability, accident or illness. The care can be provided in a care home, your own home or a hospice
NHS registered nursing care contribution If you need nursing care and you’re moving into a care home that provides nursing care , you may be eligible to receive this non means tested contribution to your care costs. It is a flat rate payment of £106.30 per week*.
* Figures apply for 2009/10
Cap your care costs
If the idea of capping the cost of your care appeals to you, you may want to consider buying products such as immediate need care fee payment plans. These are a type of annuity designed to meet the lifelong cost of your care – usually using proceeds from the sale of your property. Generally, however, they only require part of the sale proceeds, leaving some funds in your estate.
These annuities tend to offer a higher level of guaranteed income than you can normally expect from traditional investments or annuities. They also allow you to fix care costs for the rest of your life at the time you buy it.
Choose your care home carefully
You need to be confident that you can afford your chosen home over the long-term. If you think your assets are likely to fall below the means-test limit at some point, you should ask your local authority if it will be able to keep funding your care in your chosen home. If not, you may have to move.
Understand the care home contract
All self-funding care home residents are entitled to a written contract clearly setting out the terms and conditions of their stay. It is very important to study your contract before moving in. Make sure you are clear about which services are included in your fees and what are extras, and which incur additional costs.
If you are funded by the local authority the contract will be between the care home and the local authority. You are still entitled to a written statement of your terms and conditions.
Inevitably, financial arrangements are an important part of the contract. Make sure you are clear about the fees that you or your relatives will have to pay. The contract should also set out any payments required if you go into hospital.
Organise a Lasting Power of Attorney (LPA)
If you haven’t already done so, you should make sure you have a LPA in place. If you appoint a property and financial affairs LPA, it will enable the people you appoint to make financial decisions on your behalf such as selling your house or managing your bank account if you become incapable of making these kind of decisions yourself - or do not wish to do so.
You should also consider whether to make a health and welfare LPA. This is for decisions about both health and personal welfare, such as where to live, day-to-day care or having medical treatment.
If you become unable to make decisions for yourself and you haven’t got a LPA, then your family will have to go through a lengthy legal process before they are lawfully entitled to act on your behalf.
In this situation, it is the court that chooses who has the power to make decisions about your life – not you.
