Funding Long Term Care
We often get asked by clients about funding long term care, and in particular protecting personal assets. This is a complicated area of law and one where the rules are often misunderstood. Mike Bracegirdle, a Partner specialising in succession planning, looks at the facts and myths surrounding long term care and funding.
Care is often required when one of a married couple or those in a long term partnership dies and the remaining spouse or partner is left on their own. When couples live together they tend to adapt so that they can continue as a family unit, each compensating for the other’s disabilities and do not require care other than provisory care from a younger family member.
- On figures released in June 2019, in 2018 the total number of the population over 65 was 12.16 million of which 6.65 million were in the age group 65-74, and 5.51 million between 74 – 90 and over.
- The number of people of care has, despite what the media may lead us believes, remained relatively stable with only approximately 4% of over 65 year olds going into care. However, those over 85 having a 50% likelihood of having to go into care.
- The average length of stay in care is 2.6 years for a female and 2.3 years for a male.
- Live in carer
Cost range from approximately £625 per week for a single person for companionship care to £725 per week for high dependency care and discounts are normally available for couples.
- Care Home
Costs range from £600 – £800 per week in a care home and £800 – £1200 per week for nursing care (the figures vary widely dependent upon the standards of the care home and its location).
Below is an overview of the funding options available. The assessment criteria has been simplified and please note that there are numerous factors relating to capital and income that will be taken in to account. Each person’s situation is different and we would advise on a case by case basis.
Discharging the costs from your own income and capital resources.
The majority of individuals will have the benefit of the State Pension, together with a work pension and will have to draw down their savings to make up the shortfall if these pensions do not cover the fees.
However, it is important to be aware that there are a number of additional financial benefits available, some of which are not means tested such as an attendance allowance, which is payable at two levels dependent upon the extent of the individual’s disability. It should be noted that attendance allowance is not payable after 28 days in a care home unless you are completely self-funding. Attendance allowance will continue to be paid if you are in a nursing home and the only help you get with fees is the provision of registered nursing care.
When an individual’s capital is reduced to less than £23,250, an application can be made for DHSS funding. This is assessed by the local authority in the area in which you reside.
(Please note that the capital limits are different in Wales where the base figure is £50,000 for those requiring residential care and £24,000 for those requiring care in their home. Totally different rules apply in Scotland.)
Fully Funded NHS Continuing Health Care
In certain circumstances the NHS is responsible for meeting the full cost of your care in the care home. If you are discharged from hospital directly into care, you well may be eligible to be “fast tracked” – no assessment is carried out and you are fully funded for period of up to 3 months. After that time, a re-assessment is carried out by the local authority.
To be eligible for long term NHS funding you must have a high level of health related needs, resulting in your primary care being health based thus entitling you to free health care. In reality, it is much easier to obtain this funding if you have been discharged directly into a care home or nursing home and your health condition has not changed since your discharge from hospital, than it is if you have entered into the care or nursing home on a voluntary basis. An application is made to the Clinical Commissioning Group for your area and an assessment is carried out in the home by a qualified medical nurse and usually a representative from the local authority in the form of a Social Worker. In practical terms all applications for NHS funding are normally resisted unless your individual health care needs are particularly high.
DHSS Funded Care
As mentioned above, when your capital has been reduced by self-funding to £23,250 you are entitled to make an application to the local authority for DHSS funding.
It should be noted that as a married couple whilst the other spouse remains living in the house the value of it is normally disregarded and the only capital which is not in the joint names is taken into consideration.
However, it does not mean that the DHSS will fully fund you once your capital has reached £23,250. When your capital is between £14,250 and £23,250, for every £250 above £14,250 you are treated as having £1 per week income.
For those with capital below £14,250, this capital is fully disregarded for charging purposes.
Other types of capital are also fully disregarded, for example the surrender value of life insurance policies, certain type of investments bonds with life insurance elements and funds in trust or administered by the Court.
The local authority makes the determination as to eligibility following the assessment. It should be remembered that the local authority cannot generally assess the joint resources of a couple – they are only looking at the capital and income of individual who is seeking the assistance. Jointly held savings are normally, but not always, divided equally, the exception being jointly owned property where you own a share or beneficial interest in the property which can be taken into account.
How Butcher & Barlow can assist
- Lasting Powers of Attorney
Executing Lasting Powers of Attorney (LPA’s) are always a sensible option. This means in the event that you do lose capacity it is a member of your family who will be making decisions both in respect of your financial affairs and health and welfare rather than it being the local authority making an application to the Court of Protection upon your behalf. This will ensure that your family remains in control in the event that you do lose capacity and have to go into care.
- Succession planning
Succession planning normally involves advising you to put in place LPA’s and also making a Will. As part and parcel of making a Will we will consider if it advisable to set up a life interest trust in respect of your property so that, for example, the joint tenancy could be severed so that you and your spouse hold the property as joint tenants in common each with a 50% share. On the death of the first spouse the property would then pass to your trustees to be held in accordance with the terms of your Will with a life interest created for the surviving spouse so that they can reside in the whole of the property during their lifetime or for a period of time when they are able to cope on their own. This means that in the event that the surviving spouse has to go into care it should only be their 50% share of the property which would be taken into account by the local authority assessing their capital and financial resources and thus eligibility for DHSSS funding.
- Lifetime Gifts
In certain circumstances lifetime gifts of assets maybe appropriate but it must be noted that in the event that lifetime gifts are made shortly before entering care, these may be disallowed by the local authority(under the Deprivation of Assets Act) in assessing your capital resources and eligibility for funding.
- Renting our your property
Renting out your property under an Assured Shorthold Tenancy may be an option to top up your weekly income to make up the gap between that and the cost of the care
- Equity Release
Equity Release schemes may be an option in some circumstances, releasing funds from the property in order to fund care.
- Deed of variation
In certain circumstances, if our client is a surviving spouse, we may consider a Deed of Variation in respect of the first spouse’s assets to reduce the potential liability for the surviving spouse’s capital and thus eligibility for funding.
We can advise and representation in respect of NHS funding appeals if an application for NHS funding made to the Clinical Commissioning Group has not been successful. This normally means having full access to individuals medical records and an assessment by an independent GP or Medical Practitioner who has specialist knowledge of an elderly persons health requirements.
One for the Financial Adviser rather than ourselves, but rather than selling your property and turning it into cash, an option may be to purchase an annuity from the proceeds of sale of the property which would add to your existing income and make up the income gap. A financial adviser would advise whether this was the best option for you.
If you or your family require any advice or assistance, the specialist team at Butcher & Barlow can assist. See our Care Funding Page for further details. https://www.butcher-barlow.co.uk/personal-services/care-funding-advice/
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