Elderly people should be guaranteed a minimum level of state-funded social care, according to a review of the UK’s social care by government adviser Sir Derek Wanless earlier this month.
The report, commissioned by health think-tank, the King’s Fund, found “serious shortcomings” in care provision and funding arrangements and called for investment to treble by 2026. But the review stopped short of backing free social care, suggesting a minimum care package should be topped up by personal contributions matched by the state. People worried about funding long-term care need to consider their options.
What help can you get from the government at the moment?
There is a confusion about exactly what help is still available from the state. Although this rate is always under review, if you have assets of between £12,500 and £20,500, you have to meet some of the costs. The amount you pay is assessed on a sliding scale. Remember that if you own your house and no-one else lives in it with you it will be included in the assessment.
How much would it cost to go into a care home of your choice?
The average annual fees for a private nursing home in England is £25,552 and £18,420 for a residential home.
Can I get insurance to cover the cost?
Long-term care insurance can be taken out before care is needed to pay for any fees in the future. You choose the level of fees you think you’ll need and then pay monthly premiums, which are determined by your age. Claims on these policies can be made when the person insured can no longer carry out a certain number of activities of daily living, which include washing, dressing, feeding, mobility and continence. Long-term care insurance, if properly arranged, should cover care in your own home, and the cost of a residential home if this were needed.
Who offers long term care insurance?
The number of providers offering this insurance has dropped dramatically. Axa stopped selling its Lifetime Care insurance plans in 2004. Other insurers that sold similar policies – such as Bupa, Norwich Union and Prudential – have also withdrawn from the market. Now, only Partnership Assurance, previously known as The Pension Annuity Friendly Society, offers such cover. See www.partnershipassurance.co.uk.
How much does this cover cost?
The Partnership Assurance Care Prepared insurance policy costs different prices for different people. The cost depends on your age and state of health when you buy a policy. For example, monthly premiums for benefits of £1,000 a month for a female aged 65 next birthday would start at £148, rising to £180 for premium cover. For a male aged 65, rates for the same cover would start at £101 rising to £104. This would have a three-month waiting period from a claim being registered before benefit was paid and is for benefits that would not rise year on year. Given that long-term care costs tend to rise faster than inflation, it may be sensible to choose escalating cover.
Are any illnesses not covered by long-term care insurance?
Certain conditions such as depression and schizophrenia will not be covered but dementia is.
What happens if I don’t need care? Won’t that mean I would have wasted a lot of money on premiums?
That’s one of the reasons why people don’t take out this type of insurance. There is another option to get around the problem of losing thousands of pounds in premiums if you don’t need long-term care. These are called long-term care insurance bonds and are a combination of long-term care insurance and investment. If you do eventually need care, some of the fund is cashed in each month to pay your fees. And if you go on needing care fees after your fund has been cashed in, insurance is then used to pay the subsequent fees. But if you don’t need care or you die before all your fund is used up, the remaining value of the fund is returned to you or your family.
Is there anything I can do at the point of needing care?
Immediate care insurance is a way of paying for care only if you need it. You can take out a policy just before you or a family member needs to go into a residential home or receive care at home. You pay a lump sum premium and care fees are paid at a specified level until the person needing care dies.
How much does an immediate care policy cost?
There are only four providers – PPP, Norwich Union, Partnership Assurance (also known as PAFS) and GE Life. To give an idea of costs, a 90-year-old woman going into care, and needing £1,000 a week of benefit, would need to pay between £54,000 to £60,000. However, each immediate care annuity is individually underwritten to take account of age, sex, health and other factors.
Is there a way around paying for insurance at all?
There’s always a way around insurance. You can just use investments to create your own long-term care bond. You simply have to build up sufficient capital to buy income-generating bonds or annuities when care fees are needed. As there’s no insurance element, there are no premiums coming out of your capital – so it can all be passed to your family if you don’t spend it on care. The risk is that if the individual ends up needing care for a long time the fund may not cover all care costs.
