C8 Long-Term Care

Long term care is regulated by…

FCA

NHS are responsible for…

“primary health” care NOT personal/domiciliary care

NHS funded nursing care is…

• additional nursing care when in nursing home

• not means-tested and tax-free

• paid directly to care home

If someone pays their own care fees, they can claim…

attendance allowance

Attendance allowance is…

• paid from state pension age (if younger could get DLA/PIP instead)

• for personal/supervisory care

• tax-free

Local authorities have a duty to…

provide means tested help with care costs and assess individuals care needs

Local authorities will determine…

• whether they should fund or partially fund

• maximum fee levels

When assessing individual’s level of contribution they must leave them with…

a sum of money to cover some of their own personal expenses

The savings thresholds for whether residential care is funded or not are…

• upper threshold - £23,250 (self funded)

• lower threshold - £14,250 (this amount is completely ignored when calculating)

• in between - £1 tariff income assumed per week for every £250 in between

A legal charge can be placed on a property if…

it normally counts as an asset but isn’t liquid, and the debt is cleared when it’s sold - deferred agreement

Local authorities have guidance for assessments from…

CRAG - Charging for residential accommodation guide

Most income is taken into account but…

• some is totally ignored - earnings from employment, council tax reduction

• some is partially ignored - 50% of pension income can be repaid to a partner not in the same care home

Surrender value of insurance bonds with life cover and personal possessions are…

disregarded

Assets considered include…

• shares

• cash

• property

• business owned

• ISAs, OEICs, unit trusts, investment trusts

If over 55 and choosing not to draw income from DC pension…

notional income is assumed

Value of home is disregarded…

• for first 12 weeks of being in care home

• when partner, former partner is living there, they’re a lone parent, or relative 60+ or child under 18/incapacitated is living there and it’s their main home

To reduce the value of a house as asset, should consider…

tenants in common and on 1st death passing equitable interest in house into trust to children

Transferring assets out of own name to reduce value for assessment is…

illegal - local authority can use notional value of capital disposed of

There’s no legal time limit for…

transfers not to be considered

Types of long-term care includes…

• family care (approx 12% of adults are carers)

• professional care (own home or care home)

• at home (domiciliary care)

• care home (temporary, respite or permanent)

• sheltered housing (supervision not care)

• extra-care housing (renting or buying)

• close care (same site as care home)

Continuing care retirement communities (CCRCs) service costs may be…

shared by all residents/charged only to those who use them

GPs can assist families on deciding…

which one to choose, budget, location, future needs, or special requirements

Immediate needs plans (annuities) features…

• single premium

• income until death

• basically an impaired life annuity

• income paid to care home is tax free

• income paid to individual is PLA

• level or indexed benefits

• guarantees (on death soon after inception)

• qualify if unable to do one ADL

• usually effected through EPA or LPA

Deferred care for immediate needs is where…

benefits paid after short period, for someone who has short-term funds themselves - cheaper than immediate needs

Pre-funded traditional insurance…

• single or regular premiums

• no refund if cancelled

• provides benefits when needed in future

• usually need to be unable to do 2 or more ADLs

• normally pays until care no longer required

• most offices have withdrawn from this market

Pre-funded investment linked policies…

• single premium investment bond

• insurer can take withdrawals to pay for long-term care policy

• can encash bond at any time

• most offices now withdrawn from this market

Care cash plans…

• pay lump sum and/or income

• pays for set period only

• used for future care needs

Equity release involves…

exchanging equity to pay for cost of care

A lifetime mortgage consists of…

• cash sum and interest repaid on death or move into care home

• cash sum or income for rest of life

• drawdown gives most flexibility

• minimum age (normally 55+)

• significant early repayment charges

Interest only lifetime mortgage option features…

• cash sum secured against home

• mortgage could be fixed or variable (usually fixed)

• loan repaid on sale, death or moving into permanent care

Roll-up lifetime mortgage features…

• cash sum or income secured against home

• interest payable and added to mortgage debt each month

• repay loan on sale, death or moving into permanent care

A home reversion plan consists of…

• part or all of home sold and owner gets proceeds

• either retain or invest money (annuity)

• peppercorn rent may be available or market rent in return for higher proceeds

• possibility of releasing tranches over time

• wont get full market value of house

• only for those over age 60

Savings can be used to fund care costs by…

taking income instead of reinvesting or switching to income producing assets

Pensions can be used to fund care costs by…

• releasing money in tranches

• taking before SPA

• using it to secure an impaired life annuity

• using lump sums (pension freedom DC rules now allow this)

Other sources of funding care costs include…

• selling capital assets

• selling or renting the home after moving to nursing home

• using accelerated benefit on CI/LI policy with TI cover

A viatical settlement is where…

a terminally ill person sells existing LI policy for cash, as a % of sum assured, and the investor continues paying the premiums and receives the death benefit - effectively turns LI into a CIC policy

When considering investment options, consider…

• amount of income/capital available now and needed in future

• clients attitude to risk and timescale (e.g. med term - equities)

• timescale, using life expectancy tables or family history

The only product that insures against living longer than average is…

Annuities

Care at home involves…

• GP/med adviser deciding

• local authority providing some/all, some contracted out

• looking after home and garden, transport and individual care requirements

For care in a home, things to be considered include…

• whether home meets needs now and future

• budget

• single/shared room

• special requirements

• location

• possibility of needing more care for frail or unwell

Those that can help with care and benefits includes…

• local authority

• charities such as Age UK

• independant specialist services

Family can help by…

• providing help themselves

• offering help choosing care package

• offering financial help