Money
Retirement
Long-term care - your questions answered
One in four of the UK population will require some form of long-term care in their lifetime, writes Saga expert Owain Wright
To find out more about the existing options and financial assistance available, check out the questions raised by Saga online readers below:
Neil: Hi Owain, can I ask exactly what long term care is and how your role works?
Owain Wright: Long-term care is requiring any form of professional care in your own home, residential home or nursing home. I have two main roles. One is as guide to help you through the care funding maze. And my second role is that of a specialist financial adviser to help create income and where possible protect capital.
DS: How does long-term care in this country compare with other EU nations? Are there any lessons we can learn from our continental neighbours?
OW: Paying for care is a global problem and if you look in a bit of detail at what other countries do it all usually boils down to the same thing. The State will pay for some of the costs but the person who requires care will have to pay for the rest. Generally the only difference is where along that line each Government decides to place its marker.
Frankie: Are there any proven benefits of saving for long term care when means testing will result in me getting it anyway. Why save when those that have nothing are supported by the state, and those who do save are penalised by the current Government?
OW: Generally speaking, the more capital and income that you have, the easier you will find it to both meet your care costs and protect your capital. I cannot disagree however, that some people might prefer to spend their savings and take their chances on the State. There is no right or wrong answer - it's purely a matter of personal preference.
Rod Widdrington: Can you explain the difference between what people living in England and those living in Scotland have to pay for long term care in a residential home and a nursing home. How can Scotland afford to be more generous than England to its older population.
OW: The main difference in Scotland is that if you require personal care then you will be eligible for the Personal Care Allowance which is presently £145 per week. If you also need nursing care then you be eligible for the nursing contribution which is £65 per week but this is also available (in a slightly different format) in England, Wales and Northern Ireland.
Vernon: How much can a long-term package cost?
OW: Care at home can cost about £12 or so per hour, a residential home will cost, on average, about £24,000 per annum with a nursing home about £29,000.
Harriet Walker: In case my husband and I need special care can we gift our home to our children and ask them to rent it back to us at a nominal fee. How would this affect us or them with claims that we could perhaps claim from the Social Services.
OW: If you needed care your local authority would ask what your motivation was for gifting your home to your children. Under the Deliberate Deprivation Rules the local authority could ‘notionally’ assume that you still owned the asset.
Honey: My in-laws have a very small pension - would it be more cost effective to place them in a care home in the sun? I have seen adverts for residential care homes in Spain and Turkey.
OW: I’m afraid that I don’t have too much experience of care overseas but would be surprised if it were not cheaper. Do remember to check that the standards of care are acceptable to you.
Colin Angel: Hi Owain, I'm hearing that finding that people received as a Direct Payment isn't necessarily the same amount of money that councils would pay if they provided the care themselves. Are you hearing anything similar?
OW: Your question seems to asking about the difference between Direct Payments to individuals and the sums paid out to care homes. Care in your own home will often mean that there are lower care needs, with lower associated costs. In addition, and apologies for being vague, but direct payments do vary with each local authority. Having said all of this, after assessment, payments should generally reflect the care need.
Peter Davis: Is there any way simple way to assess in advance how long each of us is likely to need 'long term care'? I have in mind the general guidance about likely life span, based on current mortality statistics and on one's parents and grandparents ages at death, which helps with retirement planning.
OW: Alas no. There are, as you say, guidelines and averages but when it comes to individuals there is no way at all of assessing longevity. I’ve seen many people who were very unwell indeed make an amazing recovery in the safe and warm environment of a good care home and they have gone on to live there for many years.
Leo Barquilla: It would appear that simply moving to Scotland in your final years would solve many of the cost problems, do you agree?
OW: The Scottish system can mean that you are better off on some occasions but not all. For example if you are in a Scottish care home you will get the personal care allowance of £145 per week but you will not get the attendance allowance benefit that you would get south of the border and this can be anything up to £62.25 per week. Also, the accommodation costs are increasing quite rapidly as care homes are no longer able to charge for personal and nursing needs.
Jill Berry: An immediate needs policy is financially prohibitive for my mother as she is 71 with dementia. Please tell me the best way to fund the excess £700 per month above her income, from her capital of appx £120K while retaining as much as possible of her capital. I understand there are some investments that offer tax benefits to the elderly. Thank you.
OW: You need to find £8,400 a year and you have £120,000 to help you do it. An annuity would, on average, cost 4x the amount you need so, in this case, about £34,000. Spending £34,000 to help protect the remainder is worth considering. Find out the exact cost before you exclude the annuity as an option. You should also look at investing to create an income as you only need a net yield of about 7%.
Stuart Baker: What happens if I go into care and the only asset I have is my home?
OW: This is perhaps once of the most complex questions there is! Generally, your care should be paid for by the local authority for the first twelve weeks. This is called the Twelve Week Property Disregard. After that, unless the property is disregarded for any other reason, for example, spouse still living there, relative aged 65 or over still living there, then the property will be included in the means test, and will be expected to meet the cost of your care.
Peter Westbrook: How easy is it to get a Judicial Review in order to assess my mother in law in line with the Coughlan Judgement?
OW: There is no shortcut unfortunately. You can certainly end up at the door of the Health Services Ombudsman but you will have to start by asking your Primary Care Trust to review their decision first.
Donald C: Are there any special rules that apply to people living in Northern Ireland that differ from mainland Britain?
OW: Nothing drastic, the main difference being the amount of nursing contribution that is paid. There are three bands in England, but only one (£100 per week, I think) in Northern Ireland.
Annie S: Who should pay for post-hospital care home placements?
OW: It differs a little with each local authority. Most will carry out a means test and that will dictate who will have to pay for the care. Some local authorities pay for the first 4 weeks anyway and most will pay for the first twelve weeks if you own a property but your other assets are below the means test limit. This is called the Twelve Week Property Disregard.
Steve: A friends father is in a nursing home he has had multiple strokes and can't speak, move and is confined to bed 24/7. He is fed through a tube and needs nursing care to deal with his needs. At present he is fully funded but he has a house worth about £150,000. What is the long term position with care is it a medica care and a NHS cost?
OW: I am happy to answer this question - but can i just ask, when you say 'fully funded' do you mean self-funded, funded by the NHS or funded by the local authority (Twelve Week Property Disregard?).
Rowena Bell: I believe the state should pay for long-term care. Where do you stand on this, Mr Wright?
OW: It would be great if they would wouldn’t it. The trouble is that if the state did pay for long term care the money would have to come from elsewhere and with only a finite amount of money available it has to be a question of priorities. I’m glad I’m not a politician.
Donald C: I hate the thought of having to sell my house if I need care in the future. Do you have any solutions?
OW: Good planning and sound advice should be able to help you to avoid having to sell. You could also consider switching your property ownership to Tenants in Common as this could potentially help you to have your property value removed from the means test if you should require care in the future.
Alan Armstrong: What criteria is usually applied to make people eligible for free care?
OW: They assess the amount of nursing are which is needed. The divide between band 3 of the nursing contribution and free nursing care is at present very blurry and often open to mistakes. Generally if someone has complex and very variable medical needs that require constant nursing attention then they should have a chance of receiving free NHS care.
John: Can you explain what tenants-in-common means in relation to nursing home costs?
OW: Yes! There are two ways of owning your property as a couple: joint tenants or tenants-in-common. With tenant's-in-common you and your partner own half the house each and when the first dies it will be usual for their share of the property to be left to the children rather than the partner. If the surviving partner then required care, it may well be that the local authority would have to value the property at nil if a buyer could not be found for the remaining half of the property.
Mary Winstone: Will I have to sell my home if I go into a nursing home to pay for fees, my husband will still be resident in our house.
OW: You will NOT have to sell your home so long as your husband still lives there. There are also several other occasions when a property should not be included in the means-test.
Steve: I am not sure he is not self funding but whether the funding is local authority or NHS I am no sure. He is currently being reviewed and the house is on the market. can you please explain the difference.
OW: You are suggesting (I think) he is not self funding, and that suggests to me that his care is being paid for, for free, by the NHS. Otherwise, the local authority would probably have included the property in the means test, resulting in him being self-funding. My team and I are happy to answer this in more detail with you after this chat at your convenience. Our phone number is 0800 056 8152 - it's a freephone number - please feel free to call.
James Goodacre: Can you tell me about the various Equity Release schemes that are on offer?
OW: In the context of paying for long-term care, there are two equity release options. One is offered by the State and is called the Deferred Payments Scheme. In short, they can pay for your care and take out an equivalent charge against your property. They will expect their money back shortly after your death but do not charge interest until after 56 days from this time. The second option is commercial equity release schemes, which generally work along the same lines but interest is charged from Day One. Both can have their advantages depending on your circumstances.
John: In respect of Mary Winstone's question, will the government help pay for nursing home fees even though she owns her own home?
OW: If you require care, your local authority will assess your means (the means test). Often, this will include the property but, as I mentioned in Mary' s case, not if your spouse is still living there. Aside from the property, almost all of your other assets (cash, savings and investments) will also be included in a means test. So, in Mary's case, if her other assets exceed the means test limit, then she will have to meet her own care costs. If they are below, then she should get State assistance towards the cost of care.
Bob Stevenson: I have a sister, 51, who is registered disabled and still lives with my mother. If my mother has to go into long term care will the local authority have the responsibility of re-housing my sister should the house be sold to pay for my mother's care?
OW: Assuming that your sister will continue to require care herself, then the Social Services department should assess her care needs and then put in place a care plan to ensure they are met.
Crabblefox: My mother who is 87 and partially sighted has had home carers for 2 yrs, she is now in hospital and awaiting a brain scan result. I am told she has obvious dementia. If she is diagnosed as unable to care for herself due to this, will this be social or nursing care ie: does she lose her property to the local authority? My mother has very little cash only her property, does this make a difference if she goes into care?
OW: Dementia is a tough one from a care point of view - as a reasonable person might well suggest that it is a nursing need, however in the majority of cases, people with dementia are assessed as requiring either social care or low-medium band nursing care. In this case, I think it likely that she will be responsible for meeting her own care costs, due to the fact that she owns her own property. Careful consideration should be given as to how best to use the property in order to find a balance between meeting fees and protecting capital. I am happy to add further thoughts on this, if you would find this helpful.
Brian: Hi - I have an aged uncle who is just about coping in his own home, but probably not for much longer. As he will eventually have to go into care will this mean he will have to sell his house, which is very dear to him?
OW: I'm afraid I would need to look at his full details to give you a definite answer but it is unlikely that he would have to sell it during his lifetime.
Tony Cuthbertson: Can you tell us about the best investment-related plans?
OW: In the majority of care-funding cases, the main requirement is to achieve a high-level of income with as little risk as possible to capital. There aren't actually too many investment sectors that can provide both these criteria. My preferred sector for this type of task has, for a long while, been the UK commercial property sector where my preferred funds have yielded double-digit returns with a very low-level of volatility. This is because your investment is not so much reliant on the underlying asset increasing in value, but rather on the rental income that comes from the funds' tenants.
Mary: I am retired and own my own house which I share with my daughter, who is in her early thirties. If I go into care for whatever reason, would it be a good idea to give my house to my daughter in case I lose it through paying care home fees?
OW: Unfortunately if you gift any of your assets away when you need care (and indeed for a fair while before you need care) then your local authority could assume that you are deliberately depriving yourself of an asset in order to have the State meet your care costs.
Lee Neal: I am 48 and live with my elderly mother. I have no plans to move out as she needs support from me. She has little in savings, her house is her only asset. If she needed care would the house be taken into account or would the fact that I live there mean that it would be excluded?
OW: The likelihood is that the local authority would include the property in the means test. I haven't come across many local authorities however who kick relatives out onto the streets, so it is possible, if you wished to remain living there, that the local authoriy would agree to meet the care costs and put an equivalent charge against the property.
OW: Hi Kath, if your mum does require care and you choose to sell the house then sale proceeds will be her’s to do with what she wishes (excepting deliberate deprivation). With regards to the second point, buying half your Mum’s house is certainly an option.
Kath Weir: My mother owns her own house but does not have any disposable income for treats, holidays etc. If i give her money every week what will happen if she has to go into care and they make her sell the house to pay for it. Will i be able to set money aside from the house that i have given her. Could I buy 50% of the house and give her the money to spend or will i then lose this money if the council make her pay for care fees?
OW: Hi Kath, if your mum does require care and you choose to sell the house then sale proceeds will be her’s to do with what she wishes (excepting deliberate deprivation). With regards to the second point, buying half your Mum’s house is certainly an option.
Peter Westbrook: Is it possible to get free legal advice (long term) in order for me to do the donkey work in my quest to get free long term care for my mother in law?
OW: Peter - I am not really an expert regarding legal aid, it's probably best to consult a solicitor regarding this.
