Paying for any type of care, regardless of someone’s age, can be an expensive thing to do. Often, the care that is needed is so specialized that it can only be done by specialized carers or nurses. No matter how old or young you are, it is always good to know how much you can expect to pay for care. If you are elderly, it is important to know whether or not you will be able to afford care on your own. If you are younger, you may be expected to pay for a family member’s care or want to plan accordingly should something happen to you.
or the costs of care homes vary but a good indication of what you can expect to pay was given in an article in the Independent (Macerlean, 2010) who says that the average weekly fees at a residential care home in the UK are $479 and $669 that makes it $24908 per annum for a care home and about $34,788 for a nursing home. This can be quite scary if you are expected to pay for someone else’s care. However, if the person in need of care is deemed to have less than $14240 in capital assets, he or she will not have to make contributions from their capital. Income and benefits will however be assessed and most of it will have to go towards care. It is, however, good to know that the government is willing to help you out. If the local council the individual lives in is expected to contribute towards care, everything except a small personal expenses allowance will be used to fund care.
Who pays for care?
If you have an elderly parent who needs care and cannot afford the right care, you may want to seriously consider contributing some of it yourself. They have raised you and taken care of you when you were young, so it is no surprise that many do this for their parents. If you can’t afford, the government has programs which assist the elderly as well. You may need to do some good research first before you can choose the best home care scheme.
Caring work for disabled and elderly people is nowadays on huge demand. The carers or nurses generally stay at the houses of their clients and offer help, companionship, Practical assistance and support. The main responsibilities of the carers are helping them with the mobility, running errands for them, taking them to the various appointments or meets, preparation of their meal, getting in and out of the bed, assisting them with the shopping and pension collection.
There are many caring work agencies which hire carers who can look after the elderly people, usually in their own houses. The carer lives in the client’s house and it is usually called as live in care work. Their stay in the client’s house is limited to a definite period of time. Care work is a flourishing industry and it goes hand in hand with an increasingly aging population. Many clients prefer to spend time in their own houses instead of the nursing homes and want to have complete independence which is why is so important.
Live in care work is the best option for the carer. The working hours are usually 8 hours a day for seven days per week. Along with the salary, the carer gets free food and lodging and is available for another 5 hours on call for any sudden emergencies.
Managing the responsibilities of a paid job and the demands of caring often make people give up their paid job. Those who have the fall-out have a tough call. They need to face lurking financial hardships. Thinking carefully and giving it a thought on how to cope up with everything together will help you explore all the possible options.
As a working carer, you would need to make deliberate attempts to have everything in place for the elderly people that they would need while you are away working. Many ranges of supports like access, is available on call, frequent checks on the person you care for and ready-made arrangements for them are needed. Make sure or confirm it with the HR personnel at your work, whether they have any possible support for carers. There might be some existing plans exclusively for carers listed in their policies.
Paying for elderly care is quite costly. Reports keep increasing of most elderly who have had to sell their homes in order to afford long term care, including residential care. Many elderly people have been asked to sell their homes in order to afford care costs and many have done so. There are other ways of using your home to pay for elderly care, without having to sell it. Finances can be raised from ones home easily to cater for the much needed and costly long term care.
1. Releasing Equity to pay for elderly care:
One way of paying for elderly care using one’s home is through from the home to pay for care. This works when there is equity on ones home to be released. It is difficult to use one’s property when there is negative equity in one’s home.
2. Loans for the elderly to pay for care:
The local authority is also considering another method of using your home to pay for elderly long term care. Through this method, the elderly person is given a loan to pay for residential care. The loan will only be repaid to the local authority after the elderly person dies, through the sale of the deceased’s home.
3.The Partnership Care Plan Payment Option:
Another way of using your home to pay for long term care is through the partnership care plan payment option which is suitable to the elderly who are 80 years and older, single, divorced or widowed and who is the sole owner of their homes. The Care Plan payment option assists an elderly who do not have available cash to buy a care plan. The elderly person will get a loan against his home which shall be payable after the sale of their home. This means that the elderly person in need of long term care will not have to wait until the sale of their home to receive much needed care. Once the elderly person’s health improves, he or she will be able to return home. The amount borrowed by an elderly person under the care plan is based on his or her life expectancy.
Dementia is not a specific disease but a term that covers a collection of symptoms relating to cognitive impairment. Different symptoms will present themselves dependant on which area of the brain is affected.
Someone who has difficulty remembering or struggles to reason is likely to be suffering from cortical dementia. The cerebral cortex controls our ability to remember and an example of this type of dementia would be Alzheimer’s and Creutzfeldt-Jakob disease. Huntington’s disease and Parkinson’s disease are both associated with subcortical dementia.
Other forms of dementia include vascular dementia which is triggered by a blockage in the arteries that travel to the brain. The damage that ensues is likely to result in difficulty with communication skills, being unable to reason, slower reaction times, memory loss and lack of coordination and in many instances can also show its damage in violent behavior.
Taking care of someone suffering from a degenerative mental illness such as dementia is likely to become more and more difficult as the disease progresses. The conditions may take many years to fully take over and you may only notice minor symptoms in the initial stages. There are many trains of thought that believe in maintaining the individual in their own home environment with all their memories around them and knowing their way around their home, however, unless they are closely monitored they could become a danger to themselves if they perhaps left on a ring of the cooker or started to wander.
Due to technical advances, it may be possible to install a closed circuit tv system into the home of a loved one with dementia so that you can observe them without them having to give up on their independence until full-time residential care is required.
With improvements in medicine, the number of people requiring residential care or nursing care is set to rise considerably over the coming years. Many of these elderly people will have worked hard all of their lives and may be facing the prospect of using up their life’s savings in a very short space of time paying for care.
The process will start by the local authority doing an assessment of your care needs and providing you with an individual care plan. This will establish where the care will be provided for example care in your home or a residential or nursing home.
It is then the responsibility of the local authority to conduct a means test in order to establish if you are to be a self-funder. A self-funder is someone who has assets in excess of the upper means test limit of $23,250. Your assets will include all savings and investments held in your sole name or 50% of any jointly held assets. There is an exception though with which is a form of life insurance plan.
Under the Charging for Residential Accommodation Guide (CRAG,) these types of investment would normally be excluded from an assessment because they are classed as insurance policies. On death a single premium investment bond would guarantee a certain payment would be made, this would normally be 101% of the initial investment.
The Local Authorities, however,r would look closely at any investments in this class of product and would need to be satisfied that the investment was not being made for asset deprivation.
If they considered that the investment has been made in a deliberate attempt to deprive yourself of the asset they could conduct the calculation assuming this capital was still part of your total assets. Care should also be taken where income had previously been taken from the bond is then stopped as any income from the bond would also be included in your ability to cover your care costs.
Due to the ever-increasing costs of providing care for the elderly, many people have taken specialist financial advice surrounding Long Term Care Insurance (LTCI) products. Whilst many of these products are no longer available to new investors it is important to understand how they all work as legacy products are still in existence and could be called upon in the future to help you pay for your care needs.
The types of care plans fall into two categories:
has more or less disappeared from the market, one of the explanations for this is a higher than expected level of claims on the policies, in other words, the underwriters got their calculations wrong. Actuaries would have based the premiums for such policies on anticipated life expectancy and how likely a claim would be for individuals taking into account such things as their current health, medical history, family history and even where in the country they lived. Due to improvements in medical care many, more people can expect to live for longer and therefore the insurance companies would be expected to pay the income to the residential home for far longer than initially expected.
There are two main types of pre-funded care the first of which is a typical insurance policy that would have required the regular payment of premiums and would have provided protection just in case care was required. As with most life insurance policies, this type of protection would not provide a repayment of premiums if not claim were ever made or generate cash in value at any time.
The other type of pre-funded care plan was a combination of a lump sum investment bond with a protection policy. The idea behind this arrangement was for the long term care investment bond to produce the income to pay for the premiums to a care protection plan. The main benefit to this type of plan is that with careful planning some of their assets would be able to pass onto their beneficiaries on death. However, due to falling investment markets, the returns were unlikely to be able to maintain the premiums required on the policy.
So you are faced with the prospect of providing long term care either for yourself or for an elderly relative. The first issue to combat is where the care will be provided. I may be beneficial for you to remain in your own home or if this proves to be too costly you may need to reconsider a move into residential or nursing home. Once a decision has been reached about the location of the care the next question will usually relate to the cost of care, who will need to pay and is this method of payment sustainable for the lifetime of the individual.
It may be that when you assess your assets fall below the lower means test limit which is currently $14,250 and therefore will qualify for your care costs to be paid for you by your Local Authority. The other reason why your care costs will be covered would be if you qualified for continuing NHS health care. You may receive this benefit if you are assessed as having a primary need for medical care/nursing care. If you are considered to be a self-funder you will need to ensure that your assets are managed correctly in order to provide an income to cover the care costs for the rest of your life.
The most common way to achieve this is by purchasing a point of care annuity also known as which provides the income required.
In return for a lump sum payment, the insurance company will provide a guaranteed income for the rest of your life. You are able to include some level of escalation to your income in a bid to keep pace with the increase in the cost of your care. It doesn’t matter if the annuity is used to pay for care in your own home or in a residential care home, providing the income is paid directly to a registered care provider the payments will be paid free from income tax.
In years gone by many people believed that there was an unwritten understanding that you could gift away your savings and property to your family or other beneficiaries and it would, therefore, place these assets outside of your means test for paying for long term care. Many families with elderly relatives believed that if assets were passed over a certain length of time ago
In reality, though the Local Authorities were wise to these tactics and they would investigate where an elderly person’s assets had gone and more importantly the reason for their disposal. The deliberate deprivation of your assets is illegal to avoid paying for care.
However, the law is understanding in that it appreciates that people may wish to give away their assets for other legitimate reasons. In some instances a transfer of property may take place in order to mitigate some for the beneficiaries. In order to prove this as the reason for the transfer, the individual would be seen to make a market rate of income if they were to remain in the home after transferring ownership.
Ultimately the Local Authority concerned would have to provide proof in these cases that the motivation for transfer of their assets was NOT for the purpose of getting them to pay their care home fees.
Other considerations should also be given when transferring your property to a family member or third party, such as not being able to raise finance against the value of your home, insecurity for the future should the person who the property transferred to may find themselves in financial difficulties and the property may need to be sold.
So you have worked hard all your life. You have paid your mortgage and finally, you own your property outright. In your later years, your health starts to fail and your need for long term care has arisen. Many people feel that their only option at this stage is to use their only asset which is their home.
However, it is worth looking closely at how property is treated in the assessment of paying for care. Where an elderly person has a spouse or partner still living in the property or if that home is the main residence for an elderly relative over the age of 60 the value of the property will not be taken into account.
If the individual has a dependant who is under the age of 16 living in the property the value will also be ignored. In some other instances the Local Authority may have the discretion to use the perhaps where someone has given up their own home to move in with the elderly person in order to provide life in care.
For a single person living alone the local authority will disregard the value of the property for a period of 12 weeks following their admission to a residential care home. This is known as the 12-week property disregard. This would only apply however if the individual had assets below the upper means test limit of $23,250 without the inclusion of the property value. Those that fail the means test would have to pay for their own care from day one.
At the end of a12-week property disregard, the local authority would bring the value of the home back into the equation when doing the financial assessment. Some local authorities may at this stage be able to provide funding in the form of a deferred payment scheme. This is essentially a loan for the cost of your care that is secured as a charge on your property and only becomes payable once the property is sold either before of just after death. The main benefit of this would be that the loan is interest free until 56 following the death of the individual.
As a nation, we are all expected to live longer and the sad fact of life is that with longevity it is highly likely that many of us will require some form of our later years. When the time comes you can request an assessment of your care needs or for an elderly relative for which you are acting as an attorney.
Your care assessment will be carried out by a Social Worker or care professional and would normally be carried out within the comfort of your own home. It is best if a close relative or friend is in attendance to offer you support.
Following your assessment your local authority will provide a report recommending the type of home care or residential care that is required.
Who pays for recommended care?
The next stage in the process is to establish who will pay for the care. Should your assets fall below the lower level for means testing of $14,250 it is likely that your care costs will be covered in full by the local authority. If your assets are above the upper mean testing limit of $23,250, you will be funding for your own care needs. For those with assets between these two figures, there will be some assistance from the state but you will be assessed as having $1.00 of extra income for every $250 over the lower limit.
If the primary need for you to receive care is deemed to be for medical reasons and nursing care then you could qualify for Continuing Healthcare which is fully funded health care provided free by the NHS.
Should you require assistance during the day, through the night or both night and day you can claim for Attendance Allowance which is a benefit payable to help with personal care. Depending on your level of need this benefit can be a lower rate of $51.85 the higher rate of $77.45 per week. This benefit is not means tested.
For advice on your long term care requirements, speak to a SOLLA accredited long term care adviser today.
The elderly will need to seek legal advice on many matters in their later years. The services that require may include setting up a lasting power of attorney, making a will and arranging trusts to protect their assets. It may also include conveyancing for the sale of a property or arranging equity release perhaps to pay for their long term care needs.
It is therefore vitally important that they choose a legal professional that they can trust and who is well experienced in dealing with the specific needs of the elderly. A national independent organization called (SFE) can provide details of suitably qualified and experienced solicitors, lawyers, legal executives, and barristers. They are there to help and guide vulnerable older people their families and carers.
Solicitors for the elderly offer a full service of advice on the following subjects:
The solicitor who you instruct to act on your behalf will be transparent with their charging structure and will usually provide you with a written estimate for the work they will carry out on your behalf. They may charge by the hour or have a fixed pricing system for certain types of work such as Lasting Power of Attorney or making a Will.
For legal professionals to work under the banner of Solicitors for the Elderly they will have had to have provided evidence of their experience working in this specialist are and also stick to the SFE code of practice.
When the elderly become unable to look after their day to day needs they and their families are faced with the prospect of looking for care. This care may initially be just a couple of hours per day to help with cooking, cleaning, and shopping, which in most part can usually be provided by family members. Because of the pressures of their own busy lives, this may not always be possible and often the extended family may live many miles away.
Professional long term care may be the answer to this problem although this option will usually come at a cost unless your assets fall below the lower means test limit of $14,250. Many individuals may delay getting the care planning they need because they are worried that all they have saved over their lifetime may be used up in paying for care.
By seeking out specialist financial advice at the start of the process they can give you valuable care home fees advice which can put you in a much stronger position to be able to preserve some of your assets for your beneficiaries. By looking at the cost of a potential care home or provision of care in your own home then taking into account any pension income you may receive there would normally be a shortfall between the two. This shortfall can be covered with the purchase of a Care Plan which is a form of payable for the rest of your life.
The lump sum required to purchase a plan such as this would be calculated based on the income required and the health and life expectancy of the person needing care. Because the amount required is a definitive amount and would provide the income for life you will have a clearer picture of the assets that could remain for the benefit of your family. It would be advisable to incorporate some level of escalation on the payments to keep up with any expected increase in the cost of care.
Andrew Lansley the Secretary of State for Health has recently unveiled proposal s to help the elderly with the growing cost of care. Last year the Dilnot report on care suggested that a cap on how much an individual should have to pay for their long term care should be instigated. The suggestion was that each person should have to pay no more than $30,000 toward the cost of their care, however, this was perhaps a little unrealistic when we consider the current financial situation the Government is facing. With cutbacks in all public services and public spending it was perhaps a little optimistic of the public to expect this recommendation to be adopted.
Whilst the government took on board the contents of the Dilnot Report their proposals are somewhat watered down. Andrew Lansley is suggesting a which would effectively put a cap on the cost of care at a figure of $100,000. This scheme would not however be free to all, but instead, individuals would have to opt into the scheme to benefit and pay a premium to ensure that their costs for care and accommodation would be capped. Effectively taxpayer would have to stand the 1-10 danger of catastrophic costs exceeding the limit of $100,000.
The Treasury have already stated the current economic situation meant they were "unable to introduce the new system at this stage". So over the past 13 years, there have been two independent commissions, three public consultations and now three white papers. Yet ultimately ever increasing costs of providing care and the increasing longevity of the nation means that the government are not or will ever be in a position where they can offer fully funded care for everyone.
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