In the last couple of days the Secretary of State for Health Andrew Lansley has announced proposed changes to the way are paid. It was announced that a scheme that should come into force by 2015 would prevent the need for an elderly person or their family having to sell their home in order to cover the costs associated with providing their long term care.
There is in fact already a Local Authority funded scheme in existence that allows this to happen. The deferred payment scheme is not well publicised as many Local Authorities do not have the funding available to cover the cost and those that do offer it have limited funding so the option may be refused. This scheme allows the Local Authority to pay for your care costs in the form of a loan that is secured on your home. The loan will need to be repaid on death or if the property is sold before this time. The loans available on the Deferred Payment Scheme are interest free until 56 days following the death of the individual. At this point interest will start to accumulate on the loan outstanding until the debt is repaid.
The current proposal to extend the home loan for care scheme to all Local Authorities has indicated that there will be interest charged on the loan from the start of the arrangement. Whilst the availability of funding through the Local Authority my offer the individual more options for example, by retaining their home this could be rented out to provide a level of income that can in turn be used to pay some of their care fees, there would still be a danger that if care continued over a long period of time the funds available my run out.
Therefore consideration should be given to selling the home and using the funds that are available to purchase a Long Term Care Plan which can provide you with the security of an income guaranteed for your lifetime to cover the cost of care.
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