Importance of planning ahead to pay for care
Research from The Live-in Homecare Information Hub has found that people are not aware of the costs involved in later-life care and are leaving their financial planning to the last minute. The research, which is published in its report No Place Like Home,* revealed that with such a potentially long-term financial commitment on the horizon, just 1.9% of people spoke to a specialist independent financial advisor about planning ahead to pay for care.
Decide what type of care you might want
The first step is to think what your ideal care scenario would be, then talk to a specialist ‘later life’ financial advisor (not just a standard financial advisor). They’ll assess each situation thoroughly and advise on all conceivable options, including whether any state funding is available. In all cases, I would recommend talking to a financial advisor who specialises in later life planning, or to a member company of the Live-In Homecare Information Hub.
It’s important not to discount any options until expert ‘later life’ planning advice has been taken, because there are many ways and means of shaping and affording care. Specialist later life financial planners will be authorised and regulated by the Financial Conduct Authority and will also have obtained a dedicated long term care qualification. They will be Disclosure and Barring Service checked too to provide added reassurance that they are cleared for guidance involving vulnerable people.
How are care fees determined?
Fees will be determined by a number of factors: by whether you choose an introductory model provider of carers, or a fully managed service provider and also by the level of care required. ‘Companionship care’, for example, will cost less than specialist personal care for people with more complex needs or challenging behaviours.
A specialist later life financial adviser can recommend ways, for instance, to set up an ‘immediate care’ plan , which is a dedicated and potentially tax-free product designed to cover all or part of a person’s care fees for as long as it’s needed. Once established, immediate care plans will pay towards care fees indefinitely, so they can provide you with peace of mind and as such, are a popular choice. Another alternative is to borrow cash against your home from banks, building societies, or via some of the specialist mortgage products available to fund live-in care. The annual interest, which is currently relatively low, is usually settled monthly. The original mortgage capital debt can often be settled from the proceeds of the house with no additional interest to be paid.
These schemes are not to be confused with equity release, which has definite pros and cons. Although cash is released to use towards care, it’s normally expensive, with compound interest building up (i.e. interest on interest) over and above the debt from funds which have been freed up initially. As a result, the next generation can find they’ve lost the house entirely or there’s very little equity left when their parents pass away.
How will a specialist later life planning adviser help me?
The specialist later life planning advisor will hold a face-to-face meeting to assess the situation thoroughly from both a care and financial perspective; then prepare a comprehensive report detailing each and every available option together with their recommendations. This allows the client, legal representatives or family members to weigh up all the facts and make a truly informed decision.
Expert care fee planning also helps ease the burden of worrying about essential monetary matters during a time that is often highly confusing and emotionally draining.
Not everything is means tested or taxed, for example. Attendance Allowance is available to anyone over 65 who need assistance with essential daily tasks for longer than six months.
There are some scenarios where the NHS may be responsible for funding. If full time care is required and a person’s primary need is a health need, all their care fees could be paid by the NHS through a little-known funding stream called NHS Continuing Health Care. Many people wrongly pay care fees, because they don’t know this exists, so talking to a specialist later life financial advisor is essential.
Don’t leave it too late to plan how you pay for care
Many of the members of The Live-in Homecare Information Hub have noticed that families are leaving care planning later and later and are often at crisis point with a parent or older relative, at which point they have no time to research the options properly. One thing is for sure: planning ahead as early as possible is vital.
One option for care is live-in homecare, a well-established, whilst possibly less well-known alternative to residential care, but one which is growing in popularity. It means that people can be cared for at home in familiar surroundings, close to family and friend and remain with beloved pets, if they have them. For most people, any long term care represents a significant ongoing financial outlay, but there are numerous plans available to help you to pay for live-in care in your own home, for as long as it’s needed. Live-in homecare fees can compare very favourably those of with residential homes, especially where couples are looked after together, when they can be significantly less.
Lucy Perkins, Director of Care at EnViva Care. EnViva Care is a founder member of The Live-in Homecare Information Hub.
For further information on fees and funding, please visit stayinmyhome.co.uk
*A nationally representative survey of adults was commissioned by The Live-In Homecare Information Hub via market research specialist Censuswide during January 2015. 1,040 over 16 year olds were surveyed.
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