What will the State pay for?

Faced with such a potentially large and open-ended cost, what does the State offer by way of financial assistance? Not a lot...

The NHS now only provides and/or pays for the Nursing Care Service Component of a person's long-term care service needs. All other costs and services associated with long term care are your responsibility unless you qualify for Local Authority assistance. In Scotland, Free Personal Care is now available.

The 1993 Health and Community Care Act forces those with savings to pay for their own care. England, Wales and Northern Ireland have one set of rules. We are referring to these. Scotland has differing rules, and the key differences are detailed later. The rules are constantly changing, but not for the good of individuals.

If your Local Authority agrees that you need a care home it will assess your means to work out what proportion of the costs is your responsibility, and what the Local Authority will pay. If you get a contribution from the Local Authority, the Authority will contract with the care home, pay the home direct but ask that you make your contribution towards the fees to them.

The size of your contribution depends on the assessment of your wealth by a means test. Means testing is based on net worth to determine the level of funding it will agree to. The qualification bar is set very low...at the breadline level.

In England:

• Assets greater than upper means test limit
  You will not be entitled to any financial assistance from the Local Authority for long term care costs in a care home - it will be up to you to make all your own arrangements for care.

• Assets between the means test limits
  Your Local Authority may give some assistance. The amount of assistance takes into account all of your actual income and the 'tariff income. This is all your income, less the Personal Expense Allowance.

• Assets below lower means test limit
  You will have to give up ALL your income to the Local Authority. They will top it up to meet care fees. Income includes all of your private pensions, plus most of the Social Security benefits to which you are entitled. You can keep a small amount for personal spending.

Monetary limits

The monetary limits apply to the individual needing care, where the Local Authority are considering care in a care or nursing home. Similar limits may apply where care is to be provided in your own home, but will exclude the value of the house.

Although Local Authorities have to provide the care you need if you qualify for it, there are times when there are more demands on their budgets than they can meet, and they are unable to provide immediately all the care that is requested at any one time.

If you have assets exceeding £21,500 you get nothing and are liable for the full cost, until your money runs out and total assets fall below this figure.

The definition of "assets" will normally include the family home, unless a spouse or close family member remains in site. Strict measures exist to ensure that anyone seen to have "deprived themselves of assets" in order to claim State benefits can be fully investigated and forced to pay. So those who sell the home to a family member or seek to avoid paying, can be pursued in the courts.

If you have assets below £21,500, you get increasing help on a sliding scale down to the lower limit of £12,750 where no contribution is needed.

Are there any State Benefits  you may be entitled to?

Most state benefits are means-tested, but Attendance Allowance is a non-means tested, tax-free state benefit, payable to all individuals over the age of 65 who have needed care (defined as help with essential daily tasks, such as washing and dressing) for longer than six consecutive months.

Attendance Allowance is available at two rates, a lower rate, for those who need help during the day or the night and a higher rate, for those needing care during both the day and night.

The current weekly figures are £43.15 lower rate and £64.50 for the higher rate.

Individuals needing care under the age of 65 qualify for an allowance, but this is paid in the form of Disability Living Allowance.

What about Free Nursing Care?

Individuals assessed as needing nursing care in a nursing home, are entitled to receive an additional nursing care allowance, this is officially known as RNCC (Registered Nursing Care Contribution).

This allowance is non-means tested and tax-free, although how much is paid will depend on where you live.

In addition to the above a person may qualify for Continuing Care - the NHS contributes to the cost of care (but to qualify for this benefit, patients must be unstable and/or unpredictable and need constant 24-hour specialist/acute nursing care).

No nursing care allowance is payable for people classified as needing residential care (in a care home without nursing) or for those people receiving care in their own home.

What about Personal Care?

Personal Care in only available in Scotland and is £145 per week. Should a resident qualify for Personal Care, they are no longer eligible to receive Attendance Allowance.

From April 2008 elderly people in England will receive personal budgets to fund their own social care.

From April 2008, individuals will be means-tested to assess their health and personal needs, and councils will then pay cash into their bank accounts or those of nominated relatives.

Beneficiaries will be able to shop around for the best personal care packages, which will include help with getting dressed or washed, meals on wheels, cleaning services and cooking.
  

The State Supported Equity Release Scheme

Each local authority has an equity release scheme in place to enable residents of care homes to fund part of their care fees by releasing capital from their former home. It is called the Deferred Payment Scheme.

You can only qualify for the scheme if you are about to permanently enter into, or are already permanently living in a care home, and have insufficient income and other assets, other than the value of your own home, to meet the cost of care, and do not wish to sell your home or are unable to sell your home quickly enough to pay for care fees.

A person can also only qualify for an equity release scheme if their home is not treated as a disregarded asset. Their home would be treated as a disregarded asset:

There are restrictions. You do not pay during the first 12 weeks of permanent residence in the care home. It cannot apply if the house is occupied by your partner and/or a relative or family member who is either aged 60 or over, or under 16 and is a child the person is liable to maintain, or is incapacitated.

Once the local authority has carried out its financial assessment to see if you qualify, and your care needs are assessed as requiring permanent residence in a care home, the local authority will enter into a care contract with the care home. The local authority will then be responsible for paying all of the care fees to the care home.

The local authority will also enter into a separate contract with you. This contract will be known as a deferred payments contract. Through it you agree to pass on all of your after tax income, less the weekly Personal Expense Allowance, to the local authority. In addition, you agree to repay any monies the local authority has to pay to the care home, over and above income contribution, agreed in their contract with the care home.

Repayment of any additional monies paid by the local authority is secured through a charge on your own home. The accumulated charges are repaid when the home is sold.  In effect, the local authority provides an interest free loan for the care fees payments over and above the your available income until the home is sold or until 56 days after your death if earlier.

What if you want a better quality home than the Local Authority is prepared to pay for?

The Local Authority will pay fees in excess of its baseline level, if and only if it believes it can be certain of obtaining the difference in top ups throughout the lifetime of the person from either you or a third party.

What it all boils down to is that if you need long term care, and need state help; you lose all control on what you do with your income or home.

This is why many people are taking matters into their own hands, to provide funds for care. Some methods provide income or cash, to use how you want, if you do not need care.

Get a quote

For online quotes and costs on UK long term care plans, use our Get A Quote section, or for enquiries about long term care plans, complete our enquiry form.