Paying for Care

There are several ways to pay for long term care costs

 

SOLLA: Society of Later Life Advisers (ASSOCIATE)

Most people use a combination of:

  1. Savings and investments, including private pension income
  2. State (Universal) Benefits e.g. State Pension, Attendance Allowance
  3. Releasing equity from your home by borrowing or by selling some or all of your home.
  4. Renting out your home
  5. Family help
  6. Care Fees Annuities - CFAs (also known as INAs - Immediate Needs Annuities)
  7. Local Authority pays
  8. NHS Continuing Healthcare (CHC)
  9. Deferred Payment Arrangements (Local Authority lends you money)

When a care need arises, some people believe that #7, above: "Local Authority pays" is the norm.  It isn't.

If you (or your parent, if you are the Attorney) have assets of more than £23,250, you pay. (Perhaps topped up by your family, if you have insufficient.)

If you own even the smallest home, in any of the lowest house price areas of the UK, you will, therefore, have assets of more than £23,250.

(In some circumstances, such as when your long term partner, civil partner or spouse continues to live there, the value of your home would be disregarded in a care needs financial analysis.)

Some people believe #8, above: "NHS Continuing Healthcare (CHC)" is the norm i.e. the NHS pays for your (or your parent's) care.

A small number of the hundreds of thousands of people needing long term care qualify for CHC.  CHC is there for those who, otherwise, would still be in a hospital bed and the NHS wants the bed.  So, one's medical situation has to be extreme to qualify.  This is not the case with the bulk of those having care needs.

Care Fees Annuities (CFAs) - often called Immediate Needs Annuities

Care Fees Annuities are intended for individuals who need, or will soon need, paid-for care.  For a single payment to an insurance company, they will pay your care provider.  The payment is tax free on you (or your parent).  CFAs can be powerful tools to be used to cap care costs, provide for inflation and leave assets to your children for when you die.  Above all, they provide a guaranteed payout, and the arrangement is bespoke to the individual needing care.