Long Term Care - Who Pays the Bill?

Nowadays, the majority of us are living longer and, with medical science continuing to advance, we are surviving what were once considered terminal illnesses. This means that more of us will need some form of long-term care and the big question is, “Who will pick up the bill?”

Location lottery

Most people are unaware of just how much long-term care costs and the financial help available at present depends on where you live. At present you could pay around £307 a week (£16,000 a year) at an average residential home, while nursing home fees range from £16,000 to more than £50,000 a year, but are typically around £24,000. The cost of someone visiting you at home could be between £8 and £12 an hour, and home alterations, should they be necessary, can be expensive too.

In England the government will pay a contribution of between £35 and £110 a week towards the ‘nursing’ element of someone’s care, but will pay nothing towards personal care. This is only available if you are in a full-provision nursing home.

In Wales you are likely to receive a flat rate of £100 a week towards nursing costs only and Northern Ireland is considering similar payments of between £90 and £100 from October 2002. However, the new rules in Scotland mean that you get a flat rate of £65 towards nursing care costs and up to a further £145 towards personal care costs. But if you receive the personal care contribution in a care home, you will lose your attendance allowance of £37.65 or £56.25 a week.

Financial solutions

Basically, there are two kinds of financial product to consider for long-term care: those you buy in advance and those that help you meet the immediate need for care. The earlier you take out a long-term care plan, the less it costs but, sadly, people tend to tackle the problem only when it occurs and then selling their home is often the only option.

It is usually better to buy a scheme that limits the liability. At this stage, you could buy an immediate-need care fee payment plan that pays an income higher than traditional annuities because you have an impaired life. You hand over a lump sum in exchange for a guarantee of extra income, which, if paid direct to the care provider, which will be tax free. It can also include a degree of inflation proofing, so it should continue to meet the additional income needed to pay for care.

Long Term Care Jargon

Personal care
Includes the provision of non-medical services that involve close personal care, although Scotland is likely to expand the definition to include psychological support and counselling for people with dementia.

Attendance allowance
A non-means-tested, tax-free weekly benefit paid to anyone needing help to look after themselves. It is only paid to those aged over 65.

Nursing care
The performing, planning, supervision or delegation of nursing care by a registered nurse, to include such tasks as changing dressings and tube feeding.

Care Fee Payment Plan
Provides an income from an insurer in exchange for a lump sum. How much you get depends on the insurer’s view of your life expectancy, so the more impaired your life, the more you will get.