How to fund long-term care for the elderly

If you or a relative need to be taken into long-term care, the chances are you’ll have to foot the bill yourself, says Naomi Caine. So it’s wise to check out all the options

If you or a relative need to be taken into long-term care, the chances are you'll have to foot the bill yourself, says Naomi Caine. So it's wise to check out all the options

How can you fund care for elderly relatives? It's not easy and it's made harder by the complex and often unfair funding system. Most people have to pay for long-term care themselves. Help the Aged estimates that about 40% of people entering residential or nursing homes meet all or part of the cost. And it's not cheap. Fees for residential homes have soared by 51.5% since 2000-2001, says Sarah Womack of The Daily Telegraph. You can now expect to pay upwards of £25,000 a year.

Funding personal care: Local Authority contributions

Local authorities will pay towards the cost of care if an elderly person's assets, including their home, amount to less than £21,000 in England and Northern Ireland (£21,500 in Wales and £20,000 in Scotland), says Alexandra Frean in The Times. The local authority decides how much it is prepared to spend, says Teresa Hunter in The Sunday Telegraph. But Help the Aged's Care Fees Advisory Service warns the typical shortfall is £100 a week.

Even if the authority pays the care home fees in full, you must still contribute. You have to hand over your entire income, including private and state pensions or interest on investments. You can keep just £19.60 a week. However, everyone, no matter what the value of their assets, potentially qualifies for two state handouts: attendance allowance and Registered Nursing Care Contribution.

Everyone over 65 who needs personal care can claim an attendance allowance of either £41.65 or £62.25. If nursing care is needed either in a residential or nursing home, you may qualify for the Registered Nursing Care Contribution. There are three rates, depending on the severity of the condition. Most will receive the lower rate of £40, or the middle band of £83. There is a higher band of £133 for the extremely ill.

Funding personal care: other options

If you fail the means test, you must meet the cost of the care home in full. There are ways to fund it: You can, for example, ask the local authority to defer payment of the fees by putting a charge on your property. But the house will have to stand empty for a number of years, or be rented out. And you might run out of money before you die. You could take out an annuity, where you pay a lump sum to an insurance firm, which promises to meet certain set payments for the rest of your life. This gives you security, but can be an expensive way of doing things particularly as you might die the day after handing over your money.

Contacts: Help the Aged, 020-7278 1114, www.helptheaged.org.uk/carefees; Saga, 0800-0566101, www.saga.co.uk/ltc; Symponia (an umbrella group of specialist advisers), 01789-774595, www.symponia.co.uk.

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