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Care fees planning

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David Crozier
David Crozier

This document discusses the aging population in the UK and the rising costs of elder care. It notes that the population aged 65+ has increased significantly since 1931 and will continue growing. Currently over 418,000 people live in residential care facilities in the UK. The average cost of a private nursing home is 贈563 per week but can be higher. Various legislative acts are also discussed regarding eligibility for state assistance and means testing. Options for funding long-term care include using savings, annuities, and state benefits. A case study of Harry explores solutions like an immediate needs annuity that could fund his home care costs while preserving assets to pass on.

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1 Care Fees Planning with
2 Brian Fisher Marketing Manager Lifetime Care
3 The Ageing Population 0 5 10 15 20 1931 1961 1991 2001 2021 2031 2041 UK Population aged 65 + Sources: 1931-2001 Census data 2021-41 Government Actuarys 2006 based projections M I L L I O N S
4 The Ageing Population UK Population aged 85 + Sources: 1931-2001 Census data 2021-41 Government Actuarys 2006 based projections 0 1 2 3 4 1931 1961 1991 2001 2021 2031 2041 M I L L I O N S
5 0 1 2 3 4 5 6 1901 1931 1951 1961 1971 1981 1991 2001 2002 2003 2004 2005 2006 2010 2016 2021 2026 2031 2036 2041 2046 2051 2056 2061 UK Population aged 85+ M I L L I O N S You are here Sources:1901-2001 Census data 2002-61 Government Actuarys 2006 based projections
6 The Legal System Wills and Estate Planning Transfer of Assets...... Solutions for those who are unable to look after their own financial affairs. Power of Attorney Enduring Power of Attorney Lasting Power of Attorney (England and Wales only)
7 The Facts 418,000 in residential care Currently 15% of people aged 85 and above receive care in a Care Home or Long Stay Hospital. Source : Laing & Buisson, Care of Elderly People Market Survey, 2010
8 The Cost of Care Care homes with nursing: The average cost of a private care home with nursing in the Northern Ireland is 贈563 per week Source : Laing & Buisson, Care of Elderly People Market Survey, 2010 .but can cost considerably more.
9 Relevant Legislation National Assistance (Assessment of Resources) 1992 HASSASSA 1982 & Adjudications Act 1983 Income Support (General) Regs. 1987 National Assistance Act 1948 Insolvency Act 1986 Health and Social Care Act 2001
10 Legislation NHS & Community Care Act 1990 Law in April 1993 Encourages care at home and in the community Source : NHS & CCA 1990 Policy Document Reduces State financial burden
11 Means Testing Assets over 贈23,250 (in N. Ireland) which can include your property Health and Social Care Board set maximum limits for cost of care All available income compared with this figure
12 When home may be disregarded Spouse/partner still resides in dwelling Relative over 60 resides in dwelling Relative with incapacity resides in dwelling Dependent child under 18 resides in dwelling First twelve weeks after entering a care home Source: Charging for Residential Accommodation Guide (C.R.A.G.)
13 Deprivation Must be deliberate deprivation No time limit needed to prove 6 months - recovery from recipient After 6 months - no case against recipient Source : Charging for Residential Accommodation Guide (C.R.A.G.) Insolvency legislation
14 The Health & Social Care Act 2001 Introduced free nursing care In N. Ireland single rate of 贈100.00 per week Payable by the Health and Social Care Board directly to the care home Property disregarded for the first 12 weeks Deferred Payment Scheme
15 State Benefits Attendance Allowance(2013/14) Higher rate - 贈79.15 per wk Lower rate - 贈53.00 per wk Carers Allowance - 贈59.75 per wk NHS Continuing Care
16 Care Funding Solutions Pay from income Use investments to produce an income Draw down capital Immediate Needs Annuity
17 Immediate Needs Annuities
18 Immediate Needs Annuities For those already requiring care. Regular monthly benefit Single premium Care at home or in a Care Home Paid for life Benefits can be indexed Premium Protection Option Tax free - paid to registered care provider Taxable - when paid to policyholder
19 Options: Indexation Level RPI RPI+2% Choice of 3% to 10% Premium Protection Protects : 25%, 50%, 75% of total premium Long Term Short Term (first 3 or 6 months) Immediate Needs Annuities
20 Meet Harry
21 Care at Home Harry is aged 79 Currently in a wheel chair Suffered a stroke last year Paralysed down one side Determined to stay at home Doesnt want to sell his house
22 Current situation Current Income from all sources 贈21,800 net p.a. Domiciliary Care Costs 贈49,700 p.a. Household expenses 贈 7,500 p.a. Shortfall in income 贈35,400 net p.a. Capital 贈150,000 Investment portfolio 贈 50,000 National Savings Certificates 贈 30,000 Building Society House 贈550,000 he wants to pass on These figures are for illustrative purposes only.
23 Harrys concerns. Worried that he is a burden to family Choice of care Would like to be financially independent Worried about having to leave his house Would like to leave an inheritance
24 Familys concerns... Dad secure and well looked after Capital running out His father lived to 90 Although suffered a stroke still strong and mentally alert
25 Options available Invest the capital to produce income Achieve a typical 3.5% net return on 贈230,000 = 贈8,050 p.a. Current Income 贈21,800 + 贈8,050 = 贈29,850 p.a. May have to move into a care home Meet the care costs from capital Risk the capital being used up and having to sell the house These figures are for illustrative purposes only
26 Solutions Purchase Immediate Care plan Cost a lump sum of 贈143,955 Provides 贈35,400 p.a. increasing by 5% p.a. Tax Effective Tax free benefits paid to registered care provider Surplus capital of 贈86,045 贈11,045 for immediate access 贈75,000 invested for legacies These figures are for illustrative purposes only.
27 Harrys views Choice of care Financially independent Flexibility for care cost increases and personal spending money Not a burden on family Should be able to leave an inheritance
28 Familys views Father able to stay at home Predictable net income Additional capital for additional expenses Peace of mind
29 Government proposals... 2017?...2016?... 2015?..... The Care and Support Funding Reform Proposals: ONLY APPLY TO ENGLAND! Introduce Longevity Cap of c.贈72,000 Increase means test threshold to 贈118,000 Introduce accommodation charge of c.贈12,000 pa A Universal Deferred Payment Scheme
30 Friends Life Company Ltd , the provider of the Lifetime Care range of plans, is authorised and regulated by the Financial Services Authority, register No 185063 (www.fsa.gov.uk/register/home.do) A company limited by shares, registered in England No 3291349. Registered office: Pixham End, Dorking, Surrey. RH4 1QA As part of our commitment to quality service, telephone calls may be recorded. The address for written communications is The Friends Life Centre, PO Box 1810, Bristol, BS99 5SN. Telephone 0845 30 30 430 Further InformationFurther Information Full details of our range of products & services are available from your Financial Adviser This presentation is based on our understanding of current Law and HM Revenue and Customs practice which could change.
31 Navigator Financial Planning Ltd 3b Milltown Hill Warrenpoint Co Down BT34 3QY T: 028 3085 1199 E: david@navigatorFP.com Navigator Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority. FCA registration no 587701. Further InformationFurther Information
32 Care Fees Planning with

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Care fees planning

  • 3. 3 The Ageing Population 0 5 10 15 20 1931 1961 1991 2001 2021 2031 2041 UK Population aged 65 + Sources: 1931-2001 Census data 2021-41 Government Actuarys 2006 based projections M I L L I O N S
  • 4. 4 The Ageing Population UK Population aged 85 + Sources: 1931-2001 Census data 2021-41 Government Actuarys 2006 based projections 0 1 2 3 4 1931 1961 1991 2001 2021 2031 2041 M I L L I O N S
  • 5. 5 0 1 2 3 4 5 6 1901 1931 1951 1961 1971 1981 1991 2001 2002 2003 2004 2005 2006 2010 2016 2021 2026 2031 2036 2041 2046 2051 2056 2061 UK Population aged 85+ M I L L I O N S You are here Sources:1901-2001 Census data 2002-61 Government Actuarys 2006 based projections
  • 6. 6 The Legal System Wills and Estate Planning Transfer of Assets...... Solutions for those who are unable to look after their own financial affairs. Power of Attorney Enduring Power of Attorney Lasting Power of Attorney (England and Wales only)
  • 7. 7 The Facts 418,000 in residential care Currently 15% of people aged 85 and above receive care in a Care Home or Long Stay Hospital. Source : Laing & Buisson, Care of Elderly People Market Survey, 2010
  • 8. 8 The Cost of Care Care homes with nursing: The average cost of a private care home with nursing in the Northern Ireland is 贈563 per week Source : Laing & Buisson, Care of Elderly People Market Survey, 2010 .but can cost considerably more.
  • 9. 9 Relevant Legislation National Assistance (Assessment of Resources) 1992 HASSASSA 1982 & Adjudications Act 1983 Income Support (General) Regs. 1987 National Assistance Act 1948 Insolvency Act 1986 Health and Social Care Act 2001
  • 10. 10 Legislation NHS & Community Care Act 1990 Law in April 1993 Encourages care at home and in the community Source : NHS & CCA 1990 Policy Document Reduces State financial burden
  • 11. 11 Means Testing Assets over 贈23,250 (in N. Ireland) which can include your property Health and Social Care Board set maximum limits for cost of care All available income compared with this figure
  • 12. 12 When home may be disregarded Spouse/partner still resides in dwelling Relative over 60 resides in dwelling Relative with incapacity resides in dwelling Dependent child under 18 resides in dwelling First twelve weeks after entering a care home Source: Charging for Residential Accommodation Guide (C.R.A.G.)
  • 13. 13 Deprivation Must be deliberate deprivation No time limit needed to prove 6 months - recovery from recipient After 6 months - no case against recipient Source : Charging for Residential Accommodation Guide (C.R.A.G.) Insolvency legislation
  • 14. 14 The Health & Social Care Act 2001 Introduced free nursing care In N. Ireland single rate of 贈100.00 per week Payable by the Health and Social Care Board directly to the care home Property disregarded for the first 12 weeks Deferred Payment Scheme
  • 15. 15 State Benefits Attendance Allowance(2013/14) Higher rate - 贈79.15 per wk Lower rate - 贈53.00 per wk Carers Allowance - 贈59.75 per wk NHS Continuing Care
  • 16. 16 Care Funding Solutions Pay from income Use investments to produce an income Draw down capital Immediate Needs Annuity
  • 18. 18 Immediate Needs Annuities For those already requiring care. Regular monthly benefit Single premium Care at home or in a Care Home Paid for life Benefits can be indexed Premium Protection Option Tax free - paid to registered care provider Taxable - when paid to policyholder
  • 19. 19 Options: Indexation Level RPI RPI+2% Choice of 3% to 10% Premium Protection Protects : 25%, 50%, 75% of total premium Long Term Short Term (first 3 or 6 months) Immediate Needs Annuities
  • 21. 21 Care at Home Harry is aged 79 Currently in a wheel chair Suffered a stroke last year Paralysed down one side Determined to stay at home Doesnt want to sell his house
  • 22. 22 Current situation Current Income from all sources 贈21,800 net p.a. Domiciliary Care Costs 贈49,700 p.a. Household expenses 贈 7,500 p.a. Shortfall in income 贈35,400 net p.a. Capital 贈150,000 Investment portfolio 贈 50,000 National Savings Certificates 贈 30,000 Building Society House 贈550,000 he wants to pass on These figures are for illustrative purposes only.
  • 23. 23 Harrys concerns. Worried that he is a burden to family Choice of care Would like to be financially independent Worried about having to leave his house Would like to leave an inheritance
  • 24. 24 Familys concerns... Dad secure and well looked after Capital running out His father lived to 90 Although suffered a stroke still strong and mentally alert
  • 25. 25 Options available Invest the capital to produce income Achieve a typical 3.5% net return on 贈230,000 = 贈8,050 p.a. Current Income 贈21,800 + 贈8,050 = 贈29,850 p.a. May have to move into a care home Meet the care costs from capital Risk the capital being used up and having to sell the house These figures are for illustrative purposes only
  • 26. 26 Solutions Purchase Immediate Care plan Cost a lump sum of 贈143,955 Provides 贈35,400 p.a. increasing by 5% p.a. Tax Effective Tax free benefits paid to registered care provider Surplus capital of 贈86,045 贈11,045 for immediate access 贈75,000 invested for legacies These figures are for illustrative purposes only.
  • 27. 27 Harrys views Choice of care Financially independent Flexibility for care cost increases and personal spending money Not a burden on family Should be able to leave an inheritance
  • 28. 28 Familys views Father able to stay at home Predictable net income Additional capital for additional expenses Peace of mind
  • 29. 29 Government proposals... 2017?...2016?... 2015?..... The Care and Support Funding Reform Proposals: ONLY APPLY TO ENGLAND! Introduce Longevity Cap of c.贈72,000 Increase means test threshold to 贈118,000 Introduce accommodation charge of c.贈12,000 pa A Universal Deferred Payment Scheme
  • 30. 30 Friends Life Company Ltd , the provider of the Lifetime Care range of plans, is authorised and regulated by the Financial Services Authority, register No 185063 (www.fsa.gov.uk/register/home.do) A company limited by shares, registered in England No 3291349. Registered office: Pixham End, Dorking, Surrey. RH4 1QA As part of our commitment to quality service, telephone calls may be recorded. The address for written communications is The Friends Life Centre, PO Box 1810, Bristol, BS99 5SN. Telephone 0845 30 30 430 Further InformationFurther Information Full details of our range of products & services are available from your Financial Adviser This presentation is based on our understanding of current Law and HM Revenue and Customs practice which could change.
  • 31. 31 Navigator Financial Planning Ltd 3b Milltown Hill Warrenpoint Co Down BT34 3QY T: 028 3085 1199 E: david@navigatorFP.com Navigator Financial Planning Ltd is authorised and regulated by the Financial Conduct Authority. FCA registration no 587701. Further InformationFurther Information

Editor's Notes

  • #10: Nat Ass (A of R) 1992 deals with Means Testing and the Income Support Regulations HASSASSA = Health and Social Services and Social Security Act : Section 21 deals with the guidelines on the 6 month rule. Section 22 deals with charges on property Inc Supp Regs covers the treatment of assets given away prior to 6 months before requiring care. Nat Ass Act covers the requirement to maintain a person for whom one has responsibility. Insolvency Act - legislation used by LAs to take take action on a debt over 贈750 (贈1,500) in Scotland