Welcome to Age Space Money, the podcast that gives you insight, ideas and perspectives on elderly care and finance. This podcast is presented to you by Annabel James, founder of Age Space, which is an online community for anyone looking after, or supporting, an elderly parent; and Jason Butler, financial wellbeing expert and author of “Money Moments: Simple Steps to Financial Wellbeing“.
In episode 2 Annabel and Jason discuss the topic of funding care. Jason offers his top tips on what you need to consider when thinking about elderly care funding, and the financial options that are available.
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Jason's advice on speaking to your parents about care funding
- Where do they want to live when they are older and requiring care?
- If they will need care, what kind of care do they want? Would they like this to be in a care home, or in their own home?
- How are they going to fund this?
Live-in care is an increasingly popular option for people who need more care but want to retain their independence. Find out what a live-in carer could do for your parents.
Jason's advice on planning for the future
Be wary of organisations that sell seminars about protecting your assets from long-term care fees. Doing this could mean you lose choice or control over your care; when assessing your entitlement to funding, the Local Authority could challenge your arrangements as a ‘deliberate deprivation of assets’, if, for example, your house is wrapped up in a trust, which means this could be added back in.
You may consider buying an immediate care annuity. This is where you give a lump sum of money to an insurance company, and they pay a guaranteed amount until you die. A care annuity moves the risk of someone living more than 4-5 years in a care home, which is the typical care fee, to the insurance company. Taking out a care annuity could be a good option for people with multiple needs, as the insurance company will charge you less for the income if you have multiple needs.
The question for some families is, “Shall we buy some insurance to provide an immediate lifetime income, to meet some of the fees?”, – it is rare to buy insurance to cover all of the fees, because no-one knows how long they are going to live.
You may consider converting your pension into lifetime income using a pension annuity, (if you’ve got good health, you’ll get a certain level of income; and if you’ve got poor health, you’ll get an even higher level of income).
If you’re going to need care and likely to live a long time, you probably want a defined benefit pension, and what’s known as an impaired life pension annuity from your pension pot, as if you’re relying on investments, you might find that these get dissipated, and you run out of money.
Find out everything you need to know about how annuities work from the Age Space annuities guide.
Jason's advice on getting your parents' care needs assessed
Everyone is entitled to have a Care Needs Assessment from their Local Authority.
If you have very complex needs and meet the criteria for NHS Continuing Care, then all of your care will be funded by the NHS. However, this affects only a very small number of people.
At the other end of the spectrum, people requiring lower levels of long-term care, who have more than the means-tested amount of £23,000, will need to fund all of their care themselves, until they don’t have any more money.
However, many people qualify for a contribution towards their care from the NHS, if they require an element of nursing care.
The first thing to do is to have an assessment to find out what your options are, and what you need to do.
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