How to cover long term care fees

How to cover long term care feesI was quoted in the Sunday Times yesterday, in an article about upcoming changes to the system for long-term care fees.

The cost of long-term care is often a big concern for families, who can see assets quickly depleted by care home fees.

Under current rules for people living in England, the local authority will not provide financial support for long-term care fees until your eligible assets fall below £23,250.

People needing care in later life can sometimes qualify for free care from the NHS, known as NHS Continuing Healthcare, although in our experience this is often difficult to obtain.

From next April a new £72,000 lifetime cap on care fees will come into force, although this does not include so-called ‘hotel costs’ such as accommodation or food. As a result, it is likely to take many years to reach this lifetime cap.

Commenting in the Sunday Times yesterday, I referred to a recent care fees planning case where we obtained a range of quotations for an immediate needs care annuity.

These are individually underwritten, designed to pay a guaranteed income for life in return for capital, to cover the gap between income and expenditure.

There is currently only three providers of these immediate needs care annuities in the UK market, but it is so important to obtain a quotation from all three before considering this option alongside the range of other options for funding long-term care.

Here’s what I had to say in the Sunday Times:

“I’ve recently written a care fees planning report for a 77-year old lady with Alzheimer’s disease, who needs to fund a shortfall between her income and care fees of about £2,500 a month.

“The quoted premiums for an immediate-care annuity ranged from £123,000 from Friends Life, to £178,000 from Partnership, with the premium quoted by Just Retirement somewhere in between.

“All three underwrote their quotes based on the same GP report and care manager report, but clearly take very different views of her life expectancy for premiums to range in price by almost 50%.”

You can read the article in full here (subscription required).

This example highlights the value of independent financial advice when it comes to care fees planning, so it is possible to consider not only the most competitive immediate needs care annuity terms but also other options for funding long-term care.


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About Martin Bamford

Martin Bamford is a Chartered Financial Planner, Certified Financial Planner (CFP) professional and published personal finance author. He works with elderly clients to provide advice on funding residential care fees, hosts the Informed Choice Podcast and is a keen ultra runner.
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