WHO WILL PAY FOR YOUR LONG TERM CARE?

 

‘Long term care is the care you may need if they develop a long term illness or disability. It is possible that your local authority will help to pay for this care. Bear in mind however, that the level of care that may be paid for by a local authority may not be what you may have chosen. In deciding whether to contribute to long term care, the local authority take into account capital and level of income. The lower level of capital taken into account is £13,500. This means that if you have capital assets of less than £13,500 the local authority will; based on this capital test, pay all long term care expenses. The upper limit is £22,250. This means if you have capital assets of more than £22,250 you will have to fund your own care. In addition to this capital test the local authority also take into account a persons income.’

 

What assets are taken into account as capital?

 

‘Nearly everything, including the value of your home. There are however steps you can take to perhaps limit the accountability of assets including putting the ownership of the home into tenants in common where it is owned by more than one person. This may help, as the market value of a half share of a house may be ignored by the local authority – who would buy a half share of a house on the open market?’

 

Are all capital assets taken into account?

 

‘No. Interestingly the capital value of single premium bonds is disregarded provided they are life assurance policies. Those bonds which contain no element of life assurance are still taken into account for the capital test. And withdrawals from all bonds are treated for the purposes of means testing as available income to help with payment of care costs.’

 

So all you need to do is give away your capital or arrange it in a form that will be disregarded?

 

‘If only life was that simple! There is a rule called ‘deliberate deprivation’ which means that if the local authority think that you have taken steps to deliberately make yourself  eligible for assistance, they may ignore the steps you have taken and take all the original capital into account. There is no time limit to this rule although the longer in advance the steps are taken the better.’

 

So what next?

 

‘Simple steps like changing the ownership of a house or investing money in a life assurance bond will not cost a lot to implement and might help in overall planning. Always bear in mind though that deliberate deprivation rules apply and seek legal advice before doing anything.’

 

The above information is based on Scottish Widow’s understanding of the current legislation as at July 2008. This is subject to change at any time.