Who will pay for aged care?

It is important to note that the person must be assessed to have ‘severe/critical needs’ in order to qualify for local authority funding support so a relatively healthy 75-year old who has depleted their assets would not necessarily receive support.

Indeed, if a person has deliberately spent or given away their assets they could be accused of ‘deliberate deprivation’ of their assets to avoid having to pay for their care, which can result in prosecution.

In addition, how assets are considered as part of this financial assessment can depend on a person’s circumstances as – for example – if their partner or a dependent continues to live in their primary residence, it can be exempt.

Ultimately, this situation leaves a significant number of people looking to meet annual costs of around £29,000 for an undetermined period from a finite amount of financial reserves.

While some manage this complex equation, research from the Local Government Information Unit suggests that 25 per cent of self-funders fall back on State support after exhausting their own funds, which can mean they have less control over their care choices at a time when they may be most vulnerable.

Financial burden

This also puts an additional financial burden on the local authority and ultimately, the care home as councils (due to their buying power) pay lower set fees. This has led to some recent reports suggesting that care homes are starting to ask for financial assessments prior to residents moving in.

So how can people meet these costs? With the typical single pensioner having an income of £10,244, the majority of those who need care will need to consider other options and will need specialist help to make sustainable financial choices.

While independent financial advice pays dividends for the majority of people who use it, care is one of those areas that is not only complex but often emotional and involves an entire family so financial advice is more valuable than ever.

One of the first options that need to be considered is whether your clients are receiving all the state benefits they are entitled to. If a client suffers from a long-term health condition or disability and has difficulties with activities related to ‘daily living’ and/or mobility they may also qualify for attendance allowance or personal independence payment – neither of which are means-tested.

You might then look at discussing whether they would benefit from an immediate needs annuity. These products provide a guaranteed income for life - which can be index linked – to contribute to all or part of a person’s care fees.