How to Secure Funding for Residential Long Term Care Costs

Learning that you or your loved one requires long term care can be a difficult message to receive. However, what can be even more overwhelming is the cost that can be associated with that care. It seems the long term care continues to cost more money as people determine how they will bridge the gap in order to make it possible to receive the care they need. Due to the increasing cost associated with providing Long Term Care for ourselves or for elderly relations many people are concerned about having to spend their life’s savings to secure the care they need. This is a legitimate concern. It seems that care costs are far outlasting the costs of providing long term care and it is with good reason that this is happening on a regular basis. People simply do not have adequate time to save for their long term care needs because they are just living much longer than was ever expected. As life expectancy continues to increase, people are being forced to fund more years in care with the same number of working years in which they can build up their savings to provide that needed care in the future. Just because we are living longer does not mean that those last years are healthy. In fact, they may be very unhealthy which translates to very expensive.

Average costs for care in a residential care home setting are now coming in at over £25,000. If you need nursing care on top of that, you are going to spend even more as receiving nursing care can add an additional amount of at least £10,000. With numbers like that, it easy to see why you, and most other consumers, worry about how you will pay for care. You may have savings but in all likelihood, these costs could eat them up in very little time leaving you with not only no way to pay for care but if you’ve spent down your savings you also no longer have the luxury of a financial cushion.

There is help available for those who do not have sufficient means to pay for their care. If you have no assets, or less than £14,250 you can be deemed eligible to receive assistance based on passing the lower means test threshold.

Should you have £23,250 or above, you have reached the upper means test limit. This means that you will be required to use your own assets to fund care for yourself. However, if your level of assets falls between these two levels you are eligible to receive some assistance. Eligibility for State help with funding is limited and many people find themselves with assets exceeding the current thresholds. It doesn’t take much to find yourself ineligible for assistance but yet even if you are deemed ineligible, funding your own care can seem daunting and impossible.

The biggest fear that you may have is that your funds may run out before your life ends which can lead to the need to then fall back on the Local Authority for your care. Because the care provided by the state is limited on cost, you are likely to need to move to a cheaper home which would not be ideal if you are already settled. Most consumers own their home and would prefer to never have to leave it.

A solution to this problem would be to purchase an immediate needs annuity which is also known as a Long Term Care Plan. In return for a single premium payment which is based on your income, age, life expectancy and medical history you would be guaranteed to receive an income for the rest of your lives. This type of scheme allows you to take control and budget for your future care costs with added benefit that the income is paid tax free providing it is paid directly to your registered care provider. If you took this route, at the very least you would be able to stay living in your own home and receiving care there, at least until you were no longer to stay there based on your individual needs.

One of the most important aspects of planning to pay for care is to ensure that you are aware of all available financial assistance. Secondly, it is important to be as proactive as possible in planning. It is easier to plan for the future today than it is to try and make your money stretch further than it actually can in order to pay for your care.