When it comes to paying for care at home or in a residential care/nursing home, most people are shocked when they first focus on the costs involved. A recent survey of over 9000 elderly care homes by health and social care market experts Carterwood* revealed a UK average self-funded nursing home cost of £1,142 per week.

The main reason for this lack of appreciation of the costs involved is a similar lack of appreciation as to the distinction between ‘health care’ and ‘social care’, despite the difference being very significant when it comes to determining the availability of financial support.

Across the UK, healthcare is the responsibility of the NHS and is free at the point of need. Social care, in contrast, is the responsibility of local authorities in England, Scotland and Wales and Health and Social Care Trusts in Northern Ireland and is ‘means tested’ due to an expectation that those who are able should pay for their social care.

Whilst there is no formal definition of social care, it is often described as dealing with ‘activities of daily living’, in other words help that is needed to carry out day to day activities such as eating, washing, dressing, using the toilet and bathroom and mobility issues. In contrast, a health care need is one related entirely to the treatment, control or prevention of a disease, illness, injury or disability and the aftercare of someone with these conditions.

What this means in practice is that for many veterans, including those with dementia, they will be expected to pay for their social care. Given the costs involved, for many this can decimate their life savings and in some cases require the sale of the family home.

For veterans requiring social care support, either in respect of funding for a care home place or for care at home, the means test will assess what is termed ‘eligible capital and income’ to determine the extent of any local authority support.

For those living in England and with capital in excess of £23,250, in most case they will be expected to pay for their social care until such time as their capital falls below this level, at which point their remaining capital and income will be taken into account to determine ability to pay.

As veterans some capital and income are disregarded from the ‘means test’ including:

• Guaranteed income payments made to veterans under the Armed Forces Compensation Scheme
• War Pension Scheme payments made to veterans with the exception of Constant Attendance Payments
• The first £10 per week of War Widows and War Widowers pension
• War widows and widowers special payments
• The value of any ex-gratia payments made on or after 1^st February 2001 by the Secretary of State in consequence of a person’s, or person’s spouse or civil partner’s imprisonment or internment by the Japanese during the Second World War.
• A gallantry award such as the Victoria Cross Annuity or George Cross Annuity

For those who end up paying for their own social care, often referred to a ‘self-funders’, many simply pay the costs out of their income, liquidating capital assets including property as they go along until such time as all their money has gone. Whilst at this point, the local authority will step in it is important to understand that they are only likely to pay the care provider a set local authority rate, typically below that care providers charge self-funders (as the current care system is largely propped up by this cross subsidy between higher fees from self-funders and lower fees for local authority placements). If the care home that someone is in when they run out of money has no local authority places available, or is a self-funder only residence, this is likely to mean either family or friends must pay the difference known as a ‘third party top-up’. In the worst-case scenario, if such a top-up is not available, the person in care may have to move to another care home, possibly in a different location, with all the upheaval and distress that can cause.

So, what can be done to avoid the possibility of running out of money?

The first thing to appreciate is that there are many different ways that care fees can be paid. For example, since April 2015 and following the introduction of the Care Act 2014, local authorities in England are required, subject to eligibility criteria, to offer a loan (often referred to as a deferred payment agreement) to meet care costs, secured on the home of the individual in care, at a fixed rate of interest, repayment of which is deferred until a later date such as the death of the person in care.

When it comes to peace of mind, another much-underused means of payment is called an Immediate Needs Care Annuity. This is simply an insurance policy offered by a few specialist insurers, that works in much the same way as an annuity in retirement does. In return for a one- off set premium, the policy undertakes to pay a regular income towards an individual’s care costs for the rest of their life. The level of premium depends on things such as the persons age, health and the expected level of current and future care fees. It is currently the only way many can guarantee payment of care fees for life, thereby protecting remaining assets from future care fees.

So why is such a solution much-underused? The simple answer is that only a regulated financial adviser who has passed a designated exam on long term care insurance, recognised by the regulator ( the Financial Conduct Authority) that is authorised to advice and facilitate access to such products.  Most of the general public do not have a relationship with such an adviser or know where to find one.

Fortunately, many of the volunteers who give pro-bono guidance via Forces MoneyPlan have the qualification required ( known as CF8: Long Term Care Insurance from the Chartered Insurance Institute) and can discuss the generic advantages and disadvantages of all ways of paying for care, including the use of an Immediate Needs Annuity. Whilst they cannot give advice in terms of a personal recommendation under the Forces MoneyPlan scheme, understanding options when it comes to paying for care is a critical first step in minimising the negative impact paying for care can have on overall financial wellbeing.  Furthermore, if having received free guidance, a recipient wants to pay the Forces MoneyPlan adviser for further advice including a personal recommendation as to the best was that person can pay for their care, then that is of course an option, but only should the recipient proactively seek it.

How do I find out more or request a meeting?

Contact your Blesma Support Officer and will tell you how to take advantage of this service and what to do next.

https://forcesmoneyplan.org/