people with elderly relatives are aware that long
term care is a problem and has many associated costs.
These costs can quickly erode assets such as savings
and the family home. It is possible to use an immediate needs annuity
to help cap or reduce the total cost of a nursing
home, when a relative can no longer fully look after
According to the ABI, in the UK
there are 9 million people over the age of 65.
Of those aged over 70 approximately 20% receive
some form of home assistance and 4% receive home
assistance on a continuous basis. There are 500,000
people in residential care and the total cost
of long term care in 2001 exceeded £4 billion.
Part of the funding for long term care in a nursing
home where the relative suffers from impaired
health can be provided from NHS funding or the
Local Authority subject to means testing. Any
shortfall could then be met from an immediate
needs annuity. The income from an annuity
could be as high as 25% of the capital to purchase the annuity depending on the individuals
age and medical condition.
However, if the individual has capital of more
than £20,000 in England, (£19,000
in Scotland and £20,500 in Wales) there
would be no assistance from NHS funding or the
Local Authority. Full assistance from the Local
Authority is provided if the assets are less than
£12,250 in England (£11,750 in Scotland
and £13,500 in Wales).
There are state benefits for people that require assistance
on a daily basis, Disability Living Allowance (DLA), Mobility
Allowance (MA) and Attendance Allowance (AA). The DLA and
MA can be claimed by people that need help looking after themselves
and people that find it difficult to walk and get around.
The DLA is paid at three different rates depending on the
help required, lower rate (£15.55 per week) middle rate
(£39.35 per week) and higher rate (£58.80 per
week). The MA is paid at two different rates depending on
the nature and severity of the mobility condition, lower rate
(£15.55 per week) and higher rate (£41.05 per
Anyone over the age of 65 is eligible to claim for Attendance
Allowance if they are either ill or disabled or requires help
with a number of activities
of daily living such as washing, eating or mobility. The
benefit is not means tested and is paid to anyone irrespective
of personal wealth and assets. The applicant needs to explain
the type of help they require, when they need this help, details
of their medical
conditions and other less serious problems they may have
as well as the medication they are taking. There are two rates
for AA depending on the amount of help required, lower rate
(£39.35 per week and higher rate (58.80 per week).
Where an individual is applying for long term care support
either, residential care or nursing home care, from either
NHS funding or Local Authority, there are a number of limits
relating to their personal capital. Capital is defined as
including savings, investments and property.
Under section 47 of the NHS Community Care Act 1990, the Social
Services must assess each applicant in relation to their needs
for residential care or nursing home care. This assessment
will determine how much the applicant can afford to pay after
taking into account any state benefits they are entitled to
claim and any other income they receive less any personal
If the individual has capital of more than £20,000 in
England, (£19,000 in Scotland and £20,500 in Wales)
there would be no assistance from full NHS funding or the
Local Authority. To cover the long
term care costs, full assistance from the Local Authority
is provided if the assets are less than £12,250 in England
(£11,750 in Scotland and £13,500 in Wales). There
is a sliding of scale of support where the assets fall between
these levels, for example in England between £12,250
and £20,000. There a number of factors that can be taken
into account to discard the applicant's property from the
means test as follows:
||Where a spouse or unmarried partner
lives in the house;
||If a relative aged over 60 lives in
||If a relative is aged under 60 but
||Where a child aged under 16 lives in
the house and this house is their main home;
||If the property is the sole residence
of the former carer of the individual now in care, and
this carer gave up their own home in order to look after
There is also a 3 month property disregard rule. This allows
an applicant to access residential care or nursing home care
for 3 months and have their property disregarded for means
testing. Therefore the value of other assets such as savings
and investments must be less than £20,000 in England
to have part of the long
term care costs paid by NHS funding or the Local Authority
or maximum funding towards long term care if below £12,250
in England. Once the 3 month period is over, the property
will then be included for means testing.
The NHS is legally obligated to provide long term care funding
where an individual requires specialist supervision or equipment.
If an individual does not meet the NHS funding criteria funding
will not be provided on a health care basis and is deemed
social care which would be provided by the Local Authority
subject to means testing.
The local primary care trust (PCT) is responsible for providing
local health services and they determine an individual meets
the criteria for NHS funding of long term care. The decisions
made by the PCT are not necessarily accurate or consistent
and there is difficulty determining what medical
conditions warrant health care provided by NHS funding
and social care provided by the Local Authority.
This confusion was highlighted in the case of Pamela Coughlan
in 1999 who challenged the decision to transfer responsibility
for her care from the NHS to the Local Authority. Pamela was
partially paralysed resulting in breathing difficulties, required
regular catheterisation and was doubly incontinent. By changing
from the NHS to Local Authority this would mean Pamela would
have to find extra funding to meet her care costs.
The Courts ruled that Pamela meet the NHS criteria of 'complex
and intense' needs and that funding her long term care must
be provided by the local health authority. Due to the nature
of her condition her needs were in a 'wholly different category'
from the needs that would be provided by the Local Authority.
Nursing care bands
Partial NHS funding is possible for those individuals that
do not qualify for full long term care from the NHS. Subsequent
to a Royal Commission in 1999 that recommended all health
care and personal care to be provided free, changes were introduced
in England to provide extra funding but only for health care
and not personal care where the care is provided by a registered
nurse and only up to certain limits.
Under the Social Care Act 2001 this defines nursing care as
the registered nurses contribution to providing, planning
and supervising care in a nursing home setting. This does
not include time spent by any other personnel such as care
assistants however would include the time spent by a registered
nurse in the monitoring and supervision of others delegated
work relating to long term care.
This change was introduced from 1 October 2001 and means that
anyone paying their own nursing home care fees will have a
fixed weekly contribution paid by the Department of Health
directly to the nursing home care provider. In England the
PCT determines if an individual is entitled to a registered
nursing care contribution and which of the following funding
level bands would apply:
||Highest band of £125.00 per week;
||Middle band of £77.50 per week;
||Lowest band of £40.00 per week.
The definition of the type of long term care provided by
the bands is that the lower band requires minimal registered
nursing care input, say bi-weekly wound care. The middle band
requires registered nursing on at least a daily basis and
the highest band requires frequent intervention from a registered
nurse throughout a 24 hour period because their condition
is unstable or unpredictable.