Self Funding

A care fees annuity

A care fees or immediate needs annuity is a type of insurance policy also known as a ‘care fees plan’. They care commonly used for self funded care. An individual will be assessed to understand their health and care needs now with a projected outcome for what is required in the future. Following an assessment, a fee is payable based on the outcome of the assessment with a view to covering weekly care fees, whether in a residential care home or through a live-in care service for as long as it is needed.

A care fees plan can be purchased as soon as the need for care provision arises and, as the name suggests, benefits the recipient immediately. If the income from an immediate needs annuity is paid directly to you or your loved one’s registered care provider, it is tax exempt under current HMRC policy. The annuity can also be index-linked in order to protect against the effects of fluctuating inflation.

The Good Care Group works in partnership with Symponia, a professional body representing over 120 financial and legal advisors who are all specialists in the area of privately funding care. They can help you with funding long-term care at home, so you can have peace of mind and reassurance that you are receiving the very best advice.

Equity release to finance care fees

Equity release schemes enable homeowners aged 55 years or older to release some or all of the accrued value of their property without the need for selling it or moving elsewhere.

If you are privately funding care, this enables you to use the value of your house to pay for your care fees, or to purchase a care fees annuity. This means that you therefore do not have to sell your house and can receive live-in care in your own home. How much you can release depends on several factors, such as your age, health, lifestyle, the kind of equity release plan you choose and how much your home is worth.

Immediate Care Plans (ICPs)

Immediate Care Plans (ICPs) are a tax-efficient way of covering all, or part, of your care costs. The plan will pay an agreed, tax-free amount at regular intervals, directly to the care provider, for as long as care is needed. Payments can be set to rise over time, to keep pace with any increases in cost. A lump sum is required to purchase the plan, with the calculation being based on your age and health.

Home reversion plans

With a home reversion plan, you agree to sell all, or a percentage of, your property for an agreed amount. You will come to an agreement with the revision company as to how that money will be paid, typically as a lump sum or monthly income, or both. You will continue to live in your home. When your home is eventually sold, the revision company will receive their proceeds from the sale.

Useful Resources

The Moneyhelper website is another useful resource, which brings financial and pension information together from three government financial guidance providers; the Money Advice Service, the Pensions Advisory Service and Pension Wise. They provide information on care fees annuities and other forms of self-financing care.

The Care Fees Annuity website has a cost of care calculator that provides an estimate as to what premium you may need to pay, based on your circumstances.

Legal & General has a useful care costs calculator which will help you understand how much may be needed to self fund care.