Two successive Governments have wrestled with the question of long-term care funding. To reach a decision about what the state can afford requires a detailed understanding about what care is needed and how it is delivered through the NHS, local authorities, the voluntary and private sectors.
In trying to unravel the problem, it has taken the Labour Government one royal commission and almost 18 months of analysis by the Treasury and the Department of Health. Their recommendations were eventually embodied in last summer's NHS Plan and proposed that nursing care in a nursing home should be free, leaving elderly people with assets to continue picking up a significant proportion of their care costs.
There are two points to be made about this. The first is that, after all this deliberation, a decision by the Scottish Executive to propose funding personal as well as nursing care is unlikely to result in a change of heart in Westminster. Noisy lobbying in Westminster appears to be falling on deaf ears.
The other point is that part of the complexity to the funding problem is that everyone's needs are different. The illnesses and the infirmities of old age strike in a variety of ways. You can explore the degree of risk with clients in the sense that one in four people will need care in old age but you cannot know what type of infirmity may strike or the type of care it will require. You can only talk in general terms, for example about a preference for receiving care at home or in a residential setting.
However, you can talk about aspects of care that your clients may want to control or areas of their life they may want to protect. Most people value their independence and their dignity and also feel that they want some freedom of choice.
Our own experience tells us people prefer to be cared for at home. This may seem quite straightforward. There are basic entitlements in terms of the delivery of nursing care through the local authority but the choice of who delivers that care and the quality of other support services available is very much in the hands of local authority departments. If you want something different you have to pay for it.
You can pose all sorts of questions about the care support which might be needed or desirable at home. Does the person needing care live in a bungalow or a two-storey house and how does this affect mobility? Does the family live close by and will they help with tasks such as cleaning and bathing? Is the garden left to become a wilderness? How far away are the shops and how will the person get there if they cannot drive or even walk?
Solving any of these problems has a cost attached. Keeping the body going is in the hands of doctors and nurses. Keeping the spirit going, keeping one's dignity and independence is something quite different. Let us ask a few more questions. Will relying on the local authority for care really satisfy your clients' needs? If they are receiving care at home, would your client be able to:
Interview and select the agency which supplies their care?
Choose when they want to receive their care?
Adapt their home to keep them as independent as possible?
Avoid asking the family to act as unpaid carers?
And if your client's health deteriorates will they be able to go to the nursing home of their choice?
Have nursing home staff available to look after their social welfare?
Asking your clients to imagine their own health deteriorating and asking them to dwell on specific areas of physical or mental degeneration is likely to halt any discussion about long-term care insurance in its tracks.
However, you can ask them which aspects of their life they would like to try to safeguard. You can ask them what choices in general terms they feel they need to protect.
Policies offering cash benefits can help your clients to pay for additional services which make these choices possible. Having access to a care support service can help your clients put the right care package together for their needs.
Then there is the issue of financial needs. The means test threshold will go up to just around £18,500 from April this year so homeowners are still on the hook for a significant proportion of their long-term care costs. Assuming that current legislation goes through, the NHS will meet the costs of a registered nurse's time spent on providing, delegating or supervising care in any setting. According to the NHS Plan, this means up to £5,000 a year of nursing care in a nursing home.
Personal care, for which the individual still pays, might include help with washing and bathing. Accommodation in a care home, which your client will have to pay for, includes the “hotel” and food costs as well as other amenities and services on offer. Nursing homes cost on average around £20,000 a year and, while common standards of nursing care should be available, there is a wide variety in the standard of amenities and services which is reflected in the cost. It is also worth remembering that the cost of care at home can easily equal or exceed the cost of a nursing home.
There is a misconception that long-term care insurance has to cover the full cost of care. Assessing your clients' financial needs includes identifying the gap between retirement income available to go towards the cost of care and the likely costs if care is needed. At the lower end of the scale, it may be that a cushion of perhaps £600 a month is necessary. For a 65-year-old man in a reasonable state of health, the premium could be as low as £40 a month.
LTC insurance is available to provide financial protection in retirement and can protect an inheritance for the family. But, it is often the protection of people's freedom of choice and their desire to maintain a standard of living which tips the balance.
We know the Government is encouraging the public to consider LTC insurance and the Cat standards to be introduced shortly should provide an added degree of public reassurance. The biggest need is for IFAs to go out and discuss about this form of protection with clients who are approaching or have passed retirement age.