If you are un-concerned that the costs of long term care are something that is likely never to harm you think again.
The Government’s CRAG (Charging for Residential Accommodation Guide), specifies the rules and regulations regarding how and when a person will be means tested to assess whether or not you are going to be expected to pay for all or some of your costs relating to your long term care costs.
In simplicity if you have more than £23,250 in cash assets then you will be means tested for assessment purposes. The details are quite specific in respect to what the CRAG rules deem to be your capital.
The following is an extract of from the Governments web site:
The Government’s CRAG
6.001 A resident’s resources are either capital or income. It may not always be obvious whether a payment should be treated as capital or income, but generally, a payment of capital is one which is:
a) not in respect of a specified period; and
b) not intended to form part of a series of payments.
The Government’s CRAG
6.002 Examples of capital are shown in the following list. The list is intended as a guide and is not exhaustive.
• Buildings
• Land
• National Savings Certificates and Ulster Savings Certificates
• Premium Bonds
• Stocks and shares
• Capital held by the Court of Protection or a Deputy appointed by that Court
• Any savings held in:
• Building society accounts – income which is paid into an account becomes capital once the period over which it is taken into account as income expires.
• Bank current accounts, deposit accounts or special investment accounts. This includes savings held in the National Savings Bank, Girobank and Trustee Savings Bank – income which is paid into an account becomes capital once the period over which it is taken into account as income expires.
• SAYE schemes
• Unit Trusts
• Co-operative share accounts
• Cash
• Trust funds (see Section 10)
Treatment of Investment Bonds
6.003 The treatment of investment bonds in the financial assessment for residential accommodation is complex because, in part, of the differing products that is on offer. For this reason councils should seek the advice of their legal departments when they arise. However it is possible to offer some general advice and councils are referred to the Social Security Commissioners decision R (IS) 7/98 which rules that an investment bond falls within the disregard by virtue of its intrinsic nature as a policy of life assurance. N.B. The AOR are largely based on Income Support Regulations.
6.004 Councils are advised that if an investment bond is written as one or more life insurance policies that contain cashing-in rights by way of options for total or partial surrender, then the value of those rights has to be disregarded as a capital asset in the financial assessment for residential accommodation (see paragraph 15, schedule 10 of the Income Support (General) Regulations 1987). In contrast, the surrender value of an investment bond without life assurance is taken into account.
You can read into this that Investment Bonds could be your new best friend, if the Government accept that by holding these you can protect your cash asset base rather than holding low interest cash assets.
For full details contact Frank on 01902 422333
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