Footing the bill

Many people think free long term care of the elderly should be a top priority for the NHS above any other issue, according to the results of a BBC poll during its recent NHS Day. That is quite staggering.

Over 150,000 people voted on what they considered to be the main priority for the NHS from a list of 12 options. More than 40% of people cited care for the elderly ahead of issues such as more pay for NHS staff, improvements to accident and emergency (A&E) services, reduced waiting times for heart and cancer treatments and seeing their GP within 48 hours.

The emphasis on the NHS by the media and in political debate usually focuses on waiting lists and other hospital improvements. Although these are good topics for discussion, according to the results of the BBC poll, they do not address people's main area of concern: long term care.

During the 1980s and 1990s, many geriatric wards closed. With the introduction of the National Health and Community Care Act in 1993, the responsibility for care for the elderly was effectively moved to the community. This brought with it a means test, which currently requires those with assets in excess of £18,500 to pay for their own long term care with minimal input from the State.

In 1997 a Royal Commission was established by the Government to look into the funding and provision of long term care and this led to the NHS Plan implementing some changes in June 2000. Late last year, the Health and Social Care Act introduced 'free care.'

None of these costly exercises have brought about changes that sufficiently solve the problems associated with long- term care funding and provision. The BBC poll results show that while people have been paying attention to the various high-profile debates and issues about the NHS, they are also well informed and very concerned about long term care.

It is no surprise that people are uncertain about issues relating to long term care when the media highlights stories such as the closure of over 1,500 nursing homes in the last two years resulting in the loss of over 45,000 beds, the reluctant sale of family homes to fund care, and the inadequate local authority funding levels for nursing homes.

Changing demographics

Long term care is such a big concern due to major changes affecting most of the world's developed countries: a growing ageing population and the change in demographics and lifestyles.

According to the Government, the number of people in the 65 to 85 age group will increase by 41% over the next 50 years (an additional 3.3 million people). The Office for National Statistics says that by 2030, for the first time, there will be more pensioners than children. With many people now choosing a single lifestyle and many marriages ending in divorce, there has been a marked decline in extended families living nearby.

As more mothers choose to work, alternative arrangements need to be made for the provision of traditional home care for young and older family members. This increases the demand for professional care providers. However, with the onset of the minimum wage, European working directives and the introduction of the Care Standards Bill, it is inevitable that care costs will rise. It is therefore no surprise that people are concerned about who will provide care for them in their old age and how rising costs will be met.

The BBC poll results were presented to the Prime Minister for a response. Tony Blair's answer to the call for free nursing care for the elderly was a conclusive 'no.'

Taking responsibility

Given that free care will not be available to individuals with assets in excess of £18,500, people should be encouraged to take responsibility for their future care provision. This may be extremely obvious, but by default many people have done nothing to provide for their later years.

The BBC poll results show that, with the increased awareness of the issues relating to long term care funding, people may be more receptive to the inclusion of long term care in their retirement planning. This provides an ideal opportunity for IFAs, many of whom already have the skills to offer this area of financial advice. For those not familiar with long term care funding, dedicating some time to training will enable them to acquire the knowledge needed to advise on this matter.

Most long term care product providers run development programmes for IFAs and those who wish to develop their expertise in long term care can also draw on the resources of specialist organisations such as IFACare or national long term care companies that actively recruit and provide training for IFAs. It is also interesting to note that long term care is now included in the Chartered Insurance Institute G80 AFPC paper.

IFAs need to understand that long term care is more than selling the product ' it is about providing a financial, emotional, physical and practical solution to clients. In short, it is security for the future.

People need to understand what free care really means. Long term care in a nursing home has now been broken down into personal care, nursing care, accommodation and personal expenses.

Anyone with assets of less than £11,500 will receive all of these free if they have no income. But there are still restrictions on the monetary value as free care will be limited to a level set by the local authority. This has contributed to the closure of 1,500 nursing home during the last two years.

Those with assets in excess of £18,500 will be means tested and be required to meet a substantial portion of their care cost depending on where they live.

In Scotland, the situation is slightly different. Personal and nursing care costs will be met by the local authority and the NHS up to a maximum of £205 a week. The attendance allowance will be withdrawn. In England, the nursing costs (up to a maximum of £115 per week) will be met as well as the attendance allowance.

Rising costs

With the average cost of care set at £20,000 a year and rising, according to the British Nursing Association, it is clear the notion of free care for the elderly is a misnomer.

People need to understand the issues surrounding long term care, make appropriate plans for their later years and find suitable ways to fund the care they may need.

It is expected that long term care funding will be regulated by the Financial Services Authority by 2004 when IFAs will have no choice but to include it in their everyday financial planning recommendations.

People are aware and concerned for the need for long term care, but are unsure of where to get advice. IFAs are in a prime position to alleviate a very real worry for their clients and capitalise on the potential offered by long term care.

Les Schroeter is long term care business manager at Bupa