Now that we have had time to digest the detail of the Government's announcement on long term care (L...
Now that we have had time to digest the detail of the Government's announcement on long term care (LTC) what should we be looking for next?
In relation to LTC insurance advice the most important issue is to make sure that the system for State funded nursing care costs in a care home is as simple and clear as possible. It will be very difficult to administer if the system is designed in such a way as to charge each resident for the exact number of hours of 'qualifying nursing care' received each week.
The amount recovered would consequently vary from resident to resident and from week to week. Consequently the fees charged to residents by the care home would vary from month to month depending on how much was recovered from the State. This would make financial planning difficult as an individual would not know whether they are likely to be a low or high user of nursing services and so would not know what proportion of the total fees they are going to be liable for.
In the absence of a simple approach - such as £50 per week per resident - advisers will have to choose between suggesting the customer take a policy for the full possible shortfall, assuming no State-paid-for care, or an average amount. Using averages in this way is never completely satisfactory. We must therefore do everything we can to make sure that the final system is as simple as possible.
The Government's plans also include giving clear, consistent guidelines to local authorities on charging for domiciliary care services. This will have varying effects to individuals depending on how their particular local authority has dealt with such charging in the past. In some cases people will have to pay more and in others less.
For those advising LTCI customers a clear, consistent structure is vital. Currently, advisers need to be aware of the particular charging structure used in the local authority area of each potential client. Once there is one national system then advice on potential home care costs will become much easier.
A clear statement on the system of charging for care in the home along with the detail of the system for free nursing care and the changes to the means test limit will finally make it very clear to everybody where people will need to make their own provision for long term care costs.
Finally, regulation is a topic which still seems to be something which is being considered but for some time in the distant future. We are all waiting for the Treasury Committee report, but recent leaks seem to imply that this report is more about CAT standards for LTC products.
I can see no reason why the Government is delaying the introduction of regulation for LTC products. Large single premiums paid by older people must warrant appropriate legislation on the quality of advice being given.
