How to protect yourself! – part 3 of 3 – Hospital, the latter years and conclusion
So far in this three part article we have considered the facts and figures, the assistance provided by employers and the state. We have also looked at how insurance companies have helped and some of the products.
Finally we will look at the latter years in life, how a stay in hospital could affect you and conclude.
What if a stay in hospital is required?
The NHS does a good job in difficult circumstances of looking after the nation’s health.
Although waiting times have been reduced, if you want to benefit from prompt access to eligible private treatment, a choice of hospitals and specialists then going private may be your best option.
Private Medical Insurance
Often, the family pet is insured to cover veterinary bills and can be treated promptly.
Is the same value placed on owners?
As a nation of animal lovers have we afforded our pets with more consideration?
Private medical insurance (PMI) sometimes known as private health insurance provides the policy holder with the ability to get prompt access to treatment and to give more choice.
It could be looked upon as an alternative to the NHS and is designed to cover the cost of private treatment.
The main benefits are:
- Prompt access to treatment
- A wide choice of hospitals and specialists to suit individual needs
- Plans to suit your circumstances
According to the Association of British Insurers, some 7,335,000 people had some form of private health cover in April 2008
What about the latter years of life?
So far, protecting lifestyle whilst working has been considered but what about the latter years? What happens if care is required during old age? Will the children take care of the cost? What about the state, will they help?
Long Term Care
Long Term Care (LTC) planning is all about establishing ways to cover all or part of the cost of any care that may be needed now or in the future. Long term care becomes necessary when a person suffers a disability that makes them unable to continue to maintain their standard of living and this disability is likely to continue over the long term. The harsh fact is that a person in these circumstances will probably have to pay for it themselves or at least contribute to the cost. The care required may be in a home or at home.
What will the state provide?
Deciding who and how much has to be paid is the responsibility of the Local Authority via means testing. This is a complicated area and there are other conditions and allowances for property within the first 12 weeks. Support from Local Authorities is reliant on individual circumstances therefore advice should be obtained from a professional.
How can long term care be self funded?
One way to self fund is to sell assets or use existing savings. This option may not be appealing especially as people work hard all their lives and may wish to leave a legacy to children. However, there are alternative ways to plan.
There are a number of options available to help meet these costs:
- A lump sum purchase of a policy designed to provide help immediately by providing payments towards the cost (‘immediate need’ plans)
- Through regular premiums to a policy or a lump sum investment before care is required to provide funds in case care is needed (‘pre-funded policies)
- By releasing equity in a property to provide funds (‘equity release’ plans)
As mentioned previously, this is a complicated area which is ever changing. There have been reductions in the amount of insurance policies available on the market over the last few years. There is now more of a focus on building funds to support long term care rather than insurance based policies. In addition to the complicated means testing by local authorities it is recommended that specialist advice should be sought if looking for provision in this area.
Who will make financial or health decisions for someone who is too ill?
It has been considered how to fund care in later life but it is an unfortunate fact of life that as we get older our health both physical and mental can deteriorate. There is a way of planning for this eventuality to ensure that someone is able to take care of personal finances and health decisions.
Powers of Attorney
A Power of Attorney (PoA) is a legal document that is made on a special form to allow a chosen person to make decisions on behalf of an individual i.e. property, financial affairs or health issues.
The form is completed to allow powers to be used at a time in the future when a person does not want to or is unable to, due to illness or mental incapacity, make those decisions. An attorney (the person appointed to make decisions) needs to be aged 18 or over and of sound mind and not previously bankrupt if dealing with financial affairs.
What are the types of PoA?
An Ordinary Power of Attorney can be written at any time during a lifetime to allow an attorney the powers to act on someone’s behalf usually, for example, in the event of a person wishing to travel for long periods, someone who is ill or someone who just does not want to be bothered with making financial decisions. An ordinary PoA would automatically cease if a person were to become mentally incapacitated. This can create a problem, it may be precisely the point at which outside support becomes most needed.
A Lasting Power of Attorney (LPA), (formerly known as Enduring PoA) allows the powers to continue when a person becomes mentally incapacitated.
LPA’s can be arranged in two ways:
- Health and welfare
- One or more attorneys are appointed to make decisions regarding personal health care and welfare
- e.g. giving consent or refusing health care, including treatment. Decisions about care at home or going into a home. Day to day issues like diet.
- Property and financial affairs
- One or more attorneys are appointed to make decisions regarding property and personal affairs
- e.g. handle financial affairs, buy or sell assets
An LPA would need to be registered with the Office of the Public Guardian (OPG) before it can be used.
Why arrange a PoA?
The OPG website provides very useful information regarding LPAs, the need for them and the process for putting them in place. The OPG states “If you lose mental capacity at some point – for whatever reason – if you haven’t completed an LPA, other people may need to apply to the Court of Protection to be able to make any decision on your behalf. This can be costly, and can be demanding and stressful for your relatives, friends and carers.” (www.publicguardian.gov.uk)
The OPG also recommends arranging and registering an LPA early to avoid complications later.
Something to consider – Wills
A subject that fits in with the unfortunate fact that we do not get any younger and that at some point we will all die, is that of making a Will along with Estate Planning.
A Will is a legal document that anyone with a family should have. A lot of people will leave this until later in life, probably because they do not want to think of such subjects. However, for some, this could be too late. If a person dies without a valid Will in the eyes of the law they have died intestate. There are written laws about how and where the deceased’s estate is distributed. This means that belongings will probably not go to where they would want them to go they could end up with the state!
Therefore, it is important to ensure that a Will is made early in life and is kept up to date throughout life.
Protection – What does it all mean?
How to protect yourself has considered the current state of affairs and highlighted some worrying statistics. State benefits that may or may not be available have been detailed. The fact that these benefits may not be around forever and whether individuals should/can rely on help from the state has been considered.
The benefits available under employee benefits schemes have been considered. In addition, how insurance companies have helped policyholders has been demonstrated. Products that are available to meet individual needs and how they work have been explained.
To decide whether it is worth implementing any or all of the protection plans discussed it is very important to seriously think about the likelihood of a need arising and weigh up the cost and affordability whilst still working and healthy. Looking at the statistics, it could happen to anyone. Can you afford not to protect yourself? Any of the events detailed would undoubtedly affect more than just the individual concerned, so, opinions of friends and family should be considered.
This article has provided information to help you make an informed choice but the most important thing to do is to seek professional advice.
Paul Hoskin IFA.