Redmill Week 2 Flashcards
Care and Paying For It
What is the biggest source of care provision in the UK?
Unpaid care from family and friends
Who assesses and who funds Disabled Facilities Grants
This is funded by central government and assessed by local authorities
What is the maximum Mandatory Disabled Facilities Grant?
£30,000
How is the Disabled Facilities Grant Means tested?
Assets under £6,000 are ignored and assets above tariff as tariff income.
£1 per £500 of assets if over 60, or
£1 per £250 if under 60
Under what level should community equipment and minor housing adaptations be provided free?
Under £1,000 should be provided free
What type of treatments is Private Medical Insurance best for?
It is best for treatable, acute short-term conditions
What are the benefits payable from a health cash plan?
A health cash plan pays a fixed sum towards treatment
If a care receiver employs someone directly, do they need to provide them with a workplace pension?
Yes a workplace pension must be provided
Explain an Immediate Needs Care Plan and how it is structured.
An Immediate Needs Care Plan is for those who need care immediately or in the near future
It is structured as an impaired life annuity, the lump sum premium purchases the annuity. And written on a whole of life standard
How may an immediate needs annuity be taxed?
If it is paid to the care provider, it is tax free.
If paid to care receiver, then part is paid tax free as a return of capital, with the remainder paid as interest and taxed as savings income
What is a restriction of an Immediate Care Plan?
There is no scope to alter the arrangement once established.
How does a Deferred Care Plan work?
A deferred care plan pays out after a set period, in which the individual will self fund
Once the deferred period ends, how long will a Deferred Care Plan pay out for?
It will pay out for the remainder of the individuals life
How is a Deferred Care Plan taxed?
If it is paid to the care provider, it is paid tax free.
If paid to the care recipient, part will be paid as a return of capital and therefore tax free. The remainder is paid as interest and taxed as savings income.
How does a Pre-funded Insurance Policy for long term care work?
It will pay out a regular income to the care provider when the insured needs continuous care.
How does a Long Term Care Bond work? And How is it taxed?
It is reflective of an investment bond.
A lump sum investment which has life cover at 100-101% of the bid value. Each month a number of units are surrendered to cover the cost of the LTC insurance element
5% Tax Deferred allowance is available and taxed as other bonds.
What is the determining factor on if one could claim on the long term care insurance plan?
The level of disability. The more ADLs failed, the more care required
Name 5 ADLs.
- Washing
- Dressing
- Mobility
- Transfer
- Feeding
- Toileting
What is a lifetime mortgage?
A loan secured on the property which allows the borrower continue to live in the property.
It is only available to those a minimum of 55-60 year olds.
When is interest payable on a roll-up lifetime mortgage?
Interest is repaid on death, entering on LTC or sale of the property.
What is a needs tested benefit
A needs tested benefit is a benefit payable if an individual meets a certain level/test of needs
Explain the payment of interest and repayment of loan on an interest only lifetime mortgage.
The interest is paid throughout ones life, with the capital borrowed being repaid on death or once entering LTC
What is a Home Income Plan Lifetime Mortgage?
A home income plan releases a lump sum from the property which is then used to purchase an annuity.
What is the key difference between a home reversion plan and a lifetime mortgage?
A home reversion plan involves the sale of all or part of the home, whilst a lifetime mortgage is a loan secured against the property.
How much interest is payable on a home reversion plan?
No interest is payable on a home reversion plan as it involves a sale of part/all of the property
What is the main drawback of a home reversion plan?
It is unlikely that the amount received will be near the market value
What is a no negative equity guarantee?
It means that a client taking out a lifetime mortgage will never owe more than the value of the property.
What scenario would mean that the loan of a lifetime mortgage does not need to be paid when an individual enters long term care?
If the spouse remains within the property
What is tested on a contribution tested benefit
The amount of national insurance contributions
If it was found that there was deliberate non-disclose what can the insurer do?
The insurer can void the policy
What is a means tested benefit?
A means tested benefit is a benefit payable dependent on the individuals assets and income
State 2 Needs tested benefits
Attendance Allowance (AA)
Personal Independence Payments (PIP)
Who is eligible for Attendance allowance?
Disabled people above state pension age who has suffered from a severe disability for 6 months or more
Is the Attendance Allowance taxed?
No, the attendance allowance is not taxed
Is, and if so when is attendance allowance stopped once entering care?
If entering LA funded care, the benefit is stopped 28 days after entering.
If the individual is self -funding care, AA can continue to be paid
What is the Personal Independence Payment (PIP)
PIP is the equivalent of the AA for those under state pension age
Who is eligible for PIP
Someone who is between 16 and state pension age who has been suffering with a disability for at least 3 months and expects to remain so for at least 9 months
What are the two components of PIP
Care element
Mobility component
When does the care element of PIP cease
The care element of PIP will cease on admission to hospital or LA funded care for four weeks or more
What are the capital thresholds for someone who may be able to claim means tested benefits without their capital being taken into account?
£6,000 for those below state pension age
£10,000 for those above state pension age
For means tested benefits, is the home and surrender value of life insurance included or excluded when assessing capital?
The home and life insurance is excluded
What is the guarantee pension credit?
It is a means tested benefit for those reaching state pension age.
It ensures that for those without a full single tier pension would ensure that their income is topped up to the level. On a means tested basis
Who is Savings Credit payable to?
Savings credit is payable to an individual who reached state pension age before 6th April 2016 and made some provisions for themselves.
What amount will be classed as tariff income for savings credit?
Over £10,000 of capital, each £500 will be deemed as providing £1 per week of tariff income
Who is carers allowance payable to?
Payable to someone over the age of 16 spending 35 hours of more per week caring for a disabled person.
As long as that person is not gainfully employed (£123pw or more) or in full time education
If a member was previously contracted out of SERPS or S2P through their personal pension, what will happen to their single tier state pension?
It will be reduced proportionately
What types of NIC count towards state pension entitlement?
Class 1 and Class 2 NIC count towards state pension entitlement
How is universal credit tested and what is its tax position?
Universal Credit is means tested, but not taxed
Does means tested benefits consider just the individuals finances, or the couples?
It considers the couples joint finances.
What type of benefit does a pre-funded insurance policy pay?
A regular income
Does receiving the full state pension class as gainful employment for the Carers Allowance?
Yes it does
Is the Carers allowance taxable?
Yes
How often does the government review the state pension age?
Every 5 years
