New-age plans for the elderly

HEALTH INSURANCE SURVEY: gain more protection and you don't have to pay the earth, is the claim. We examine the range of different policies avai lable, from sick pay cover to insurance for the costs of going into a nursing h ome

There are more than 10 million people aged 65 and over in Britain and 900,000 people aged more than 85, according to the Office of Population Censuses and Surveys. By the year 2000 that latter figure is set to rise to 1.2 million.

The older we live, the more likely it is that we will need help looking after ourselves. And the more elderly people there are, the more health care and nursing care facilities we will require. The big question is: where is the money to come from?

Local authorities are responsible for providing long-term care for the elderly, and each authority differs in the resources it has at its disposal. The trend has been to provide people with sufficient help so that they can remain in their home. Not only do many people prefer this but it is also cheaper than paying for people to go into nursing homes.

But in 1995 around 250,000 people were in residential homes in England. Average nursing home fees are around pounds 18,000 a year, according to Bupa, although they can be higher.

While local authorities will arrange for people to go into a nursing home if necessary, the elderly person may well have to pay part, if not all, of the fees.

If you have pounds 16,000 or more of assets (and your home counts as an asset) you will have to meet the full costs. Those with assets of between pounds 10,000 and pounds 16,000 are expected to pay part of the cost. Where someone has assets of less than pounds 10,000, the local authority should pick up the bill, although this is not always the case. For those with pounds 16,000 or more of assets this can often mean having to sell their home to pay for nursing home fees. According to Help the Aged, around 40,000 people are forced to do so each year.

The Government, care organisations, the insurance industry and other interested parties have been looking at how to finance long-term care. Last month the Government published the draft Community Care (Residential Charges) Bill, under which individuals would be given incentives to take out insurance to finance care.

Long-term care insurance pays out a lump sum if you become unable to carry out basic daily activities such as getting out of bed, washing, dressing and eating. Some policies will provide only for a home help, others for full-time nursing care in the home, and others for residential care. The full cost may be covered or you may receive a set amount of money. Pre-funded schemes are offered by Bupa, Commercial Union, Prime Health and PPP Lifetime Care, among others.

Under the Government's proposals, for every pounds 1 of insurance cover you would get pounds 1.50 of your assets protected should you need residential or nursing care. For example, if you had pounds 40,000 of insurance benefit, you would be able to keep assets worth pounds 60,000, plus the existing pounds 10,000 allowance, and still qualify for state support once the benefit was used up.

The insurance industry has cautiously welcomed the proposals but believes the Government should make it pounds 2 of asset protection for every pounds 1 of cover. The Labour party is promising to set up a Royal Commission. Neither party promises to increase the amount of money available for long-term care.

Mervin Kohler, of Help the Aged, is not convinced by the answers on offer. He says: "This is one of the major social issues but it is only getting the most cursory treatment. The real question is will there be more money? Neither party is promising this; they are just fiddling around the edges. It is unreasonable to pretend that without more money we'll have the standards and availability of services that we want for our older population."