Long term care cost cap to be set at £75,000

9th February 2013

A policy on long term care funding is likely to finally emerge from the Government this week. It is thought that no-one will have to pay more than £75,000 to fund their nursing care, though they will still have to pay additional hotel and food costs from 2017.

The £75,000 limit, if adopted, is around £40,000 more than that recommended by the Care Commission headed by economist Andrew Dilnot, which reported in the summer of 2011. However when adjusted for prices from 2011 when Dilnot reported to 2017 his recommendation could be translated to around £61,000, 

One interesting development is that there may be some help for people in England with assets of up to £123,000 well above the current £23,250. This is likely to be met partly by freezing the inheritance tax threshold for three years. It was going to be raised from the current £325,000 for an individual to £329,000 from 2015/2016 but that is not expected to happen now.

In media interviews this morning, Dilnot sounded reasonably happy about the Government's plans, particularly when they are adjusted for 2017 prices. He says the idea is to protect people from what would be a catastrophic demand on their money. 

The policy development will mark the end of a decade and a half during which the United Kingdom has tried and failed to address the care issue many times. though it is not likely that this will bring a final end to the arguments. Some groups continue to advocate a National Care Service attached to and mirroring the National Health Service. 

Around the turn of the Millennium, another commission, this time a Royal one reported on the care situation and also made some recommendations about nursing care being paid for which were, mostly, ignored.

The Government's purse strings are tighter now and there is less in the purse, but it appears to have found a way of doing at least something. The current situation is that we have slightly different approaches in the different home nations. If you have assets above £23,250 in England, Wales and Northern Ireland and at £24,750 in Scotland you must pay for your care. In England and Wales you must contribute on a sliding scale if you have assets between £14,250 and £23,250. In Scotland the lower limit is £15,250 while in Wales, arguably the most generous the lower limit is the same as the higher limit £23.250.This may now change to something above £100,000 though much will depend on the detail.  

There are also significant policy differences from council to council – Dilnot suggested the system should be uniform across local authorities – and all with the very unpopular but very definite risk that the former family home will have to be sold eventually. The assets considered include the value of assets in property including the family home.Whether a £75,000 cap on what you have to pay stops this sort of sale remains to be seen.

There are some misconceptions about the current situation. Those without significant savings currently receive care and this policy change doesn’t appear to affect them. In addition, the house isn’t sold out from underneath a surviving partner. But councils may require the sale of the home, where they have shouldered a large part of the care costs affecting inheritance eventually.  

Many advisers suggest that £75,000 is a sum that is far too high anyway to be met from most peoples' savings and investments and doubly so those hotel costs, and it is higher than the original proposal.

If a lot of homes still end up on the auction block, then this new policy won't have dealt with one of the big grievances about the system.

 

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