Long Term Care Planning
Sarah Rogerson Financial Adviser explains about the pledge the Government has made under the Care Act 2014, which will now be implemented in April 2020.
Current Capital Limits for Residential Care Over £23,250 The individual is expected to meet the full costs of residential care £14,250 – £23,250 The council will contribute towards your care costs less than £14,250 Capital and savings are disregarded from the assessment process.
Depending on income the council may fund the full cost of residential care The Care Act 2014 implements a pledge by the Government to cap the cost of paying for longterm care in England. The Government’s Care Act legislation contains many changes to social care and this was due to come into force in April 2016 but the Government has delayed this until April 2020. The two main changes affecting how care is funded are:
1. A lifetime cap on care costs set at £72,000. It is proposed that a cap of £72,000 will be introduced. That means that no one will have to pay any more for their eligible care needs to be met once they have spent a total of £72,000. This cap will apply to the cost of care that people receive either in their own home or living in a care home. It does not include someone’s ‘hotel costs’ (i.e. bed and board) if they are living in a care home. These would still be charged separately even after reaching the cap, however, hotel costs will be capped as well at £12,000 per year.
2. Changes to the means test – The Care Act 2014. It has been proposed that after April 2020:
- The £23,250 upper limit will be raised to £118,000.
- The lower limit will be raised to £17,000 Therefore, anyone with assets of between £17,000 and £118,500 who meets the eligibility criteria will be entitled to some financial support according to a sliding scale. Although the cap has been set at £72,000 this does not mean that once you have spent £72,000 the state will pay the rest. Most people will have to spend around twice that on care home fees before the cap is reached.
For instance, if your care home costs you £720 a week you may calculate that in just under 2 years it will be free as you will have spent £72,000 but this may not be the case.
This is because the cap represents the amount of care you could buy at the rate your local authority would pay. If the local council is prepared to pay only up to £650 a week for a care home, it would take 111 weeks to reach £72,000, by which time you would have paid £79,920.
Even then, the cap will not have been reached because it covers only care costs – not the cost of board and lodging in the home.
The Government is expected to fix the national figure for board and lodging at £12,000 a year, which is £230 a week. Deducting that from £650 leaves just £420 a week as the cost of the care that the council will pay for.
It is that amount which counts towards the cap and it will take 172 weeks – three years and four months – before you have paid £72,000. By then, your total fees will have cost you £123,840, partly on board and lodging but also because your home charges you more for care than the local authority is prepared to pay.
Even when you reach the cap, the whole of your care home fees will not be paid. The state will pay only the £420 a week local authority cost of care, leaving you to find the balance of £300 a week.
The average stay in a care home is 2½ years, so most people who fund themselves will not live long enough to see the benefit of the cap. The Institute of Actuaries estimates that only 1 in 8 women and 1 in 12 men who go into a care home at the typical age of 85 will benefit from the cap.