/ Health, Money

Will a cap on care costs ease the financial burden?

Portrait of an elderly woman

The government has announced new plans to change how people pay for their care in the future. It hopes to reduce the number of people having to sell their homes to pay for care, but will the measures be enough?

We all like to believe that we’re invincible. When I picture myself in my older years, I like to imagine myself grey and hiking across the Smoky Mountains in the US.

But according to the Association of British Insurers, up to three quarters of 65-year-olds will need care at some point. With medical treatments advancing, and life expectancies increasing, the Office of National Statistics predicts that between 2010 and 2035, the number of people aged over 85 will more than double, and the number aged over 95 will more than quadruple. So the time may soon come when we all need some level of care, either in our homes or in a residential care home.

The cost of long-term care

Long-term care is expensive. According to the NHS Information Centre, the average cost of basic care in your own home is thought to be around £20,000 over an average lifetime, while someone in a care home could expect to pay out £100,000 throughout their stay.

And not many people have this kind of money lying around in their older years. It’s common for people to have to sell their property to pay for long-term care, meaning they lose the comfort of their home while their families may miss out on their inheritance. Indeed, 40,000 people have to sell their homes every year to pay for care bills.

It’s a crisis that’s been talked about for years. But today, following a review led by Andrew Dilnot, the government announced plans for 2017 that will cap the cost of care to £75,000 in a person’s lifetime. The intention is that people will no longer face an unlimited bill for care, enabling them to plan for their care costs and reducing the need to sell their home to fund it.

As well as introducing the cap, the government plans to raise the asset threshold you need to meet before you’re required to pay for your own care. The limit is currently £23,250, including the equity in your home. Under new plans, tiered financial support will be available to anyone with assets of up to £123,250.

The rocky road ahead

There are plenty of details that still need to be ironed out. For example, the £75,000 cap will only apply to care costs. So if you need to go into a residential home, you still have to pay for non-care costs like accommodation and food, which can be around £10,000 (or more) a year. Furthermore, the cap will only apply to care at normal council costs – so if you go into a home that charges more than your local authority rate, you may have to pay extra.

Will these changes by the government prompt you into thinking more about your plans for later life? Have you had experience of organising and paying for care for yourself or a loved one?  How was the experience and would these measures have helped you?

Comments
Guest
Bill Clarke says:
11 February 2013

I know it will be said that the country cannot afford it but why is it if you are in hospital with an illness it is free “from cradle to grave ” this used to include geriatric wards The elderly were then pushed out into residential or nursing homes Mental hospitals were also closed patients being pushed out into the community Such persons then ended up in ” care homes ” where such long term patients also classified as bed clockers had to pay for their illnesses such as Alsheimers cancer etc including old age .You were also penalised if you had saved .I foresee if we are not careful the next step will be that the argument will be put forward if one is paying for board and lodging in such places why not be fair and charge for being in hospital and the whole principle of the NHS is lost
The argument we cannot afford free care for the elderly is false One option for reducing costs could be to put more on” Liverpool Pathway scheme !
Regards

Profile photo of richard
Guest

No – Only the RICH and the Poorest and the Fraudsters will benefit – If you own a small home – You will pay for long term health care – So much for NI payments paying for Health care from “cradle to grave” as I was promised in 1948 – NOT being only free for migrants – immigrants – the feckless – and sadly the poverty stricken British (the only ones I would actually support having FREE elderly health care). I will ensure I have no traceable money or assets by 2017 – I will NOT pay for Elderly Health Care after paying NI for 40 years without claiming any back – It is TOTALLY UNFAIR FOR THE Modest hard working ELDERLY – Re-election NOW

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Guest

People are, on average, living longer than they used to, despite the stresses of modern life, obesity and its complications, and cases of poor treatment by the NHS and care homes. Thanks to many advances in medical treatment, many continue to enjoy life long after retirement. Unfortunately, it all costs money – a great deal of money.

It seems to me that some are happy to accept the advances but still expect that care in old age can be free in the 21st century. Anyone with the most basic understanding of economics should realise that the government cannot spend money it does not have, or not for very long. If we are going to spend more to fund care, that means less expenditure elsewhere and/or more income from other sources. We cannot have our cake and eat it.

Yes, we need a fair way of funding care for the elderly, but it is going to be difficult to find a system that is seen as fair by everyone. We cannot deny care to those who have who have been profligate or unfortunate and have little or no savings.

I have not studied the proposals made by the current government, but I am very glad that the issue is no longer being ignored. I expect that there will be many changes over years to come, as we attempt to make the system fairer and adapt to suit changing needs.

Guest

The situation for the elderly who have nursing needs is appalling. Continuing care funding is NOT available unless you are dead… if you lucky enough ! that is. The guidelines are misinterpreted and not followed and needs are minimised wherever possible. You are thwarted and obstacles put in place if you try to get what is rightful under the law.
It is better not to save for your old age because you are punished and your house stolen from you unlawfully.
The system in place is to get people to scrimp and save to buy a house… get in debt with a mortgage round your neck for your working life (and paying lots of taxes just to get to work) then just when you have paid it off they steal your house from you to pay for exorbitant nursing homes fees. Pension that you foolishly paid into is also taken if you have any savings. Pensions also do not keep up with the falsely reported inflation rate.

Guest
Brian says:
14 February 2013

The £75,000 is only for care and accommodation and food still has to be paid for, so in your average Care Home the likely cost of the care will be around £15,000 pa and accommodation and food £10,000pa. This means that it would take five years to reach the cap and in that time an average person would have spent £125,000. In a nursing home the situation could be worse. Additionally we are told that no money is likely to be forthcoming until 2019 but in the meantime inheritance tax threshold is frozen and personal allowances are frozen supposedly to pay for it but in truth it is just to cover other profligate Government spending. So another triple whammy for pensioners who have saved all their lives and been prudent. It is the usual smoke and mirrors trick, you can’t trust the politicians.

Guest
John Gilmour says:
15 February 2013

So when are Which? going to provide some guidance on LTC products?
As one of many who had their fingers burned by a PPP LTC product that had to be rectified by the Financial Ombudsman Service, I would welcome some really useful consumer advice.
Perhaps Which? could redirect some resources to this as opposed to perpetual reviews of tablets!

Profile photo of Gareth Shaw
Guest

Hi John, thanks for your comment. Which? has been very active on the issue of long-term care, both in the quality of care itself and the means of paying for it. You can see our response that we published at the end of last year to the Care Quality Commission here. http://www.which.co.uk/about-which/who-we-are/which-policy/health/long-term-care/

Furthermore, we have a dedicated money helpline for members that takes dozens of calls on long-term care and how to pay for it. We also have lots of guidance on our website on equity release, which is often used as a means of paying for care, as well as how care funding is assessed. Later on this year, we will be publishing an article on care funding in Which? magazine.

In recent years, there has been a lack of products in the market dedicated to paying for care. With this new Bill, the government is expecting that the insurance industry will once again innovate to create new products that can meet the ever-growing demands for meeting care costs. We will, of course, be at the forefront of the analysis of these product and helping consumers find the right solution that meets their needs.

Guest

So much for being hard working.Politicians tell you go to work to own your home,save for retirement and have a personal pension,Why? so they can take it all off you when you retire.