As a Financial Planner I spend time helping and guiding clients through the challenge of care fees planning.
As the population ages, and live longer lives, the number of us requiring long-term care in later life is rising and at a pace.
Following the delay in the introduction to the cap on care costs until 2020, originally planned from 2016, I think it’s important to understand how the current system works and how the new system will apply in England. The Cap covers the help people get in their own homes for tasks such as washing and dressing, to places in residential or nursing care homes.
How does the system work currently?
Social care is means-tested, therefore only the poorest get the State’s help towards their costs.
Anyone with assets of over £23,250 has to pay the full cost of their care. If you are being cared for in your own home, that figure only takes into account any savings and investments that you have.
If you eventually move into a care home, then the value of your home may be taken into account, depending on your circumstances.
The costs people face, therefore, can run into thousands of pounds. It is estimated that 1 in 10 who enter the care system end up paying over £100,000 in fees. Long-term care funding in Surrey can regularly exceed £60,000 or even £80,000 per annum.
Nearly half the over 65 population – have care needs and around only 20% of those effected qualify for state help. Just under half of these are getting help in their home and only just over a quarter in care homes or nursing homes. The remainder get help from other services, such as day care, meals on wheels, or simply adapting their homes and using specialist equipment.
The remaining 80% are self funding and astonishingly a significant number of these are relying on family and friends to provide support.
So how will the cap work?
From April 2020 the amount you pay for care if you are over 65 is being capped at £72,000.
To be eligible, you first need to be assessed by your council as having very high needs. Whether care is provided in your home or in a residential home, only the rate set by the council will count towards the cap. Local Authorities have their own rates and these do vary greatly between Authorities, depending upon where you live.
In residential care, you will still be responsible for food and lodging when you hit the cap. A flat rate of £230 a week is proposed. The government has stated that no one will be worse off under these changes.
It is estimated only one in eight people will reach the cap, mainly because people do not live long enough in care homes to accrue such spending on care.
Can I get help with care costs before I reach the cap?
That depends on how much you have in savings and assets. People in care homes can get help if their assets drop below £118,000. That figure may include the value of your home.
If a close relative lives in the property, such as your spouse, the home is not taken into account in the assessment, but the threshold drops to £27,000.
The threshold is also £27,000 if you are getting help in your own home or from other community services.
Once you drop below these thresholds an assessment is made to calculate how much the council will contribute to your care. However, income is taken into account and therefore people with high incomes, may still be liable for the full cost of their care.
What if my care home charges more than the council rate?
If you are funding yourself, you will be able to ask your council to negotiate the care home fee for you. But many care homes say the local authority rate doesn’t cover their costs, and you may be forced to move into a lower standard of accommodation unless you choose to pay more to stay in a care home with better services and facilities.
This is known as a top-up fee. Anything you pay above the council rate will not count towards the cap. Once you reach the cap, you will still be responsible for paying any extra costs.
The government has said no one should have to sell their home to meet care costs.
From April 2015, all councils are expected to offer deferred payment schemes which mean that the costs will be taken from your estate after death. Interest will be charged on the loan however, and it will be expected that councils will keep the loan to value under review.
Councils only have to offer these if an individual has less than £27,000 in assets other than their property. Although they can be more generous, given the strain on their finances currently I am sceptical that they would be.
Whilst this is intended as a guide only, there are solutions available, so please do get in touch if you have any questions about funding for long-term care and we shall be pleased to provide personalised advice