The government’s plans to introduce a ‘cap’ on care fees won’t now be introduced until 2020. The cap should mean people who need long term care in England won’t have to pay more than £72,000 towards the cost of their care. However, the cap only applies to ‘care costs’ not so-called ‘hotel’ costs.
The £72,000 costs cap explained
The government’s planned reforms mean that elderly people living in England who need care should not have to pay more than £72,000 towards the costs of their care. However, it’s not quite that straightforward.
There are two stages to the planned reforms. From April 2015:
– No one will have to sell their home to pay for care while they are alive. All local authorities will have to offer a ‘deferred payment’ option, which means that someone’s house can be sold to pay care costs after they’ve died. At the moment not all local authorities offer this option. You can read more about how these changes work in my article called What are deferred payment options for long term care?
From April 2020 the £72,000 care cap will be introduced.
– The £72,000 cap would be for ‘care’ only. It would not include the cost of accommodation and food (often called ‘hotel costs’). The theory behind this is that you would have to pay for food and heating etc whether or not you needed care.
SAVVY TIP: People who need care before retirement age (I assume it means ‘state pension age’) will have a lower cap. Anyone who needs care below the age of 18 will effectively have the care fees cap set at zero
– Many people would not be helped by the care fees cap. The average stay in a care home is around 14 months and the typical care home fee is around £30,000 a year. This means most people would have to pay for around £35,000 of care, assuming that they didn’t qualify for state help.
SAVVY TIP: The government may expect that people may be able to take out insurance to cover the cost of up to £72,000 of care or possibly to release money from their home. Currently, the long term care insurance market is very limited, although you are able to take out a policy at the time your relative needs care.
– It would help people with illnesses like dementia. People with dementia can spend many years in a care or nursing home, which means care costs can be several hundred thousand pounds.
Janet Davies, co-founder of Symponia, and SavvyWoman’s long term care expert, says that the care fees cap won’t be introduced for another few years, which will be too long for some people.
Means testing limit raised
The amount of money and savings that you would be able to keep would also increase, under the government’s plans to £118,000.
Currently there are different limits depending on whereabouts in the UK you live and there may be two different thresholds. In very general terms:
– There is a means testing cap of around £23,250. If you have more than approximately £23,250 in savings and capital (which could include the value of your home, unless you’re living with your partner or husband), you will have to pay your own care costs. In Scotland, you would probably only have to pay for food and accommodation, not nursing costs. The thresholds are slightly different across the UK.
– Capital and savings above the lower threshold may be taken into account. If you have between approximately £14,250 and £23,250, any savings or capital you have are assumed to produce income at a rate of £1 a week for every £250 you have above the threshold level. This is taken into account (except in Wales, where there is no ‘lower threshold’).
– If you don’t have much capital/savings. If you have less than the lower threshold of approximately £14,250 the value of your savings and capital are not taken into account. It doesn’t mean that the state pays for all your care, as your pensions and benefits are still taken into account.
Photo credit: Morguefile/ronnieb
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