You may have read my previous articles about the pension reforms that are due to take effect this year. Other major changes include the implementation of the first stage of the Care Bill 2014 that resulted from a Government enquiry.
The enquiry found the help currently available is a ‘postcode lottery’, and recommended that national eligibility criteria should be set. It went on to state that the current funding system is not fit for purpose and an urgent review is needed.
The 81-page Dilnot Report published on 4 July 2011 set out various recommendations outlining how best to fund an ageing population.
One of the main recommendations was to cap the lifetime contributions required towards social care costs, so that once someone reaches the care cap, they become eligible for full state funding. The recommended level was £35,000, however a cap of £72,000 was set, and comes into effect next year.
Unfortunately, there is a lot of misunderstanding regarding this cap. It only relates to the portion of the care home fees that are deemed as ‘care costs’ and only relates to the level the local authority would have paid. An individual still needs to fund their own ‘bed and breakfast costs’ as well as any additional costs.
It will be important to ‘get on the radar’ at an early stage. This is because the ‘counter’ only starts when the Local Authority agrees that the individual needs a certain level of care – any fees paid before this level of care is agreed will not count towards the cap.
Department of Health figures show that 16% of older people will have care costs of more than £72,000 – these people will benefit from the care cap. Meanwhile, one in five people are expected to have no care costs at all.
Currently, you only receive state help towards care costs if you have low income and assets below £23,250. The proposed changes mean that people with assets up to around £118,000 will receive financial support if they go into a care home. The amount will depend on their assets.
At Monetary Solutions Ltd, you can book a free initial consultation about any financial matters. Please call us on 020 8655 8488.