Thursday, 14 February 2013

Care Costs what the new rules mean.


Smoke and Mirrors – How the Government Put a Positive Spin on A Cost Increase.

There has bee a great deal of comment in the last week about paying for long term care will be capped at £75,000. This announcement was initially welcomed with a fanfare in the press, but it has already started to unravel.

What the government has said, and what it means –

  • Nobody will be forced to sell their home to pay for care in their lifetime.

Local Authorities will extend the current deferred payment scheme with legal charges that will be paid off after a person’s death.

  • There will be a cap on Care Costs at £75,000.

This does not acknowledge that ‘Hotel Costs’ will have to be met. The figure of £200 per week for hotel costs was in the original Dilnot report as was a fees cap of £35,000. However the proposed hotel costs cap is now  £12,500 per year indefinitely plus £75,000 per person (which is about 4 years care) means that you will pay out £125,000 in the first 4 years and only £12,500 every year thereafter.

Curiously the last figures I saw that gave an average length of stay in a care home said it was 4 years.

If you contrast the average care home cost of £550 per week at the moment or 114,400 over a four year stay the net loss to the person in care under the new scheme is £10,600.

  • The lower asset limit will be raised to £123,000.

No arguments from me this is a good thing, a rise from £23,500 at present so people will get to keep a bit more of their hard earned cash.

The last thing to say is that these are only proposals at the moment and they won’t come in until 2017 at the earliest (Parliamentary Time and Elections permitting). So you still need to be giving your clients high quality advice on protecting their property, and Writing the Right Will.

Call us in 01778 382723 to see how Will & Probate Services can help you to help your clients. www.will-probate.co.uk