Ten Truths: The new Law on Paying for Care
Changes to how care and support is funded in England will be in place by April 2016. There’s been a great deal in the public eye since July 2010 when Andrew Dilnot first made his recommendations. Such as; the most you can expect to pay for care is £72,000; the threshold for local authority financial support goes up from £23,250 to £118,000 per person; and the local authorities must provide an interest bearing loan against a property, so fewer people will have to sell their home during their lifetime to pay for residential care.
Here are ten things you need to know;
1 Do you only need to put aside £72,000 for future care?
Sadly no. The cap only applies to eligible care costs and not general living costs such as accommodation and food.
2 Can you move into a luxury care home and use up your £72,000 quicker?
The cost of care will be based on the rate the local authority pay for care, which is usually significantly lower than the amount charged by care homes for private residents. Although it will depend on individual circumstances, the government’s own figures state it will take at least four years to hit the cap with just one in eight people likely to benefit.
3 Can you move a relative, who has not been assessed, into a care home and start using the £72,000 budget?
To have care fees count towards the cap, an assessment must be carried out by your local authority and only those deemed eligible for care will have their personal budget of £72,000 set up. Also only eligible care costs after April 2016 will count towards the cap (this excludes general living costs and any other costs above the local authority rate).
4 As soon as you hit the £72,000 cap there’s no need to worry about paying for care.
You won’t need to worry about paying the local authority rate for the care element of your costs. You still need to personally pay your general living expenses such as accommodation and food as well as costs over the local authority’s rate. The amount will vary but our calculations have shown it could leave you still paying as much as 75% of the total cost.
5 Will the local authority be able to force anyone to sell their house to pay for care?
The Government’s proposed scheme, known as the Universal Deferred Payment Scheme may mean a property need not be sold during the person’s lifetime. However, it could be more advantageous to choose to sell the property and use the capital to fund the care.
6 Will the new Universal Deferred Payment Scheme mean my family home can be inherited by the next generation?
The local authority put a charge on the property and expect their loan to be repaid on the death of the person in care, together with any rolled up interest. Unless the money can be found from elsewhere it is likely the property will have to be sold (within six months of death) to pay the debt back.
7 If someone is in care now will they have reached the £72,000 cap by the time it is introduced?
Unfortunately the cap will only apply to costs incurred after it is introduced in April 2016 and only if an assessment has been carried out and eligible care needs have been identified.
8 If both spouses are alive, does this mean they will have a joint threshold of £236,000 (2x£118,000) instead of £46,500 (2x£23,250)?
Not necessarily. If a property is owned, one needs care and is deemed to have eligible care needs, leaving the other living at home, the threshold is likely to be only £27,000 in the first instance. If the second spouse needs care and moves out of the home, £118,000 will apply.
9 By April 2016 if capital is below £118,000 does anything need to be paid for care costs?
Even if someone has capital assets below £118,000 they will be expected to contribute out of their income and capital if they can afford it. However, the local authority will pay the weekly fees associated with the care element based on their national figure at the time.
10 There’s no point in getting personal advice because the Local Authority will sort it all out.
If you have substantial assets and care about whether you retain control of your finances so you can make life choices including where you receive care and by whom, it would be a wise decision to take independent advice to make sure you are making the right choices for you and your family.
At The Wealth Care Partnership, our advisers are accredited with The Society for Later Life Advisers (SOLLA) and specialise in elderly financial planning, including the best solutions to fund lifetime care costs.
You don’t need to wait until you need care. Indeed, planning your finances to ensure you have the flexibility to pay care fees in the future can give you peace of mind that if something happens, you and your loved ones will be prepared.
For a free personal review saving up to £824, call 08453 723404 or request a callback here http://www.thewealthcarepartnership.co.uk/home