The Coalition’s Care Cost Proposals
The Small Print
The Government’s new proposals to cap the costs of care have been
headline news. To cover this expense the Coalition will freeze the
Inheritance Tax threshold at £325,000 for individuals until 2019. We
question whether the proposals will really be beneficial.
Presently, if you require residential care and have more than £23,250 in
assets you are responsible for paying these fees, unless you are eligible for
NHS continuing care. Once assets dwindle to £23,250, the Local Authority
contributes towards care costs. When assets decrease to £14,250, the Local
Authority pays costs completely. For most, this results in a significant
amount being spent before the Local Authority steps in.
The new proposals are to cap the costs of care that a person will pay over
their lifetime to £75,000, and to increase the threshold after which a person
will pay for their care from £23,250 to £123,000.
So what is in the small print?
First, the cap of £75,000 only applies to social care costs. This excludes
accommodation, food, social activities and the like. The bulk of a weekly
care fee comprises these “hotel” costs, and only a small amount will qualify
as “care costs”. Therefore, you will still pay a considerable amount in
additional costs to a care home before you reach the £75,000 cap.
Second, care costs are based on the amount a Local Authority will pay if
it were responsible for meeting full costs. Local Authorities vary, and will
only be willing to pay a certain amount, with individuals having to meet the
shortfall for a better-than-basic care provision.
Third, the £123,000 threshold is not as generous as first appears. Average
house prices far exceed this. Therefore most individuals will be self-funding.
Finally, the minimum threshold of £14,250 has been raised to £17,000. This
is a minimal increase and those between the £17,000 and £123,000 band
will still contribute towards the cost of care.
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