Older people could finally be released from the burden of seeing most of their savings or the house they love being used to pay for long-term care. A key Government Commission was reported in mid 2011 on the best ways to ensure a fairer split of the costs of long-term care between individuals and the State.
Under the present strict means-tested rules some care residents and their families end up paying huge sums towards long stays in care. One in five pays more than £100,000.
But the Commission on the Funding of Care and Support, chaired by economist Andrew Dilnot, recommended a cap on the maximum paid by any one person.
If approved this would see the State stepping in to pay towards help with care bills once someone has spent a set sum – possibly £35,000 or £50,000 – from their own funds, regardless of how much they still have in the bank. But the care resident would still be expected to cover their 'hotel stay' costs for board and lodging in a home.
The Commission also called for more insurance and savings plans to help cover potential care bills.
There are already fears that the Government will put Dilnot's proposals to one side, which could cost the Treasury up to £2 billion a year extra.
Whatever the Commission suggests, it will do very little to help those families already facing the everyday challenge of paying for care today. Any new legislation is unlikely to come into force until 2014 at the very earliest.
The cost of residential care can range from anything from £25,000 to more than £50,000 a year, depending on the location and the standard of the care home.
Income from State and occupational pensions will go some of the way towards the cost. Care residents are also likely to be entitled to benefits such as Attendance Allowance.
But families are still left with a substantial shortfalling between their income and the monthly bill of the care costs. This means that for thousands of people each year, that selling their home is the only option to meet these costs.
Once a property is sold, all the sale proceeds can be invested to provide an income. Alternatively, they might be used to buy a care annuity, which provides a taxfree payment direct to the care home for as long as someone lives.
Some local authorities will offer a deferred payment scheme, where they cover the cost of fees, but then take a charge against the care resident's home and collect what is owed when the property is sold.
Means testing explained:
Current rules on funding care mean that tens of thousands of families are forced to run down their savings each year to pay for care bills.
Local authorities assess your wealth when you go into care. The means-test includes most types of savings and investments and, after a 12-week initial period, the value of your home.
The home is only disregarded if a spouse, dependent child or other relative aged 60 or more lives there.
If your total assets are above a higher capital limit – £23,250 in England and Northern Ireland – you get no help.
Between this and a lower limit – £14,250 in England and Northern Ireland – there is some help. Below the bottom threshold, bills are paid in full. The picture is complicated as each of the four home nations has different rules.
In Scotland, the capital bands are £23,500 and £14,500 while in Wales there is a single limit of £22,500, below which you qualify for help.
But some State help is not means-tested. Most of those needing residential care qualify for Attendance Allowance, paid at either £49.30 a week or a higher rate of £73.60 a week if you also need help at night.
In Scotland, care home residents may instead qualify for a weekly personal care payment of £159 instead of Attendance Allowance.
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