Queen’s Speech and Social Care – what to watch out for:

Pensions will not pay for care – people need to save for social care too

Incentives urgently needed to increase awareness

by Dr. Ros Altmann

(All material on this page is subject to copyright and must not be reproduced without the author’s permission.)

---

 

Main points

• £72,000 cap only starts from April 2016, money spent before won’t count
• Cap only covers basic care standard and excludes board and lodging cost
• Cap only starts when needs are substantial, nothing for moderate needs
• Will give better system for future, but still need to address current care crisis
• Increased means test threshold good, but most will still have to use some of their house value to pay for care
• Individuals or families will still have to pay thousands of pounds for social care
• Vital for Government to consider incentives to help people save for care

The Government will introduce a £72,000 cap on the total lifetime care costs for older people needing social care, so in future people will not face unlimited costs for care. There will also be an increase in the current absurdly low means-test threshold of around £23,250. In April 2016, anyone who has assets (including their home) of less than £112,000 will start to receive some contribution to their social care costs. The new system will certainly be better than the one we have now, but these reforms are only a start. People need to be encouraged to save for care in later life, families need to know that much of the cost will still fall on individuals and nobody is yet making plans to fund their care needs. The new measures will also only start to benefit people several years hence, but the immediate crisis needs to be dealt with too. Better integration of health and social care would help save money to the NHS by looking after older people in their own homes, or outside hospital, rather than waiting until they need emergency interventions which could have been avoided with earlier action.

The £72,000 cap will only begin in 2016 and won’t cover all care costs anyway: The Dilnot-style cap of £72,000 will be introduced from April 2016, but will still mean people having to spend tens of thousands of pounds on social care before they receive any help from the state. The cap will only begin to accrue in April 2016 and only covers certain costs, not all.

This only applies to ‘substantial’ need so care costs before that won’t count: The £72,000 cap will only apply once people’s care needs are assessed as ‘substantial.’ That means anyone with moderate care needs will have to pay the entire cost themselves. Indeed, some councils do currently cover people who have moderate needs and low means, however in future these people may not get any help at all. Only when their condition worsens enough that their care needs are considered ‘substantial’ will they get any help at all.

The £72,000 cap only covers actual care costs as assessed at a standard local authority rate and excludes food and accommodation. This would mean any higher standards of care have to be funded privately and do not count towards the £72,000, while all accommodation and food costs in a care home will also not count towards the cap.

People will still have to pay many thousands of pounds for care: Many people will, therefore, obviously have to use the value of their home to fund care needs, unless they have plenty of savings to fall back on. Pensions will not cover the high costs of care for most people, and anyone who has a lifelong pension income cannot achieve the higher sums they require for later life care once their pensions are in payment.

Consequences:

Won’t help anyone for many years to come, no help for current care crisis: The immediate crisis in social care is not being addressed by these proposals. The care cap will be introduced in April 2016, but will not cover anyone for care costs they have already incurred prior to that. The social care system is currently creaking at the seams, with cash-strapped local councils being unable to cover the costs and desperately seeking to cut care spending, despite rising demand from increasing numbers of older people. Obviously, this is bad news for those who need care and for their families, but it affects all of us, because the strain of inadequate care falls ultimately on the NHS, when older people end up in hospital as a result of falls or worsening conditions that could have been ameliorated or avoided with a little early care intervention.

People’s homes will still need to be sold: Many people will still need to use the value of their house to fund later life care. If the Government introduces a national deferred payment plan, then people might get the costs funded during their lifetime by the state taking a charge on their home that will then ultimately be sold after they pass away to pay back the costs. This means the Government can claim that people do not have to sell their home for care during their own lifetime, but the reality is that their home will eventually have to be sold to cover the costs and cannot be passed on to their family.

Means test will be more generous, but still won’t help with all costs, so people need to make their own provision if they can: From April 2016, anyone who has assets (including their home) of less than £112,000 will in future start to receive some contribution to their social care costs. The amount they receive will be increased as their assets fall and those with lower sums receive more help. However, the amount they receive will still only reflect the standard local authority rate and only start to be paid when their care needs are assessed as substantial. If they have moderate needs, they will have to find the money privately, or rely on their families to look after them.

Government should introduce care saving incentives – pensions won_t pay: Since people will still need to pay thousands of pounds for later life care, if needed, but almost no money has been set aside by families to fund this, it is urgent that Government considers introducing some savings incentives to help people fund their care needs or those of a loved one. A special tax free savings account for care – where taxed income is put in, but it can be withdrawn tax free if used to pay for care for oneself or someone else – would help focus people_s attention on the need to save for care as well as for pensions.

 

ENDS
Dr. Ros Altmann
8 May 2013