Factoring the cost of social care into financial planning became easier last week with the government's confirmation it would be capped at £75,000. But is it as simple as it sounds?
Government plans to cap the cost of social care at £75,000 will bring “greater peace of mind” to many people across the country, according to health secretary Jeremy Hunt.
The government’s move to make the system fairer was rolled out to stop the “scandal” of people being forced to sell their homes to fund unlimited long-term care (LTC) bills. At present, up to 40,000 people per year are forced to sell their properties to pay for care.
The coalition plans to cap the amount anyone would have to pay at £75,000. It also wants to increase the means-tested threshold for people going into a care home to £123,000.
Capping the cost of social care
However, the cap only covers the ‘personal social care’ element of LTC and will not cover general living expenses (estimated at roughly £7,000 to £10,000 a year), or any “hotel” costs above the rate paid for by their local authority.
Clarity needed
Care annuity specialist Partnership said greater clarity was needed about what the cap would actually cover.
Chris Horlick, managing director of care at Partnership, said “We welcome the government’s announcement which taken in the round alongside the reforms proposed in the draft Bill present another important step in reforming adult social care.
“However, it is essential that people, particularly self-funders who form the majority of people in the adult social care system, are aware that it is not a complete cap on all care costs and therefore get specialist care fees advice at the earliest opportunity in order to find appropriate solutions to pay for their care costs.”
Falling back on the state
The firm said, in 2009 out of 53,000 ‘self-funders’ – people with assets (including property) of more than £23,250 – in social care just 7,000 received appropriate financial advice. It is also thought about a quarter of these ‘self-funders’ fall back on the state after depleting their funds.
Partnership added the number of self-funders was growing.
Proper advice essential
Accordingly, it is vital that self-funders have access to appropriate financial advice, the firm said.
Additionally, this should be at CF8 level, or an equivalent level to be determined by the government.
“With a growing number of people having to pay for all or some of their own social care needs (57%), it is essential that people get relevant information and advice, and as part of this it must include specialist care fees advice,” added Horlick.
“The introduction of a cap, along with greater awareness of how social care is funded may also encourage the financial sector to look at developing more products to help people to pay for their care needs.”
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