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You can find the current article at its original source at http://www.guardian.co.uk/money/2013/feb/11/qanda-social-care-costs-elderly
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| Social care costs: what will the new proposals mean? | Social care costs: what will the new proposals mean? |
| (7 months later) | |
| What is the current situation when it comes to paying for social care? | What is the current situation when it comes to paying for social care? |
| If you live in your own home in England and are assessed by your local authority as sufficiently disabled to qualify for "social care" – help with getting out of bed, washing, getting a meal and so on – the amount you pay towards that care depends on the value of your assets not including the value of your home. | If you live in your own home in England and are assessed by your local authority as sufficiently disabled to qualify for "social care" – help with getting out of bed, washing, getting a meal and so on – the amount you pay towards that care depends on the value of your assets not including the value of your home. |
| Most local authorities in England will provide you with free social care in your home if you have savings below £14,000. If you have between £14,000 and £23,250, you will have to contribute towards the costs on a sliding scale and, if you have more than £23,250 in savings you pay the total cost. | Most local authorities in England will provide you with free social care in your home if you have savings below £14,000. If you have between £14,000 and £23,250, you will have to contribute towards the costs on a sliding scale and, if you have more than £23,250 in savings you pay the total cost. |
| If you meet your local authority's disability criteria for going into residential care, what you pay towards the cost depends on a means-test of your assets including the value of your home if there is no dependant or spouse living in it. | If you meet your local authority's disability criteria for going into residential care, what you pay towards the cost depends on a means-test of your assets including the value of your home if there is no dependant or spouse living in it. |
| If you have assets under £23,250, the local authority will cover the cost, though they will use your pension as a contribution. If you have assets of more than £23,250, you will pay the full cost of your residential care including both your personal-care costs and your bed and board, or what is known as "hotel" costs. | If you have assets under £23,250, the local authority will cover the cost, though they will use your pension as a contribution. If you have assets of more than £23,250, you will pay the full cost of your residential care including both your personal-care costs and your bed and board, or what is known as "hotel" costs. |
| If your pension is not enough to cover the monthly bill, once you have used up any savings, you normally have no option but to sell your house to continue paying for your care. | If your pension is not enough to cover the monthly bill, once you have used up any savings, you normally have no option but to sell your house to continue paying for your care. |
| Jeremy Hunt, the health minister, said at the weekend: "The real point here is that we have a scandal at the moment where, every year, 30,000 to 40,000 people are having to sell their houses to pay for care costs. | Jeremy Hunt, the health minister, said at the weekend: "The real point here is that we have a scandal at the moment where, every year, 30,000 to 40,000 people are having to sell their houses to pay for care costs. |
| "Around 10% of us end up paying more than £100,000 in care costs," Hunt said. | "Around 10% of us end up paying more than £100,000 in care costs," Hunt said. |
| What changes are the government proposing? | What changes are the government proposing? |
| The government is expected to formally announce today that the costs of personal care for the elderly in England will be capped from April 2017 at £75,000. | The government is expected to formally announce today that the costs of personal care for the elderly in England will be capped from April 2017 at £75,000. |
| At the same time, the means-test threshold for residential care will be raised from £23,250 to £123,000. | At the same time, the means-test threshold for residential care will be raised from £23,250 to £123,000. |
| For people receiving social care while living in their own homes, whatever they have to pay towards the cost of that care will be totted up – rather like running a taxi meter. Once the meter hits the lifetime cap of £75,000, all social care provided thereafter – whether it's in their own home or later on in a care home – will be free, regardless of their financial circumstances. | For people receiving social care while living in their own homes, whatever they have to pay towards the cost of that care will be totted up – rather like running a taxi meter. Once the meter hits the lifetime cap of £75,000, all social care provided thereafter – whether it's in their own home or later on in a care home – will be free, regardless of their financial circumstances. |
| For people who qualify under the disability criteria to go into a care home – and there will be a new national disability criteria rather than variations between local authorities – the costs of all the personal care they receive will again be metered and will count towards their £75,000 lifetime cap. | For people who qualify under the disability criteria to go into a care home – and there will be a new national disability criteria rather than variations between local authorities – the costs of all the personal care they receive will again be metered and will count towards their £75,000 lifetime cap. |
| But people will still have to pay "hotel" costs for their board and lodging, which will be limited to a maximum annual cost expected to be about £10,000, according to the charity Age UK. | But people will still have to pay "hotel" costs for their board and lodging, which will be limited to a maximum annual cost expected to be about £10,000, according to the charity Age UK. |
| The raising of the means-test threshold means that people entering a care home with less than £123,000, including the value of their home, will not have to pay the full cost of their care – a substantial increase from the current threshold of £23,250. Anyone with assets over the £123,000 threshold will have to pay the full costs but the care element of their costs will count towards their £75,000 lifetime cap. | The raising of the means-test threshold means that people entering a care home with less than £123,000, including the value of their home, will not have to pay the full cost of their care – a substantial increase from the current threshold of £23,250. Anyone with assets over the £123,000 threshold will have to pay the full costs but the care element of their costs will count towards their £75,000 lifetime cap. |
| Hunt said the cap was designed to ensure nobody had to pay anything by fostering a culture in which people make provision for their care by making it easier to take out insurance. | Hunt said the cap was designed to ensure nobody had to pay anything by fostering a culture in which people make provision for their care by making it easier to take out insurance. |
| "There is a misunderstanding about the cap," he said. "If you set the cap at £75,000, that is not saying we want everyone to pay £75,000 before the state helps. Actually we don't want anyone to pay anything at all. By setting an upper limit to how much people have to pay, then it makes it possible for insurance companies to offer policies for people to have options on their pensions so that anything you pay under the cap is covered." | "There is a misunderstanding about the cap," he said. "If you set the cap at £75,000, that is not saying we want everyone to pay £75,000 before the state helps. Actually we don't want anyone to pay anything at all. By setting an upper limit to how much people have to pay, then it makes it possible for insurance companies to offer policies for people to have options on their pensions so that anything you pay under the cap is covered." |
| So will everyone have to buy some kind of insurance policy then? | So will everyone have to buy some kind of insurance policy then? |
| No, but some people – those who want to pass their home on to their heirs when they die – might want to. | No, but some people – those who want to pass their home on to their heirs when they die – might want to. |
| At the moment there are very few realistic ways of insuring yourself for future social care costs because it is virtually impossible to assess the risk. Currently one in two people spend up to £20,000 in their lives on social care, while one in 10 spend more than £100,000, according to Age UK, so the risk to an insurer could be anything from zero to more than £100,000. | At the moment there are very few realistic ways of insuring yourself for future social care costs because it is virtually impossible to assess the risk. Currently one in two people spend up to £20,000 in their lives on social care, while one in 10 spend more than £100,000, according to Age UK, so the risk to an insurer could be anything from zero to more than £100,000. |
| By pegging the risk at £75,000, the government is hoping the insurance market will offer insurance products to cover the costs of social care. | By pegging the risk at £75,000, the government is hoping the insurance market will offer insurance products to cover the costs of social care. |
| Buying a policy that covers that potential £75,000 cost might appeal to someone who knows they will have sufficient pension income and savings to cover any future hotel costs of residential care and wants to protect themselves against having to sell their home to pay for future social care costs. | Buying a policy that covers that potential £75,000 cost might appeal to someone who knows they will have sufficient pension income and savings to cover any future hotel costs of residential care and wants to protect themselves against having to sell their home to pay for future social care costs. |
| Nick Clegg, deputy prime minister, has said that the new system should result in no elderly people having to sell their homes to fund their care, a promise that depends on people taking up private health insurance to cover that initial £75,000 cost. | Nick Clegg, deputy prime minister, has said that the new system should result in no elderly people having to sell their homes to fund their care, a promise that depends on people taking up private health insurance to cover that initial £75,000 cost. |
| "We will make sure no one is forced to sell their home to pay for care in their lifetime, and no one sees their life savings disappear just because they developed the wrong kind of illness," he wrote in an article at the weekend. | "We will make sure no one is forced to sell their home to pay for care in their lifetime, and no one sees their life savings disappear just because they developed the wrong kind of illness," he wrote in an article at the weekend. |
| How is the government paying for these changes? | How is the government paying for these changes? |
| The new policy is expected to cost an extra £1bn a year by the end of the decade. | The new policy is expected to cost an extra £1bn a year by the end of the decade. |
| The policy is expected to be funded partly by a new freeze on the inheritance tax (IHT) threshold at the current rate of £325,000 for individuals until 2019 together with previously announced changes to national insurance and pensions. If IHT, frozen since 2009, increased in line with inflation every year until 2019 it would reach £420,000. | The policy is expected to be funded partly by a new freeze on the inheritance tax (IHT) threshold at the current rate of £325,000 for individuals until 2019 together with previously announced changes to national insurance and pensions. If IHT, frozen since 2009, increased in line with inflation every year until 2019 it would reach £420,000. |
| The expected move on IHT comes despite the pledge by the chancellor, George Osborne, in the autumn statement to raise the threshold by 1% – to £329,000 for individuals and £658,000 for couples from April 2015. | The expected move on IHT comes despite the pledge by the chancellor, George Osborne, in the autumn statement to raise the threshold by 1% – to £329,000 for individuals and £658,000 for couples from April 2015. |
| Can't my residential care costs be paid for once my home is sold after I die? | Can't my residential care costs be paid for once my home is sold after I die? |
| A few local authorities currently run optional plans where your care costs can be deferred and then paid out of your estate on death. In future the government will be introducing a national deferred payments scheme for residential care where anyone can choose to build up an IOU for their care costs and defer them so they are paid on death. | A few local authorities currently run optional plans where your care costs can be deferred and then paid out of your estate on death. In future the government will be introducing a national deferred payments scheme for residential care where anyone can choose to build up an IOU for their care costs and defer them so they are paid on death. |
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