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Long-term care cap: who picks up the bill?

All agree that the reform of long-term care funding is overdue – the question is will George Osborne pick up the bill?

Long-term care cap: who picks up the bill?

All agree that the reform of long-term care funding is overdue – the question is will George Osborne pick up the bill?

Cap on costs

The long-awaited report into long-term residential care from economist Andrew Dilnot is proposing a cap on care costs at around £35,000 to £50,000 – and a further cap on ‘hotel costs’ for food and accommodation at between £7,000 and £10,000 a year. 

The report has been welcomed by those involved with long term care. In particular by wealthier families who have long complained about the requirement for those with assets in excess of a of £23,250 to sell the family home to fund care. 

Currently, they face unlimited bills until their money runs out. The cap at £35,000 will allow many to avoid this big expense but it will be means-tested, so not everyone will escape. Dilnot proposes that the mean-testing threshold should be raised to £100,000, with costs ‘tapered in’ until the new threshold is reached.

Caps vs cuts

The big question, however, is will Chancellor George Osborne accept the recommendations. They are reckoned to cost up to £2 billion a year at a time when budgets for essential services such as education, law and order and defence are being slashed, and public sector workers face cuts in their pensions? Or will the report simply be put on a shelf to collect dust?

Dilnot is optimistic that the proposals will be accepted by government and told the BBC’s Today programme on Monday: ‘I have spoken with all the main players in this area. I do not think that is the position we are in.’ 

He believes there will be a White Paper on long-term care by next year, although he admitted that it was unlikely that his recommendations, even if accepted in full, would be likely to be implemented before 2014. 

The reforms have widespread support. Peter Gatenby, who advised the previous Labour government commission on long-term care and is a senior actuary at leading accountants Mazars, said: ‘Already 17% of people aged over 85 require long-term care and about 40,000 homes are sold each year to pay for this. 

‘It is vital that the government take this unique opportunity to address this situation as it will only get dramatically worse, not least because the average cost of a four-year stay in a nursing home is projected to double to £225,000 by 2028, from the current level of around £112,000.’

Call to action

One solution that would remove the cost burden from the taxpayer would be if the insurance industry were to produce affordable products to cover these costs.

‘The Dilnot Commission report delivers a clear call to action to the financial services industry to work with government to develop the innovative products needed to fund long-term care,’ says Gordon Morris, managing director of Age UK Enterprises.

‘Existing products, such as equity release and annuities, could present a solution but far more has to be done to build flexibility into these products to increase access and ensure these products evolve to meet changing financial needs.’ 

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17 comments so far. Why not have your say?

Anonymous 1 needed this 'off the record'

Jul 04, 2011 at 14:02

My mother has been in care for a little over 4 years. She has paid on average £2k per month which totals circa £90k (allowing for room changes/increases in fees etc). She used all her savings and I to sell her very modest 2-bedroom home to continue to fund her care. Her bank account will fall below £23k in about another year or so and then the arguments with social services will start.

My mother has severe Alzheimers and is physically reasonably well. She worked hard all her life and saved for her old age never dreaming that the cost of care would totally deplete her reserves and leave her at the mercy of an inadequately funded social service department whose rates bear little resemblance to the true cost of care.

The system needs revision. Currently those who don't work or claim benefits get everything paid, the rich can cope but as usual those who are in the middle pay the heaviest price. Revision will be too late for my Mother but is well overdue.

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Sally Gardner

Jul 04, 2011 at 14:32

The "average cost" of a care home nowhere near reflects the actual cost in the south of the UK. I hope the government takes that into account when doing its sums, and does not leave some people with funding that does not cover their costs. If you live in South Oxfordshire, as I do, and need to have your mother in a care home close enough to visit frequently, rather than ship her off to some distant and less expensive county, you end up paying over £1,000 a week. She died after ten months and it cost her about £5k a month in that time. This is the local rate; others were about the same.

Although she had dementia and needed nursing care as well, and the care home felt she should have been eligible for funding on medical grounds, the local funding board turned her down. We sold her one-bedroomed flat to cover her costs. So I also hope that funding doesn't depend on funding boards who are looking more at cutting costs than at medical requirements. If we'd taken them to court we would probably have won. Others have. But should funding be dependent on whether citizens are prepared to take the funding authorities to court?

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Jack Porter

Jul 04, 2011 at 14:37

I am stil confused. Iaccept 'Hotel Costs' but hoe can this be apportioned if I go into a private nursing home at say £2,000 per week

If we wsh to use 'private' homes there should be a fixed monthly allowance covering Hotel Costs and Other costs.

We need some certitude otherwise we wil be unable to get any form of long term insurance.

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pam buchanan

Jul 04, 2011 at 14:46

My FIL has recently died He had Pulmonary Fibrosis, COPD, severe deforming R,Arthritis, doubly incontinent, severe weight loss to 5 stone, and was immobile. The Local Authority refused him funding on medical grounds. He was in a nursing home for 3 years. Total bill £70,000. All he has is a small semi which is needs total modernisation. He had no savings as he was forced to pay for a mobility trike, stair life and help in the home before he was given in a place in a nursing home. Always seek legal advice and never sign any documents from the Local Authority or Social Services regarding a nursing home without specialist advice. The system is an absolute disgrace and penalises anyone who is "misfortunate" enough to have worked all their lives, paid N.I. and income tax.

The elderly are being institutionally mugged by the state. Shame on you.

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K. Nackerd

Jul 04, 2011 at 15:27

What exactly does one get for such large sums of money ? What are the profits, and why do I see ''care home'' owners are so often wealthy absent landords paying such poor wages to on premises staff ?

I'm sorry my parents died young but glad they escaped the suffering of what old age really means for those who worked hard, saved hard, and got ripped off hard - disgusting when there is so much money for wars

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Jul 04, 2011 at 15:29

As Anonymous 1 notes, it is the people in the middle who will suffer, most of whom will have worked all their lives, paid their full share of tax and taken very little from the State.That is the way we seem to do things in this country, sending signals to the non working, non contributing section of the population that they will always be looked after. whilst making it clear to others that not only will they pay for themselves right to the end but they will also be taxed to pay for the others. It is little wonder that the signals are now being received and acted upon by increasingly large numbers of people who have grasped that it simply does not pay in the long run to act responsibly. That, of course, is a perfectly rational response but it sets up big problems for the future for us all. It is one thing to hold out a helping hand to people who deserve help - and Heaven knows there are enough of those - but quite another to cope with those who have just taken everything they can get without ever putting anything back. This is where much of the high cost of these problems arises.

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Clive B

Jul 04, 2011 at 15:29

Though it moves things on a little, I don't see this as a solution

a) your costs are NOT capped at £35,000 - it's £35,000 PLUS any accommodation costs PLUS any costs not covered by the state.

b) I can't see how the government can (or should attempt to) dictate accommodation charges to private firms. Its up to them to state what price they need to deliver the service.

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Stanley Spencer

Jul 04, 2011 at 16:12

Who should pay? The elderly should.

I believe that the elderly should continue to pay national insurance when they retire, afterall you still pay car insurance etc. If this isn't sufficient then inheritance tax should cover the rest. This will relieve the burden on younger taxpayers.


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Anonymous 2 needed this 'off the record'

Jul 04, 2011 at 16:28

The problem is that HUGE amounts of benefits are still paid to the fit and healthy while our elderly go without.

Only today we have had people moaning about the proposed cap of £26,000 tax free a year in housing benefit.

It is imoral that our society gives £26,000 tax free to the fit and healthy whilst screwing its elderly, sick and vulnerable senior citizens.

Restricting housing benefit to say £20k pa tax free should help cover the cost of these long term care proposals.

Cutting quangoes from £100 billion to £50 billion will cover the cost of these proposals.

Pulling our lads out of Afganistan should cover the cost of these proposals.

Sacking any one with Equality, diversity, co-ordinator, climate officer, bin inspector, outreach, 5 a day, support officer, sexuality, transgender, etc etc in their tiltle will pay for these proposals

Trouble is no political will to get this countries priorities right.

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Catrin Rowlands

Jul 04, 2011 at 17:08

I am getting more and more puzzled by the comments that the elderly who have money and property are somehow hard-done-by if they have to pay the care home fees if they have to move into one.

I am 75 years old, and I cannot for the life of me understand what is wrong with me having to pay the care home fees when I have income and assets to do so. Why should those who can afford to pay be supplemented by the taxpayer? I have worked all my life until I was 68 and was lucky enough to be able to save into a good pension. So why would I whinge about paying my care home fees and maybe sell my house to do so? After all, I have to pay my way at the moment and the taxpayer does not contribute one penny to help me. If, in the future, I have to move to a care home, all I am doing is moving home and downsizing, after all!!

People like me are referred to as belonging to the "middle class" and we are hard-done-by apparently. Well, I don't think so. All of us who have income and/or assets should pay our own care home fees. We should be pleased that we are able to do so, and then there will be more money in the pot to help those who are not so lucky, and they are given all the help they require. That is what living in a caring society means.

If I were in charge, instead of capping what the elderly pay I would be capping the care home fees. It is obvious to me (and I have done all the calculations) that someone, somewhere is minting it big time!!

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K. Nackerd

Jul 04, 2011 at 18:07

And what does one pay, and what does one get for the money ?

Who effectively ''owns'' these oldies requiring care ? How did they accumalate such wealth ?

Are the accounts available for scrutiny by residents, families of residents ?

Who are they accountable to, and how do we ''sack'' them when malpractice and shoddy care and abuse is highlighted ?

No matter who is paying - it's a case of who gets the money, what service is got for the money, is it moral value for money ?

- having a friend working as a cleaner in a care home, the money seems to by-pass both residents and workers leading to much comment about the owners living in grand houses and driving splendid cars.

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Chris Kenney

Jul 04, 2011 at 18:34

Stanley Spencer & All Readers

All myworking life I have paid copious amounts of Tax and NI contributions on the understanding that I was paying for the people who were already retired.

Why is it that now its coming up to my turn to claim no one wants to pay in anymore?

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Jul 04, 2011 at 18:50

What gets me is the LA's used to pick up the tab, that is before reorganisation when they were properly run. Now, if you have savings, they don't. Seems we pay LA's more and more for less and less, until you notice the social services bill! No wonder GB wanted to merge the SS with education, to hide this burgeoning cost.

In Barnsley the care home sites are being sold off for a peppercorn sum [LA admitting it can't run anything resembling a business or building assets] on the condition they are redeveloped by private enterprise for the same function!

Would you believe the local councillors then take a bow at the opening ceremony of the new development!

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K. Nackerd

Jul 04, 2011 at 18:53

same here, but doubt I will see my retirement as I'm about to be worked to oblivion and given I've been at work and paying tax since I was just turned 15 yrs old it seems I have nothing to look forward to except working til I'm 66 - my knees are done in now! , and if I have my say I'm not going to make someone very wealthy based on my old age and infirmity, that amounts to paying twice - tax all your life, then the vultures want what the gov wanted you to put by. For them or for you ? No wonder the gov wants you to save - they get the pickings when they can - someone on here said state mugging - agree totally

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William Bishop

Jul 04, 2011 at 19:22

In current circumstances, the elderly will be lucky to get away with even what Dilnot is suggesting, given the current Treasury attitude to additional spending proposals. There are those fortunate people who have ample assets to cover any likely care costs in old age, and I do not see the point of capping the costs for those. Universal benefits in general are looking less and less affordable, and the same would seem to apply to universal capping. Dilnot's proposals are said to be aimed at helping those in less favourable circumstances, in which case surely they should be more precisely targeted.

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K. Nackerd

Jul 04, 2011 at 19:33

Sell your house to pay for costs - how ? No one's buying. Are they going to dictate we settle for selling the house for peanuts - a forced sale. Where does it all end ? If people carry on smoking and ''Die Younger'' as it says on the packet, maybe they didn't miss much by ''Living Longer''

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Jul 04, 2011 at 22:06

All we seem to get is talk talk talk.

For goodness sake, start buttering the parsnips

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