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Q&A: how long-term care reforms affect you

The government has announced its long-awaited care reforms. Here's what you need to know about the three main changes.


by Michelle McGagh on Feb 12, 2013 at 12:59

Q&A: how long-term care reforms affect you

The government has announced plans to push ahead with a radical reform of long-term care, vowing to protect families from ‘limitless care bills’.

In 2010 the government commissioned economist Andrew Dilnot to review the future of care in the UK and the following year the Dilnot Review made a number of recommendations, including a cap on care costs.

Health secretary Jeremy Hunt has announced the government will go ahead with Dilnot’s recommendations, although with some slight tweaks.

Hunt said the social care issue had been ‘ducked by successive governments’ and had led to an unfair system where people were forced to sell their homes to pay for care.

So, what will change?

There are three main reforms to long-term care that will affect the elderly or those with elderly parents who may need care.

Change 1: a cap on care cost

Dilnot’s recommendation: that care costs for individuals should be capped at between £30,000 and £50,000 over a person’s lifetime.

What will be implemented: the government will implement a cap on costs but it will be higher than that recommended by Dilnot at £75,000 over a person’s lifetime.

What you need to know: the cap on care does not include the cost of accommodation. Those who go into care will be assessed by their local authority which will tell them what it will cost to provide care to that person, excluding accommodation.

The cost outlined by the council will count towards the cap, not the added cost of accommodation. So if a person is assessed as needing £300-a-week of care but the cost plus accommodation is £600-a-week, only £300-a-week will count towards the cap.

Change 2: increased care threshold

Dilnot’s recommendation: to increase the means-tested threshold above which people are liable to pay the full cost of care, up to the cap, from £23,250 to £100,000.

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22 comments so far. Why not have your say?

Barry Street

Feb 12, 2013 at 16:18

What are the rules for a partner going into a care home if the other partner is still living in the house

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Dislexic Landlord

Feb 12, 2013 at 16:20

I was giveing some thought to this issue and came up with an ideir

we all know that most personal Pensions die with you after you have bought an annuity some times after a short time after they have been taken out

No the Life Companys who hold the annuity must be well into pocket

so why can the goverment not ring fence the funds

Lets say the annuity is 150k and its paid a pennsion of 3k a year for 10 years thats a total of 30k why cant the goverment say to the life company 50% of what is left in the fund must be paid to a central fund which could be used to pay for long term care

Im sure this could work after all the funds were fust put away for old age so what better way could the funds be used for

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Feb 12, 2013 at 17:56

Strikes e that if you have worked hard all your life, but only acheived moderate wealth, then the social system that we old uns did pay into will uncourage us to persuade the powers that be to get rid of the additive in gas that makes you feel sick.

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colin wilson

Feb 12, 2013 at 18:01

DL a very good idea indeed. Could it ever happen? No. Because the powers that be can relieve us of our hard earned with ease.

Of course were it to happen the insurance compaies would just slash the already derisory annuity rates to compensate.

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Dislexic Landlord

Feb 12, 2013 at 18:11

Hi Colin

You are of course correct

We could never expect a better deal from Life Insurance Companys

They would never dream of comeing up with a ider like mine

But im sure they will come up with others and there will be a preimum involved and an over inflated cost

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Michael Brooks

Feb 12, 2013 at 18:19

As I see it, hese propoals will change little, as parents` homes will still be in danger. Will the £130k threshold mean that it would be advantageous to move oop north where there is cheap housing, leaving you with a tidy sum to play with. My Father was in a care home with Alzheimers, but died before the family home was endangered, albeit after paying out tens of thousands, for in essence, nothing. I now care for my 94 year-old very frail Mother, who is still mentally alert despite occasional bouts of confusion, and plan to do so except in extreme circumstances. Losing Mum`s home to care costs would mean long term for me, the difference between a comfortable lifestyle and watching every penny. Sorry to sound so mercenary.

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Clive B

Feb 12, 2013 at 18:39

This scheme is essentially another state benefit, i.e. payments from us taxpayers to those "in need". Now, I'm OK with the idea of a benefits system paying for those who genuinely can't pay for themselves (rather than won't pay for themselves, or who have squandered the money they had)

What I'm definitely NOT OK with is that idea that taxpayers should pay for somebody's care simply because they say "oh, I've chosen to lock all my money in my house and I'd prefer not to sell it, indeed I'd rather leave it to my offspring, or charity, or...."

Yes, I'm sure people would prefer to have others pick up their bills, but that's not the role of the benefits system.

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Clive B

Feb 12, 2013 at 18:54


in fact it might help people if instead of saying "I think the state should provide (or pay for) this for me" they said "I think other taxpayers should fund this for me", because that's where it's being funded from - other people not some nebulous "state"

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john brace

Feb 12, 2013 at 19:22

In the end, the folk who spend everything and save nothing get everything paid for -not to mention recently arrived grandparents who have never even worked here.... that's the bit that the rest of us object to - its not a level playing field.

In the future there should be Insurance products or an extra compulsary NI payment, - not ideal of course.

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Hilary hames

Feb 12, 2013 at 23:24

Is each individual to be 'assessed' for care costs? Surely once you are in a home the very nature of your ageing will mean more care? So are you to be re-assessed periodically.?

When my mother was in a care home she continued to pay for others thru the tax system, paid for herself in full AND the home freely admitted that 'private' residents were charged more. So she paid yet more towards the care of others. I know this is common and it seems totally unfair unless the local authority are guaranteeing to fill a certain number of beds to balance out care home costs. Does anyone know - do they do that? My mothers experience does go back 5 years.

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Feb 13, 2013 at 08:50

DL and Colin - do you not understand that "profits" made on annuities when people die before the average age pay for those who live longer ? Your scheme would simply reduce annuity rates.

I thought that Citywire was for the financially savvy :-)

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Clive B

Feb 13, 2013 at 10:25

@ Hilary

I don't know about councils guaranteeing to take a number of places, but would seem likely they buy far more places in care homes than any individual family.

I find this quite interesting

"The cost outlined by the council will count towards the cap, not the added cost of accommodation. So if a person is assessed as needing £300-a-week of care but the cost plus accommodation is £600-a-week, only £300-a-week will count towards the cap."

So, when family X says "we've spent £xxx, so we're entitled to some help now". The response will be that it would have cost the local council a lot less, so you're NOT entitled to help, even though an individual can't purchase care home space at that lower cost.

Another benefit, another mess.

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Dislexic Landlord

Feb 13, 2013 at 10:35


O f course I know that life companys make money

In fact Life companys want there customers to die early

Its in there best intrests

My Point is they should be made to give funds back to help support the old

Just think how much money they do make with this con of personal pensions

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Clive B

Feb 13, 2013 at 10:58

@ Dislexic Landlord

1) the more you reduce the profitability of insurance companies, the lower that will make annuity rates

2) if it's a "con", why do people buy personal pensions ? (their choice)

3) why should private companies be providing a state benefit ?

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Anonymous 1 needed this 'off the record'

Feb 13, 2013 at 11:05


Jon is correct, the profits as you call them do not exist as they are used to subsidise the anuitants who live longer than average.

If they give these funds to the government, where is the money going to come from to pay the annuities to the surviving pensioners?

And yes of course insurance companies make some profit, they are a business after all, not a charity.

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Feb 13, 2013 at 11:22

DL - another point - the major shareholders of the insurance companies are pension and saving funds !!! So if you reduce the profitability of insurance companies .........

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Dislexic Landlord

Feb 13, 2013 at 11:55

FAO Clive B

Only mugs buy Personal Pension its the biggest con that was ever thought of it only makes money for Fund Managers and share holders of which of course I am one LOL

why anyone buys them beats me there very little use unless you are a higher rate tax payer and you employerputs in more than the pension holder

Annuitys are a con why would anyone want to say good buy to a large amout of capital after they have worked and saved for it

I would go for shares ISA,s and some life funds at least you can control what happens to your cash

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Clive B

Feb 13, 2013 at 12:01


I don't pay into a pension for many of the reasons you state

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colin wilson

Feb 13, 2013 at 22:25


What DL suggested is worthy of a closer look on an individual basis, as a contrarian idea. I appreciate the fact that insurance companies have to make a profit on their life pension policies but just consider for instance the endowment mortgage policies which were widely sold a few years ago. The profits made in the boom years were supposed to even out the losses made in the poor years. This did not happen as we are all well aware, which proves the point that insurance company profits tend to be a bit of a smoke and mirrors job.

I personally was an equitable life contributor and got well and truly stung before I'd even applied for my annuity and even when I did apply they tried to sting me again, so I do not go along with your argument about profits being carried over on death for future annuitants. These insurance companies are running a massive ponzi scheme.

I took over running my own financial affairs ten years ago with great success and I would never ever be beholden to an insurance company ever again.

As to your remark about city wire being for the financially savvy, this surely must be an elitist remark as I find that many people read these columns who aren't savvy.

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Feb 13, 2013 at 23:49

Coliin - the Equitable Life saga was NOTHING to do with their profits or people dying early. EL simply over-valued the payouts and did not keep enough in reserve to cover a downturn which came. And then most with-profits members were stung again by the High Court Ruling that those with guaranteed annuities could raid the pot further.

You are confusing the pension funds with the equity of the administrator. In fact as most administrators take an annual fee based on the value of the fund, they do have some incentive to make the fund grow (but they still charge fees if it fallsand pay some huge salaries !).

Because endowment mortgage funds took a hit when the market crashed, and for "safety" switched into fixed interest gilts etc and so lost out on the market recovery does NOT prove the point you appear to be making.

The bottom line is that if the Treasury steals any "surplus" from the notional annuity share of someone who dies early, then annuities will cost more- to fund those who do not. We have already suffered from Brown taxing us twice, and DL's suggestion backed up by you is no different in this respect. It is not worthy of any closer look as the effects are so obvious !

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Feb 18, 2013 at 05:57

What we need is for local councils to get real. Care costs are far too high and so is the accomodation. Because Care companies know there is money to be had and the council is stupid enough to pay it. Quite frankly they take the p*ss. I could stay in a Devere hotel for 23,725GBP/PA with breakfast, health centre and swimming pool included! I curently work abroad where acommodation, laundry and all food and soft drinks are provided. This costs 32,000GBP/PA and includes 6 return flights to the UK and a choice of 5 reastaurants. Add a carer looking after 5 people on 20K a year This gives 36k tops for a top quality establishment with a good level of care. The care homes I have seen come nowhere close to these levels and remind me of council (social) housing. This is the area that should be investigated, not how or who is going to pay these exhorbitiant chages.

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Stephen Squires

Jul 25, 2013 at 16:28

THE LAW says that where there is 'illness, disability or injury' then the NHS MUST meet all care costs' free at the point of need regardless of the ability to pay' But the NHS get around paying by 'redefining health care as social care'. (High Court in the "Coughlan' case) The House of Lords debated this and called it 'cost shunting' which means that local authorities can then unlawfully charge patients for ALL their care under the National Assistance Act. In fact the solution is very simple but totally missed by 'Dilnot' of course! Also, why should those who have already paid for their care in their declining years through a lifetime of punitive taxation be forced to pay again? Why should we hand over our hard earned to the cretins who run the EU and tin-pot military dictatorships? Steve. (Founder, nhs Continuing Care Campaign and the 'Free nursing care' information forum)

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