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Gov't confirms £75k cap on long-term care costs

by Brian Cantwell on Feb 11, 2013 at 17:39

Health Minister Jeremy Hunt has confirmed government plans to cap long-term care costs at £75,000, and a new means test threshold of £123,000.

This means a person can hold £123,000 worth of assets and still receive support from the state for their care home costs.

The reforms will cost the £1 billion a year by the end of the next Parliament.

Hunt (pictured) also confirmed that the cost will be met in part by extending the freeze on the inheritance tax threshold at £325,000, or up to £650,000 for couples, by three years from 2015-16.

Hunt said: 'As we get older none of us can have any way of knowing what care needs we will eventually face.'

‘We want to accept a national eligibility test and set a standard so that no one should have to sell their home to pay for their care.'

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Later Life Solutions

Feb 12, 2013 at 14:46

So far I have read umpteen different articles on the new reforms and no-one has yet picked up the issue of the increased means test threshold actually making most people worse off than the current system.

As it stands the proposed increase to £123,000 relates only to an upper capital limit, with no mention of a correlating increase of the lower capital limit. Apart from Wales (where there is a single capital limit), in England Local Authorities apply the Tariff Income calculation between the upper & lower limit. So for someone with £123,000 of capital they will be deemed to have £436 per week notional income. Add to this their state pension and attendance allowance & hey presto they have in most cases enough income to pay all of their care costs.

Incidentally the investment yield needed to generate £436 per week from £123,000 of capital is over 18% p.a.

These reforms are a political masterpiece in just how easy it is to dupe the elderly population into thinking they have been handed a financial lifeline when it comes to their care costs, which only later on will they learn has been doused in petrol and set alight at the other end.

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