Number crunching

Much of the recent publicity about the government's proposed care bill has focused on the broad proposals. The main headline-grabbing provision is, of course, the plan for individuals of state pension age or over to have their contribution towards care costs capped at £72,000. The prospect of not paying unlimited care costs is clearly appealing. But how far do the proposals go in addressing the current difficulties surrounding care funding?

In particular, individuals must be aware that, despite the cap, those in residential care will remain responsible for an additional contribution to daily living costs known as "hotel costs". These are designed to cover items such as accommodation, food and bills and will probably be set at about £12,000, where an individual can afford to pay.

Even once the cap of £72,000 has been exceeded, people are still expected to make a contribution to daily living costs. Therefore, the real cost of ensuring that a relative remains in residential care will exceed the £72,000 cap that the government has proposed.

Many families are unaware of the £72,000 cap's limitations. Some 69 per cent of people thought accommodation would be included and a further ?37 per cent thought food would be covered, ?according to research from Saga. Also, top-up fees ?will not be included within the cap.

Campaigners are calling for increased transparency, asking the government to openly accept its new "capped" system for care home fees falls short of covering all costs. Aside from the finer details, the cap has also come under criticism with ministers saying it has been set at twice the recommended level, thus restricting how many it benefits.

Clearly only a relatively small percentage of older people will receive financial support as a result. Additionally, statistics show that people tend not to live for very long after they have reached the level of need that takes them over the cap, so the actual numbers benefiting are likely to be in the tens of thousands ?at any one time.

Concerns have been raised about the proposed deferred payment scheme, which is already in place throughout large parts of England. Although it is currently not compulsory for local authorities to provide families with the option of entering into the scheme, it is something that they should consider, otherwise they are open to challenge.

At the moment, interest is only charged 56 days after the individual's death, whereas in the new proposals it will be charged once the individual ?enters the care home.

Despite the criticisms, there are some advantages if the proposals are accepted in their current form. The increase in the means-test threshold to £118,000 (where the value of the home is taken into consideration) will benefit many and ensure that more people are entitled to some level of help.

A further group who will get an extra benefit are the 125,000 people who need residential care but are too wealthy to get state assistance. In future, they will be able to buy residential care at the same price as the local authority, typically £500 a week, instead of the inflated prices they pay as private individuals. This could cut their residential care bills by 20 per cent. The government projects that the cap on costs plus the extended means-test will help 100,000 people by 2026.

Ultimately, some proposals, particularly in relation to the increased financial limit, appear to be a step towards helping vulnerable people. It is, however, important that the public are aware of the full details of the bill and not blinded by the headlines.

 

Matthew Evans is a partner at Hugh James

He writes the regular vulnerable clients comment in Private Client Adviser