Care Fees Proposals Reviewed
The proposed £75,000 Cap on care fees.
• This is calculated based on the weekly amount the local authority would be prepared to pay for your care fees if they were providing it, not on the actual cost of the care which in most areas is considerably more than local authorities will pay.
• The cap excludes accommodation costs set at £12,000. (Ed: the average cost of accommodation in 2012 was nearly double that according to Laing & Buissons research.)
Issues to be resolved in the Care Fee Proposals.
• Once you reach your cap the local authority would assist with your care fees but only up to the amount they would usually pay for someone with your assessed needs. If the care you have chosen, or wish for exceeds that cost you will be required to find a third-party to top-up the cost. Present law does not permit individuals to fund their own top-ups.
• If the aforementioned top-up law was changed to permit individuals using their capital below the means test threshold then there is a danger that care providers would be less likely to accept any residents at local authority rates.
• Currently your home is disregarded as capital as long as you continue to occupy it therefore, if your savings are below £23,250 the cost of any home care you need would be provided to you by the local authority and counts towards your cap. For example if you were to move into a care home after receiving say £20,000 worth of home care from the LA your cap would be reduced to £55,000. However, if you are unfortunate and need to move straight into a care home when needing care, your property is counted and your cap is £75,000.
• According to BUPA, the average length of stay in care homes is 2.5 years for state funded residents and 4 years for self-funded resident. It is known that Self-funders pay more for their care than the local authority usual rate however, the amount different councils will pay towards care costs varies tremendously therefore in some local authorities it could take longer than four years to reach your cap whilst in others paying greater amounts closer to the self-funding rate the cap could be reached much earlier. This creates a postcode lottery
Care Fees Proposals: the increase in the means test threshold to £123,000.
• Once your capital is depleted to £123,000 the local authority will assist with the funding of your £75,000 cap.
• The tariff income you would have to pay between the lower threshold of £17,000 and the higher of £123,000 is £1 for each £250 therefore on £123,000 your tariff income would be £424 per week plus your accommodation costs of £230 per week (£12,000 pa) equates to £654 per week or £34,008 pa
• If the care home costs the average which the Commission quotes as £28,600 pa inflated to 2017 becomes £35,178 pa then the local authority contribution would be just £1,170 pa (£22.50 per week)
Issues to be resolved in the Care Fee Proposals.
• If the local authority are contributing towards your care costs (albeit £22.50 per week) the law says you would cease to be eligible for attendance allowance losing £90 per week (2017 inflated) so effectively you would be £67.50 net per week or £3,510 per annum worse off and making the true cost of £35,178 worth of care to the individual become £40,688 if they were to accept LA support. On this basis it would not be advantageous to accept LA support until you had spent into the capital tariff a further £22,500 (22,500/250 x £1 = £90) Therefore, the capital upper limit at which it is worthwhile seeking support reduces to £105,500.
• If the care home provides nursing care then, according to Laing & Buisson the average cost is £190 per week more. The NHS nursing care contribution is currently £108.70 per week therefore leaving a further £81.30 of what should be an NHS responsibility being funded by the individual or the local authority.
Care Fess Proposals: accommodation costs to be set at around £12,000 pa.
• The median net income of single people aged over 65 is £11,284, inflated to 2017 equates to £13,879 which, after subtracting the Personal Expenses Allowance (PEA),means that around half of older people should be able to afford a contribution of £12,000 out of their incomes.
Care Fee Proposals:issues to be resolved.
• After paying £12,000 accommodation costs the individual is left with just £1,879, £36 per week to cover their personal expenses. The current Personal Expenses Allowance (PEA) is £23.50 per week. For a number of years it has been argued that the PEA should be set higher at around £40 per week.
• Some care providers are likely to demand a higher figure for accommodation but this could only be met by individuals who are free to meet this cost because they have capital in excess of £123,000 and are permitted to top-up
• If care providers are forced to keep within the £12,000 accommodation costs cap for local authority funded residents then the are likely to continue the practice of charging self-funding residents considerably more to subsidise their local authority funded residents
Philip Spiers, Consultant, First Stop Care Advice.