The new reforms are great news aren’t they? I simply need to set aside £75,000 for future care fees and when that is gone, the government will step in and pay any care costs?
No, although the headlines have inferred this, the rules are not that simple. The £75,000 cap only applies to the care element of the cost. Charges for accommodation and food will not be included in the cap, however the Government has recommended these costs should be capped at £12,000 pa.
If my care costs are £750 per week, will the Government step in after 100 weeks?
Again, not that simple. With each home making a different charge for care, it would be unfair for the cap to be calculated based on what each individual is paying. The care package in place will be assessed by the local authority and they will set a rate that they would be prepared to pay for that package. That is the amount that will be used towards the cap.
How will the calculation of the cap work?
Here is an example: Your care fees are £750 per week and accommodation £200 per week, so a total fee of £950 per week. The local authority assesses the care package rate at £500 per week. After 150 weeks of payment of this care package, you would be entitled to assistance from the Government, but only to the sum of £500 for the care. You would still need to pay the top up care fees and the accommodation costs.
At the moment, the capital threshold for assistance with care fees is £23,250 but this will increase to £123,000 in 2017. Does that mean the Government will pay for the care costs when my capital reduces to below £123,000?
There will be two thresholds, £17,500 to £123,000. If your assets fall between the two, you will be assessed as receiving an income of £1 for every £250 between these two figures, regardless of the actual income your capital generates. This tariff will be added to your pension income and will be used towards your care fees. The local authority will top up the care fees although this may be capped. It may be necessary to have a third party relative top up the care fees, if they are higher than the authority is prepared to pay.
My mother currently has all her care costs paid by the NHS as her nursing needs are so severe. Will this funding be subject to the new reforms?
No, as far as I understand, the NHS Continuing Care system will remain in place for those with very high, severe nursing requirements as the primary care need.
The announcements also mention that no-one will have to use their home to pay for care: is this correct?
Where the home is included in the financial assessment as a capital asset, the local authority will be obliged to offer a loan arrangement call Deferred Payment Scheme. This means that they will pay the weekly care fees and these will accrue as a debt which will be charged onto the property. Interest will be charged on the amount accruing. When the property is sold, the debt will be repaid.
Do they offer something like this now?
Yes, it is the same principal, however interest is not currently charged and the local authority has the discretion as to whether they grant the scheme. An application has to be made whereas in future, it will have to be granted.
If my husband is living in our property when I go into a home, will the property be included for care fees?
No, the current rules will still apply. If your partner or a relative aged 60 or over lives there, it will be disregarded for any financial assessment.
The changes don’t come into force until 2017, what if I need care before then?
The new deferred payment scheme comes into force in April 2015. However , in any case where you are funding your own care costs, it is imperative that you seek advice from a suitably qualified adviser. Care fees funding is expensive now and even with the reforms, will remain a large expense in the future. There are lots of options available to make your capital work effectively to pay your care fees and a financial adviser specialising in care fees will be able to provide you with all the information you need to make an informed decision.
Ruth Dolan is a Chartered Financial Planner at Taurus Financial Solutions in Kent. Ruth is highly qualified and specialises in care fees planning. An accredited Later Life Adviser of the Society of Later Life Advisers (SOLLA) you can be sure to receive a very comprehensive service tailored to your particular circumstances. Call Ruth on 01227 761177 to discuss how she can help you.