An independent review into funding long term residential care has been published with proposals to cap how much people have to pay. The Dilnot Commission, authored by economist Andrew Dilnot, recommends introducing a national means-test to prevent arbitrary decisions about who is eligible for free care. Times Money breaks down the proposals and what they mean for you.
Q: How does the report affect me?
A: Requiring social care is a reality for many people in old age and the report advises policymakers how you should have to fund it, should you need it later in life. Proposals include a limit on how much you pay. The Dilnot review suggests a range of limits up to £50,000 but recommends a cap of £35,000, after which the state will pick up the bill.
Q: How do we pay for care now?
A: Currently you are only eligible for funded care home places or care in your own home if you have assets worth less than £23,250. Millions of people without state-backed funding must pay the high costs for care themselves or go without. A recommendation is included in the report to raise this threshold.
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Q: Why is reform needed?
A: Care is very expensive and can wipe out the value of people’s assets built up during years spent in work. A third end up with bills of £20,000 and one in ten pay more than £100,000 to cover care home fees of up to £900 a week.
Q: How could it affect my pension?
A: The review proposes that newly retired people should be able to trade a chunk of their pension pot for insurance against the cost of residential care. Private insurers would be counted on to offer such policies, covering people against care home fees.
Q: What would happen to my home if I couldn’t afford to pay?
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A: No one should pay more than 30 per cent of the value of their home, the Dilnot Commission stipulates, and most will pay less. Better equity release schemes should also be introduced, allowing people the flexibility of having costs deducted from the value of their home after they die.
Q: Is there any way I can protect my home if I go into care?
A: Yes, you may be able to ensure your home is safeguarded for your children if you go into care. Jeremy Allen, head of trusts at law firm Rothera Dowson, says changing the status of your home ownership from joint tenants to tenants in common is a start. He adds: “Then write wills, leaving your half to the children with a right of residence for the surviving partner. That way it will be someone else who is depriving the survivor of an asset for the means test, as number one’s half never enters number two’s assets. There is a bit more to it than this, but this route is one we have found really works.”
Q: When will the reforms be implemented?
A: Andrew Lansley, the Health Secretary, has indicated that the Government would support a cap but no decisions have been made about how much or when this rule could be brought into force. Councils spend around £14bn a year on social care and it has been estimated that Mr Dilnot’s changes would add an extra £1.7bn to the bill if they were added now, meaning the proposals are less likely to pass into legislation in their current form.