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Cap on the cost of care

The government announces details of how its cap on social care costs for England will work
WebMD UK Health News
Medically Reviewed by Dr Keith David Barnard

12th February 2013 - The government has announced that social care costs faced by elderly people in England will be capped at £75,000.

There will also be a rise from £23,250 to £123,000 in the amount of assets people have - including the value of their homes - before they will need to contribute to the costs of basic nursing care.

The Health Secretary Jeremy Hunt wants to end the "scandal" of people being forced to sell their home in order to pay for care. However, the £75,000 figure is more than twice the £35,000 recommended by a commission headed by economist Andrew Dilnot.

The changes are due to come into effect in April 2017.

'Fully funded'

Mr Hunt says the new cap will be a "fully funded solution" estimated to cost the government £1 billion by the end of the next parliament. The cost will be met by freezing the inheritance tax threshold at £325,000 for individuals and £650,000 for couples for another three years from 2015. Other costs will come from previously announced changes to pensions and National Insurance.

The Dilnot commission, which reported to the government in July 2011, called for a cap on the total amount of money an individual in England would have to pay during their lifetime towards social care costs. At present this amount is unlimited, but Dilnot recommended that the cap should be set between £25,000 and £50,000 - with £35,000 recommended as the most appropriate and fair figure.

After the cap is reached, the individual would have his or her care costs met by the state.

The commission also recommended that the means-tested threshold, above which people are liable for their full care costs, should be increased from £23,250 to £100,000.

Dilnot argued that changing the system would protect people from facing huge care bills that resulted in them having to sell their homes.

Paying for board and lodgings

Under the government's proposals, people living in their own homes will have the cost of care totted up. Once it reaches £75,000 all future social care costs will be free - whether they continue to receive that care in their own home or in a care home at a later date - regardless of their financial circumstances.

However, people will still have to pay 'hotel' costs for their board and lodging - which will be subject to a maximum cost each year. These expenses generally equate to about two thirds of the overall costs, so with the average residential care home fee being about £27,000 per year, only £13,400 would be care costs, so it would take five and a half years for the £75,000 cap to be reached. Meanwhile the overall costs would by this time have reached £145,000. The resident would have had to pay all of this before any relief was available.The government says no-one will have to sell their home in their lifetime to pay for residential care. From April 2015, if people cannot afford their fees without selling their home, they will have the right to defer paying during their lifetime. Also, people will have clearer entitlements. A national minimum eligibility will make access to care more consistent around the country, and carers will have a legal right to an assessment for care for the first time.

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