Many people are concerned at the prospect of having to spend their savings and sell their home to pay for care in their old age. This concern, together with the ageing population, has forced the Government to tackle the issue of funding long term care.
In February 2013, the Government announced its recommendation of introducing a cap of £75,000 on lifetime care costs. The full details of the proposals are yet to be revealed but what we do already know is that the cap will have limited benefits for the average person.
The £75,000 cap on care fees applies to care costs only. It does not cover the cost of accommodation, food and heating provided by the care home. These so-called “hotel costs” will be charged separately, up to a maximum of £12,000 a year per person. So if a person moves into a residential care home, rather than a nursing home, the majority of their costs will not be covered by the cap. There will still be an element of hotel costs in a nursing home. These hotel costs will be payable from the person’s savings, or if they do not have sufficient savings, their property will probably need to be sold to fund the fees.
However, it may be possible for the person to keep their property during her lifetime. The Government has announced plans for care costs to be deferred until they can be paid out of that person’s estate when they pass away. The care fees would build up and then be paid back from the sale of the property on death or from other estate funds, if any.
The new cap on care fees is unlikely to begin until 2017.
For further advice on planning for care fees, please contact us.