Within this article we will help you reassess your long term care planning.
1 in 10 of us will face care costs in excess of £100,000. Worse still, if you suffer with a long-term chronic condition such as dementia you could face unlimited care costs. But will the government’s proposed Care Bill really help?
What the Care Bill means for you
The new funding regime comes in to force from April 2016 and in a nutshell:
- There will be cap on care costs you pay over your lifetime: This will be set at £72,000. But beware as it does not cover ‘general living costs’. In your own home you remain responsible for non-care costs such as rent and utilities, so in residential care this will be no different. You will have to pay a contribution of around £12,000 a year towards meetings these expenses.
- The cap doesn’t cover everything: The cap is not calculated on what you pay for care, but on what the local authority responsible would pay. This means that in practice you are likely to spend much more than £72,000 before reaching the cap, unless you are willing to live in the most basic accommodation available.
- How much capital you can hold before you start paying: If you have capital of more than around £17,000 you will have to make a contribution to your care costs until either the cap is reached or your capital falls below £17,000.
- At what point you won’t receive support: If you have more than around £118,000 capital you will have to meet all your care costs until the cap is reached and your capital falls below the threshold.
- Deferring payments: Local authorities will allow you to defer paying for care in your lifetime through a ‘deferred payments scheme’. This avoids you having to sell your home to settle care fees, which can be repaid on your death.
Create a Plan
The authors of the Care Bill admit that the existing law is outdated and confusing; that the situation is unfair and must be changed. I agree. The changes should provide more clarity around what you are liable to pay towards your care costs over your lifetime, but careful planning is still needed to make sure you can afford the quality of care you may need, and will probably want.
Care fees planning is just one element of a proper Financial Plan, which can give you confidence you can afford to live the lifestyle you want. The importance of being happy, comfortable and fulfilled does not diminish as you get older. In fact for many people it becomes more important. So make sure you have a plan for your future, and the confidence you can fulfil it.