Much has been made of the April 2015 (and anticipated April 2016) changes to the Care Act but really, has that much changed?
Deferred Payment Agreements – The Sale of Your Home
From April 2015, deferred payment agreements will be available from all councils across England. Meaning that people should not have to sell their home in their lifetime to pay for their care bills – sounds good right? Eligibility criteria for these agreements are;
- You are receiving care in a care home (or are going to move into one soon
- You own your own home (unless your partner or certain others live there)
- You have savings and investments of less than £23,250 (not including the value of your home or your pension pot)
Councils may charge a fee to set up a deferred payment agreement and can also charge interest on the amount that is owed to them. Hold on, this isn’t sounding quite so good. You can sell your home and repay the deferred payment agreement at any point or you can have a deferred payment agreement for the full length of your stay in a care home and pay it back out of your estate following your death.
Ultimately, this means that in these circumstances your home will be sold to pay for care fees. So actually no real changes in principle to the previous system.
Cap on Care Fees – The Hidden Extras
From April 2016, a cap on care fees is proposed so that no one will have to pay more than £72,000 towards the cost of their eligible care and support needs in their lifetime. The key wording here is ‘eligible care’. Only when an individual is deemed to be eligible for care does their spending count towards the cap but access is rationed to people with high care needs for which there are complex definitions. More than 4 million people aged 65 and over could have what is classed as a care need according to the charity Independent Age. Only between 500,000 to 1m would potentially meet the eligibility criteria. So ¾ (3 million) of the people affected by these issues may receive no support at all.
But let's also remember the costs that are excluded from the cap on care costs. Even when an individual is deemed to be eligible, approx. £230.00 of the weekly fee doesn’t count towards the cap because it is earmarked for living costs such as the room, heating and food.
Combined with a number of other factors (such as local authority negotiated rates v individual rates) by the time the £72,000 cap is hit, the real expenditure by the individual will have been closer to £144,000.
Suddenly the changes don’t appear as generous do they? But how can an individual make the right personal contribution to their care later in life whilst preserving at least some of their assets for their family and loved ones? A Will Trust or a Family Settlement Asset Trust may be part of the answer – drop us a line at mailto:email@example.com and we will be happy to tell you more.
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