New care cost rules of little help

Tuesday 3 June 2014

From 2016 a care cost limit is being introduced. If £72,000 is spent on care then after that the Local Authority will meet a person`s care.

This sounds promising but the Institute of Actuaries have found that very few people (8% of men and 15% of women aged 85) will reach this.

When looking at what a person pays in care fees and calculating what of this counts towards the £72,000 limit, the care fees are split in three. The element of care costs spent on daily living do not count towards the £72,000. The top up you might pay in care fees for living in a more luxurious home do not count towards the £72,000 limit. The only part of the care fees you pay that counts towards the £72,000 cap is a figure set by the Local Authority in question.

The Institute of Actuaries has worked out if you entered residential care in London aged 85 because London costs are dearer you would reach the £72,000 cap in four years but would have spent in all about £117,000.

A person of the same age entering care in the West Midlands would take seven years to pay fees equal to the £72,000 cap but would have spent about £170,000 over that period because of the other two elements which do not count.

You will see therefore that it is important that you undertake planning for care fees.

At Blacks Solicitors we can help you in the drafting of your Wills to protect assets against care fees. We can point you in the direction of trusted independent financial advisers who specialise in investing assets for care fees which may include the purchase of specialised annuities.

You must not just assume that the new rules in 2016 will solve the problem.  The new rules will just stop catastrophic spending on care fees.