Plans to help people better prepare for the cost of their future care needs have been published alongside details of how the new fairer funding system will protect homes and savings, Care and Support Minister Norman Lamb announced today.
As part of a significant consultation looking at the practical detail of implementing the proposed funding reforms the proposals include:
- financial advice to help everyone understand their needs and plan for the future
- annual ‘care account’ statements to project when someone will reach the cap or qualify for additional financial support
- the option of joining a not-for-profit ‘deferred payment’ scheme, where the local council pays people’s residential care fees and the person is able to repay from their estate, allowing them to keep their home during their lifetime
- possible new products from the financial services sector who are responding to these reforms by looking at how pensions and expanded life or health insurance could help some people plan
- the principles that will inform the level of cap for people aged under state pension age who have eligible needs
- A commitment by the Department of Health, Local Government Association and ADASS to work in partnership on a joint programme to ensure successful and sustainable delivery of these reforms
The proposals are based on sweeping reforms to how care is paid for to give more certainty and peace of mind over the cost of old age or living with a disability. They will end the unfairness of unlimited care costs and ensure everyone gets the care they need with most support going to those in greatest need.
From 2016, the reforms will deliver a new cap of £72,000 on eligible care costs, additional financial help for people of modest wealth with less than £118,000 in assets including their home and, from 2015, a scheme to prevent anyone having to sell their home in their lifetime.
The consultation confirms details of the plans including:
- for people entering a care home, their property will not be included in the assessment of assets if a partner or dependent still lives in the home. In this case if a person has assets of less than £27,000 (excluding their home) they will qualify for financial assistance
- many people getting financial support towards the costs of meeting their eligible needs will reach the cap without paying out the whole £72,000 themselves. Because the cap is based on the total cost of meeting someone’s eligible needs, not just their own contribution, an individual’s payments are added to those made by the local authority when measuring progress towards the cap
The government has provided £335m for 2015/16 to cover the costs of implementation of the cap and the requirement to offer deferred payments for residential care. This includes funds that will enable local authorities to begin assessing people’s needs for care and support around six months before introduction of the cap, if they choose to do so.
Care and Support Minister Norman Lamb said:
These reforms bring reassurance to millions of people by ending the existing unfair system so no one need face unlimited care costs or the prospect of selling their home in their lifetime.
Now we are unveiling proposals for how the new system will operate and what it can do to help people plan and prepare for future care costs – and over the next three months we’ll be seeking people’s views on making it a reality.
No one wants to face an unknown future. This overhaul of the way care is paid for gives people the certainty and peace of mind we all deserve.
The consultation looks in detail at the various elements of the reforms seeking people’s views to help the government deliver a fairer and more sustainable care and support system in local areas.
Assessing people’s care needs
This includes looking at the role of the assessment of a person’s care and support needs in the new system. These assessments will build on the universal provision of good information and advice on the types of care and support available to them, helping them to receive help and support that could prevent or postpone their need for formal care.
The assessment will also be the first stage of a process that establishes whether a person’s needs are eligible and allow the council to track the care costs that count towards the cap. This ensures the local authority will pay the costs to meet their eligible needs once the cap is reached.
More people will want an assessment as it tracks their progress and helps them access state support. This represents a significant opportunity for local opportunities to offer information and advice, and signpost people to preventative services. We estimate that over 500,000 more people could make contact with their local authority in 2016 and we are seeking evidence on the best way to both deal with this challenge and make the most of the opportunities offered.
Protecting your home
The consultation also looks at the operation of the fairer funding system including ways to protect people’s homes if they need to go into residential care. It outlines that the deferred payment scheme will be run by local authorities in a way that is fair and affordable for all and that they should not aim to make a profit.
For the first 12 weeks in residential care, no-one will be expected to use the value of their home to pay their fees. This will give everyone breathing space when they go into care and the consultation askes how we can support people to make decisions during this period.
For the first time all local authorities will offer people the option of a deferred payment. This will help an estimated 40,000 people who sell their home each to year to pay for residential care. The consultation proposes that anyone in this situation should be able to defer their care fees for their lifetime and pay from their estate, providing more time for decisions and choice and peace of mind over how they use their home – for example so that a relative or tenant can live there.
The consultation sets out who will qualify and considers how we can ensure the scheme works well for people and is affordable for authorities. It outlines that the schemes will be run by local authorities who will be able to charge interest to cover running costs – the rate will be announced following the consultation. The idea of a cap on interest payments to protect those in care for a long time will also be considered.
However the scheme will be non-profit and it is planned that deferred payments will work like draw-down mortgages – where care home fees are added on weekly rather than in a lump sum. This is the cheapest possible form of loan because interest accrues at the slowest possible rate.
The consultation also explores how to ensure people who take out a deferred payment have the help they need to maintain, rent or sell their home if that is what they want to do.
Fewer than 50 per cent of people aware they might need to pay for their care and support. This consultation looks at how we can encourage people to plan for their future and how they can access to good quality advice.
That is why the Care Bill sets out clear legal duties for authorities to provide local people with information on these issues. People should be able to access good information in a suitable format which includes information on the costs of care, the financial support available, on financial products and other options, and on practical arrangements such as appointing a lasting power of attorney.
The consultation will looks at how council can arrange access to independent financial advice and what can be done to encourage people to think about their future needs.
Care costs capped for under 65s
The government has said that people who have eligible needs when they turn 18 will receive free care to meet their eligible needs and those who have eligible needs who are below state pension age will have a lower cap. The consultation looks at a series of principles for considering what the level of the cap should be for people below state pension age, which include reflecting how people of different ages ability to plan, prepare and build up savings to meet their care need changes.
- For more information contact the Department of Health press office on 020 7210 5010.
- The consultation will run for until 25 October and can be found at [link to follow]
- Government currently provides support, through local authorities, to people with eligible needs who cannot pay for it themselves. Two-thirds of people with care and support needs receive some local authority support. Those who do have sufficient means pay for their own care and support. As rates of home ownership among older people continue to increase over the next five years, we would expect a greater proportion to fund their own care in the future.
- The independent Commission on the Funding of Care and Support (chaired by Sir Andrew Dilnot) identified there is currently no effective way for people to protect themselves from unlimited care costs. This makes it impossible for people to plan and make provision to pay for care with any certainty and they will be able to access the type of care and support they want. As a result, people who could afford to save or invest proactively towards the costs of their care have little or no incentive to do so. Furthermore, a person with modest wealth and no savings or other investments may go on to lose everything because financial support is only available to people with worth less than £23,250.
- People are particularly affected if they need residential care. Currently, around 30,000 – 40,000 people a year who have limited income or savings may need to sell their family homes to pay for care. This can be difficult and distressing at a time when people are vulnerable.
- This can leave people feeling worried, unprepared and powerless. It is likely this adversely affects their wellbeing in later life, their experiences of care and the decisions they make.
- Evidence to the Dilnot Commission expressed the view it was reasonable and fair for those who have wealth to fund their own care. However, they did not think it was reasonable or fair for all a person’s wealth to be at risk.
- The Government accepted the Commission’s principles upon which the future funding of care and support should be based.
- Government will:
- introduce a cap on the costs which defines the level people should have to pay to meet their eligible needs (from April 2016):
- a cap set at £72,000 in April 2016 for people of state pension age and over
- people who develop eligible needs before state pension age will benefit from a cap lower than this amount
- people who turn 18 with eligible needs will receive free care and support to meet those needs
- people receiving residential care will remain responsible for a contribution to daily living costs. This contribution will be set at around £12,000 in April 2016, where they can afford to pay
- the total cost of meeting the person’s eligible needs will count rather than their financial contribution
- target additional financial support to those people with modest wealth to help them with care costs of meeting their eligible needs by extending access to financial support:
- the financial limit used in the financial assessments for people in residential care increases from £23,250 to £118,000 when the value of their home is considered as part of their capital (from April 2016)
- combination of the increase in the financial limit and the state contribution towards costs of care counting towards the cap means many people will not have to contribute the full cap amount
- give everyone the right to defer paying care home fees, so people should not have to sell their home in their lifetime to pay for their residential care costs (from April 2015)
- Everyone will have this reassurance, not just the 16 per cent of older people needing care currently face care costs of £72,000 or more. This will empower people to take responsibility for their care in line with what they can afford. Everyone will be protected against unlimited care costs. And state support will be targeted for the people who need it most.
- In advance of this, from April 2015, people needing residential care will have access to deferred payment agreements in every local authority in England. This means people will no longer face the added stress of having to rush into selling their home to pay for care home fees and will have the flexibility to avoid selling their home within their lifetime.