Care Home Funding: What Next?

Going into the recent General Election, the Conservative Manifesto promised us “dignity and protection in old age through the right long term solution for elderly care”.  They went on to pledge:-

• To maintain the Pensions Triple Lock until 2020;
• To introduce a single capital floor set at £100,000 for the payment of care fees; and
• To extend deferred payment for residential care to those receiving care at home.

But what exactly did this all mean?

The Pensions Triple Lock was introduced in 2011 and promises that the basic State Pension would rise by a minimum of either 2.5%, the rate of inflation or Average Earnings Growth (whichever is the highest). A recent report by The Institute of Fiscal Studies has stated that between April 2010 and April 2016, due to earnings growth being weak, the value of the basic State Pension has increased by 22.2% compared to growth earnings of 7.6% and 12.3% over the same period. This means that pensioners’ income has risen at almost double the rate of the average worker. This has obviously “cost” the Government who are looking to save money by replacing the Triple Lock with the Double Lock after 2020. The Double Lock proposal is to allow for the basic State Pension to rise by a minimum of either the rate of inflation or in line with the earnings that pay for them (whichever is highest). It is proposed that the “savings” on the Double Lock would then be used to help fund Social Care.

Here the losers would be the pensioners drawing their pensions and living on a day-to-day basis but the potential winners would be those in need of Social Care. The promise to introduce a “cap” on care fees to protect assets to the value of £100,000 including the family home was a very popular move and potential vote winner for those already receiving care in a care home but would be detrimental to those receiving social care at home as their once exempt property would be included in the means test. Labour immediately dubbed this the “dementia tax”.

Theresa May appeared to dramatically back-track on this during the campaign and, apart from stating that “ministers will work to improve social care”, it was conspicuously absent from the Queens Speech. The cynical amongst us would remember that the cap on care fees was promised before in the Conservative Manifesto of 2015 when the proposal was to limit care costs to a maximum contribution of £72,000 but this did not materialise.

The deferred payment for residential care to those receiving care at home would, we are sure, be a relief to those who would prefer the comfort and familiarity receiving care in a home environment. It also provides the reassurance that they would not be forced to sell the family home to pay for care during their lifetime. However, it still means that payment of this care would come out of sale proceeds of the property once the patient has passed away. Once again, how much the care would cost in total depends entirely on the cap.

At present, when an individual is assessed for Local Authority funding, the value of property, savings and income is all taken into account. Although there are certain circumstances (including if the property is occupied by a spouse) when the property is disregarded from the assessment. If, after the assessment, assets amount to more than £23,250 then the individual is assessed as being able to fully fund their own care until their assets fall below that threshold.

It would appear that, for the time being, this situation will continue and without a cap on the amount to be paid above the threshold of £23,250. More information on the current rules and the options available to protect the value of your home from care fees can be found in our Guide to Care Home Funding and Home Protection Schemes.

It has been announced that there will be a further consultation on care costs but when this will take place and what the outcome of this will be is unknown. As a result, it is fair to say that the future in respect of the payment of care costs remains uncertain.