Paying for Care

Errata

The front page of today's Observer has a report on how long term care of older people could be paid for.

People in England and Wales could pay a one-off "inheritance levy" of up to £12,000 in return for free long-term care in their old age, under controversial government plans being drawn up to cope with the growing demands of an ageing population. The fee would either be deducted from the estates of older people when they die or paid on retirement. The aim is to replace a system that forces many pensioners to sell their family homes to fund massive nursing home bills

http://www.guardian.co.uk/society/2009/jun/14/older-people-health-inheritance-levy

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Farway

On the surface seems a "good idea" the problem as usual will be the devil in the detail. like pay your money & later find no care home is within the allocated insurance payout

EdInvestor

If it is a bit like paying for your funeral in advance, it might appeal to quite a few people.The amount is not too onerous.

Errata

The suggested amount is interesting as at the moment £13,500 of capital is ignored. The thinking behind this could be that it leaves £1.5k towards the funeral with family making up the shortfall if there is no life insurance.

EdInvestor

http://www.dailymail.co.uk/news/article-1192929/Radical-plan-deal-ageing-population-mean-12-000-levy-elderly.html

Bit more in the MoS, including a costing.

Errata

Thanks Ed - as far as I can figure out the talk is about the levy being imposed for the cost of care not just the cost of residential care. The MOS piece states 1 in 5 will need care which seems to imply all care as this figure is way out for residential care.

The money would be taken when the elderly died or paid when they retired.

There will be a riot of people are asked to cough up £12k when they retire to pay for care they may not need ! And if that's what comes to pass, it's a tax on old age, not a levy.

EdInvestor

Errata wrote: »

There will be a riot of people are asked to cough up £12k when they retire to pay for care they may not need ! And if that's what comes to pass, it's a tax on old age, not a levy.

Well yes, especially if their neighbour, on state pension and benefits is not required to cough up.....

Could not the money be paid at the point of going into care? Then, if care is not needed, it simply remains as savings.Only problem with that is that anyone on the borderline will spend the money so they don't have to pay anything.

Or is the plan that everyone forks out, whether they need care or not?

Errata

I read it as a levy on everyone. Which sensibly would mean it would be paid out of estates rather than upfront at retirement. That way, those who have nowt won't pay, as happens at the moment, and those who only have their property but no savings will be able to pay IYSWIM.
I think at the moment the national average for residential care is probably in the region of £500pw, so £12k only covers 6 months which is a lot less than the average length of residence. Must mean the government is hoping plenty of people will never need care, but they'll still have to cough up £12k.
No doubt all will be revealed, and it may change with a change of government in 10 months time !

monkeyspanner

Errata wrote: »

The suggested amount is interesting as at the moment £13,500 of capital is ignored. The thinking behind this could be that it leaves £1.5k towards the funeral with family making up the shortfall if there is no life insurance.

That's a good suggestion but it could be related to a calculation of the average care home cost (over and above state pension and other benefits) that it currently costs. I have seen one estimate that the average life expectancy after care home admission is 18 months.

Does that stack up?

But essentially it is another stealth tax.

margaretclare

Errata wrote: »

Thanks Ed - as far as I can figure out the talk is about the levy being imposed for the cost of care not just the cost of residential care. The MOS piece states 1 in 5 will need care which seems to imply all care as this figure is way out for residential care.



There will be a riot of people are asked to cough up £12k when they retire to pay for care they may not need! And if that's what comes to pass, it's a tax on old age, not a levy.

I am blowed if I want to pay upfront for something which I may never receive!

If one in 5 people 'will need care' then 4 in 5 will not. Now, we see many posts on this site and others making the assumption that care will be needed and 'how to avoid paying for care to protect my inheritance' etc, whether the question is asked by the person himself/herself or by the sons/daughters. I have always worked on the opposite assumption, that I'll be able to live independently, even if I have to pay for help coming in. I do not make the assumption that I'll inevitably end my days in full-time residential care. I do not in the least mind paying for services that I choose for myself, but this kind of blanket proposal, assuming everyone is the same, is not something I look on with any great favour.

Errata

We live in a democratic society, which means there are always winners and losers. I hope I will never need more than a minimum of care in my own home, but I can't predict that and neither can anyone else.
There are a great many things I don't wish my taxes to be used for, but if I accept that society will protect me, and I do, I have to accept that I have to contribute to enable that.
I think this levy/tax burden will be mostly borne by the baby boomers who it appears are, and may be, the wealthiest generation this country has ever known. £12k to them is nothing more than the price of a decent car, a conservatory or a handful of foreign holidays.
I'm sure the arguements will rage, but this method of covering the cost of care of older people seems to have more support from more keyplayers than any alternative. If I've understood things correctly £12k will not relate to the amount or length of time someone may need care in their own home or in a residential home.