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Elderly Care Cost Limit Proposals Resulting from Dilnot

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monkeyspanner
monkeyspanner Posts: 2,124 Forumite
edited 10 February 2013 at 3:13PM in Over 50s MoneySaving
On Monday a much trailed announcement will be made about government proposals to limit care costs for the elderly. This will be the government's response to the Dilnot report of 2011.

So far these are the trailed proposals.
Lower Savings Limit Currently £23250
Dilnot £100,000
Proposed £123,000 with sliding scale of support.

Overall spending limit(excluding hotel costs) Currently Unlimited
Dilnot £25,000 to £50,000 with £35,000 suggested.
Proposed £75,000

Hotel costs Currently not considered separately
Dilnot £7,000 to £10,000 a year
Proposed £12,500 a year

Additional overall cost Dilnot £1.7billion a year
Proposed £1billion a year

Proposed introduction is 2017

This would seem, as usual, to hit those in the middle wealth spectrum hardest. I did some fag packet calculations and came up with the following.

Take an "inexpensive" care home at £600 per week or £31200 a year take off the £12500 hotel cost leaving £18700 a year. Thus £75000 equates to almost exactly 4 years of fees. Total spend in those 4 years. £125,000 including "hotel costs"

On first examination it does not look like this will prevent properties having to be sold to fund care. In addition there is a perverse incentive to choose a more expensive care home as this will mean the £75,000 limit is reached sooner. e.g £1000 a week care home equates to about two years before the £75000 spend limit is reached. I am unclear if the resident will be expected to continue to pay the £12,500 "hotel costs" after the £75,000 limit is reached if their saving are still over £123,000 but if not going for the more expensive care home will mean a saving of two years "hotel costs" limiting the overall spend to £100,000.

Of course anyone choosing this option will then be faced with the SS saying they have to move to a cheaper care home or find a third party to pay top-up fees.

So someone with a home worth £225,000 plus £25,000 savings could be faced with spending 50% of that before the limits are reached.

Based on the £600 a week example. This compares with the worst case Dilnot proposals of total spend £73,600 over 2.36 years. Or the best case Dilnot proposal total spend £32,250 over 1.03years.

The acceptance of the concept of "Hotel Costs" also raises some interesting points with regard to NHS Continuing healthcare funding (CHC). Are the government accepting that the balance of the care home costs relate to the residents needs other than domestic i.e. costs related to additional care needed because of their medical needs? Are the government opening the door to charge CHC funded residents for their "hotel costs" or conversely provide an opportunity for all residents to argue for their non-domestic charges to be funded as a medical need?

If you have reached this point thanks for taking the time to read this post to the end.
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  • Mojisola
    Mojisola Posts: 35,559 Forumite
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    On first examination it does not look like this will prevent properties having to be sold to fund care.

    This is what I think - I'm selling my Dad's house to pay for his care and would still have to sell it under the new rules.

    On the other hand, it wouldn't make sense to leave it standing empty.
  • Wicked_witch
    Wicked_witch Posts: 722 Forumite
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    edited 10 February 2013 at 4:22PM
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    I'm confused, because the BBC article says the cap won't apply to the cost of accommodation in residential care homes. Isn't that the cost that most homes are sold to fund?

    Happy to be corrected, I'm nowhere near retirement age but try to keep up to date for my husband's parents.

    Re-read the first post, I understand it better now. Didn't realise the costs of care homes was divided into different parts.
  • monkeyspanner
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    I'm confused, because the BBC article says the cap won't apply to the cost of accommodation in residential care homes. Isn't that the cost that most homes are sold to fund?

    Happy to be corrected, I'm nowhere near retirement age but try to keep up to date for my husband's parents.

    Re-read the first post, I understand it better now. Didn't realise the costs of care homes was divided into different parts.

    I think the cost of accommodation is what I called "hotel costs" in my post i.e. up to £12500 per year will be ignored when assessing if the £75000 has been reached.
  • Errata
    Errata Posts: 38,230 Forumite
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    ach ........... buqqer it, I'm off to buy a new car. A really nice expensive one :D
    .................:)....I'm smiling because I have no idea what's going on ...:)
  • monkeyspanner
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    Errata wrote: »
    ach ........... buqqer it, I'm off to buy a new car. A really nice expensive one :D

    Good idea you can't drive one from a Parker Knoll high back chair.
  • SallyG
    SallyG Posts: 850 Forumite
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    If I and my two adult children and, in future, their families are still living in the original family home - extended to cope and owned in equal shares between the three of us - will there still be a charge on that family home for any residential care I might need in old age - would they be required to sell the family home they're living in to meet my care costs after I die?
  • pollypenny
    pollypenny Posts: 29,394 Forumite
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    I'm still booking a flight to Switzerland! :p
    Member #14 of SKI-ers club

    Words, words, they're all we have to go by!.

    (Pity they are mangled by this autocorrect!)
  • Savvy_Sue
    Savvy_Sue Posts: 46,216 Forumite
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    SallyG wrote: »
    If I and my two adult children and, in future, their families are still living in the original family home - extended to cope and owned in equal shares between the three of us - will there still be a charge on that family home for any residential care I might need in old age - would they be required to sell the family home they're living in to meet my care costs after I die?
    I'm not sure there's a definitive answer to that yet: atm there's no requirement for the house to be sold while other owners are still living in it, because it's only your share which is part of your assessment.

    And the whole headline has been 'no need for anyone to have to sell their home', so it shouldn't be any 'worse' than the current situation.

    Mind you, did anyone else hear that whereas the LA will put a charge on the person's home and not charge interest on the fees, the future plan is that any charge on the family home WILL be subject to interest!
    Signature removed for peace of mind
  • Errata
    Errata Posts: 38,230 Forumite
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    Savvy_Sue wrote: »

    Mind you, did anyone else hear that whereas the LA will put a charge on the person's home and not charge interest on the fees, the future plan is that any charge on the family home WILL be subject to interest!
    Yes I did, and it's always struck me that LA's not charging interest on the money they loan - because that's what it amounts to - is extremely imprudent of them. I can't think of any other sector of the population that would be given an interest free loan by the Council for an open ended amount of time if they asked for it.
    .................:)....I'm smiling because I have no idea what's going on ...:)
  • dhj
    dhj Posts: 48 Forumite
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    Am I the only one confused by this? If the assumption is that I don't have to sell my house then where is the £74,999 going to come from to pay my care home fess before the government step in?
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