The government has set the care funding cap at £75,000. Most have criticised the move in that the cap is too high to benefit the majority of private funders, nor does it take accommodation costs into account. What are your views and how will it affect your business?
Chris Horlick, managing director, Partnership
We welcome the government’s announcement of the £75,000 cap on the amount people will have to contribute towards personal care. Alongside the draft Care and Support Bill it is another important step forward to reform social care.
However, clarity is essential about what the cap will cover and what it will not.
The cap will only apply to the ‘personal social care’ element, which for those in residential care is typically only a third of all costs. The cap will also be subject to both eligibility criteria and the prevailing local authority rate.
The cap will not cover general living expenses – set at around £12,000 a year – or any costs above the rate paid for by their local authority. It is also vital people are aware these changes will not come into effect until 2017.
This is particularly important for self-funders; those who have to pay some or all of their care costs, who currently account for 57% of the care system.
It has been estimated that 25% of self-funders deplete their assets prematurely and fall back on the state.
While the introduction of a cap provides an opportunity to ensure that these people are referred to specialist care fees advice, it is vital that people entering the care system now, or in the near future, get specialist financial advice which will allow them to make better informed choices about how best to pay for their care needs.
Aj Somal, chartered and certified financial planner, Aurora Financial Planning
I believe reform in this sector is much needed. The recent government announcement of the £75,000 cost cap will enable a level of certainty to the level of potential liability faced by clients, however the upper means-tested threshold of £23,000 will have minimal impact on my clients; all my clients are above this threshold anyway.
It is also difficult to predict how the pre-funded care insurance market will develop and grow, if it can at all, in the light of these developments as currently there are only a handful of operators in the marketplace anyway.
If the government looked into ways of linking care funding with pension savings, then I think this could be a logical step. This is because, for most of my clients, the second largest asset away from the family home tends to be their pension savings so some sort of innovations within the marketplace in this area will enable advisers to help their clients more than they can do currently.
Long-term care funding will be a pressing issue that is unlikely to go away anytime soon and it will be a political hot potato for any future governments as we develop a continually and increasingly unmanageable ageing population within the UK.
As far as I can see, all this means is that more and more of adviser clients will eventually need some form of long-term care. Therefore, reform and innovation within long-term care funding cannot come soon enough.
Tish Hanifan, joint chair, Society of Later Life Advisers (SOLLA)
SOLLA welcomes the recent government announcement of changes to the funding of social care. The combination of a raised threshold and the implementation of a cap is in line with Dilnot principles, however the cap level will inevitably mean many people will not benefit at all.
