On the 18th July 2013 the Department of Health launched a consultation in relation to proposed reforms to the care funding system in England and Wales. The consultation is underpinned by the new powers and duties for local authorities which were set out in the Care Bill 2013.
Under current legislation, individuals only receive financial support from a local authority following an assessment of their financial assets. As there is no limit to how much an individual can contribute to their care, it is possible for the majority of an individual’s assets to be dissipated by paying for care fees, rather than being preserved to pass on their loved ones following their demise.
The Department of Health recently launched a consultation on the future funding of care costs on and from April 2016, individuals with assets over £118,000 (including their home) will be required to contribute to the cost of their care up to a maximum of £72,000.
If implemented, there will be an obligation on the part of a local authority to draft and regularly review a care and support plan and prepare a personal budget for each eligible individual resident in their catchment area to track when an individual had reached the personal contribution limit.
The new plans will result in wider opportunities to defer care fee payments to ensure that any funds due to a local authority can be paid back from their estate following death. This will be made available by way of deferred payment agreements which will be entered into with a local authority and reinforced by way of legal charge/security over an individual’s assets. Whilst this option is currently available to those residing in certain areas, it is not universally offered by every local authority.
In addition, the Department of Health is expected to consult with the financial services industry to ensure a wider range of products are available to help individuals plan for future care fees in time for the introduction of the new system in April 2016. Products that may be adapted to fit with the new scheme include care annuities, critical illness insurance and pension based solutions such as an annuity that would pay out more if someone needs care.
As recommended by the Dilnot Commission, it is intended that annual adjustments will be made to the care cap in line with average earnings and inflation. There will also be a review of how the cap is working every five years which will take into account changes in life expectancy and any changes in the way care is usually delivered.
As research conducted by Bupa indicates that the average resident of a care home only stays for a period of 801 days, it is questionable how much of a positive impact the proposed reforms will make to the contribution an individual will make to their own care.
If you would like further information on the proposed reforms or assistance with private client matters please contact me on 0113 336 3363 or via email at email@example.com
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