Funding Care in Later Life

Under the changes proposed in the Care Act 2014, which received the Royal Assent in May 2014 and which came into effect in April 2016, the funding of elderly care has changed significantly. There is a factsheet available from the Government website. There have only been minor updayes since April 2016.

One of the perceived benefits under the new system is that 'eligible care costs' are to be subject to a 'lifetime cap' from 2020. This is not as beneficial as it may seem, however, because the cap does not include the 'board and lodging' element of the care costs, which currently normally exceeds £1,000 per month. Furthermore, the legislation provides that these costs may be varied in line with average earnings.

However, the cost of looking after the elderly is not, and never has been, free in the UK. With the increasing pressure on public finances caused by the ageing population, it would be a considerable optimist who did not predict future changes in the elder care system.

The BBC has created a care costs calculator to show the likely care costs which a person will have to pay and the NHS has useful information as does Age UK.

What is quite clear is that in anyone needing elder care who has significant assets should expect these to be diminished by the cost of care. The costs will be fully paid by the recipient of care where they have assets exceeding £23,250 until their capital falls to that value and then a proportion of the cost is paid until capital falls to £14,250. The fact that the assets may not be realisable is not in  point - for example, where a property is owned but cannot be sold, the council will, if necessary, take a legal charge over it, so that when it is eventually sold, the council's costs will be recouped.

Elsewhere in the UK, the cap is set at different levels. In Scotland, full self-funding only starts when the assets of the person in care exceed £28,000. However, following a recent increase in the limit by £10,000 in Wales, a Welsh resident needing care now will have their funding fully met by the state up unless their assets exceed £50,000.

It is a common misconception that gifting away a property will mean it cannot be taken into account as an 'asset' for assessing care costs if the time between the gift and the need to go into care is significant. This is not strictly the case. However, a property occupied by a dependant over the age of 60 cannot be counted as an 'asset' for this purpose.