Friday, 15 February 2013

Reform to Elderly care costs

Finally a government has had the courage to address the issue of the cost of elderly care: I am proud we have taken the bold step of doing the right thing for people who have worked hard and saved all their. Every year more than 30,000 people have to sell their homes to pay for the cost of care. The current system, which only provides state support if your assets are above £23,250, is unfair and sends out completely the wrong message – that if you work hard, save for your future and want to have something to pass on to your loved ones, your savings can disappear in a puff of smoke if you end up needing long term care. As one in three of us will get dementia and one in ten end up with more than £100,000 of care costs, this is a problem a responsible government cannot ignore.

The new reform package includes from 2017:
•A cap on care costs at £75,000. The intention is not that people should pay the £75,000, but that they should not have to pay it because they can cover it through, say, an option in their pension plan. Only with the certainty of knowing there is an upper limit to costs will pension companies or insurance companies offer this.
•Increasing the threshold for financial support from £23,000 to £123,000. This will help strivers on low incomes who may have saved and bought a house for which a potential £75,000 cost could still mean losing it.
The package will cost £1 billion a year by the end of the next Parliament, from which around 20% of the cost will come by extending the freeze on the threshold for Inheritance Tax. This is right because overall these proposals offer a much stronger way of protecting inheritances people have worked for all their lives - by allowing them to make provision so a family home is never at risk, something that currently is not possible.
We have now delivered in just two years what Labour ducked for 13 years. We can be proud we will be perhaps the first country in the world which, in the face of an ageing population, is building a system where people plan and prepare for their care costs as much as they plan and prepare for their pensions.