Care fees cap ‘too high to help most people’

Government plans for a cap on care costs will do little to help most nursing or care home residents, new analysis suggests.

Currently, only people with less than £23,250 in assets, such as savings or property, receive help from the state with their residential or nursing care costs. The government is in the process of introducing changes that it says will mean that people with £118,000 worth of assets or less will start to receive financial support if they need to move to a care home.

The changes include the introduction of a £72,000 cap on each individual’s care costs from April 2016. However, individuals will still have to pay other charges, to cover items such as food, energy bills and accommodation, which could add up to a further £12,000 a year.

Now, a new study carried out for the Centre for Economics and Business Research has found that most people will not be in a care home long enough for their care costs to reach the cap.

It says that with an average stay of 1.4 years in a nursing home and 2.3 years in a residential home, at average prices the cost would be £56,700 or £68,800, adding: “For someone admitted into a home in 2016, the cap only kicks in after about 2.6 years in a nursing home or about 3.9 years in a residential home, so the majority of residents will not be affected by it, given the typical amount of time spent in each home.”

The report concludes: “Average household wealth is above the new upper cut-off of £118,000, leaving the average household in a position where they can meet the costs only through selling their home. The cap of £72,000 will be too high to affect most people.”

The report suggests the average cost of a residential home is £29,300 a year and £38,800 for a nursing home.

Lee McClellan, a partner in Palmers’ Elderly Client department, who advises on long-term care issues, said : “Earlier this year, Care Minister Norman Lamb said that people had ‘unfairly faced losing almost everything they’ve worked hard for in order to get the care they need – in the worst cases, many have to sell their home or exhaust their life savings’.

“Yet this report confirms that the government’s reforms could have a limited impact. Even the £72,000 cap is misleading, as it will not be calculated based on actual payments made but on a notional figure likely to be substantially lower than the actual costs in many cases.

“With a growing elderly population in the UK, more and more people are likely to have to fund long-term care – for themselves or for their parents – and it seems clear that the government’s reforms will do little to ease the financial burden for many.

“In these circumstances, seeking expert advice is essential to help avoid becoming one of the many people who are paying more than necessary in care fees. For more information, please contact our Elderly Client team.”