The care bill has little to offer those receiving care at home
The government's Caring for our Future consultation gives the clearest picture yet of how the new system of paying for care will work from April 2016. The main change is the introduction of a cap on the amount that anyone can be expected to pay, so in theory nobody loses out. But it appears that most people receiving care in their own home won't see much benefit.
The current system is detailed in Who can afford retirement housing?Under the new and future system, the state will only help with "eligible" care costs - those identified as necessary by a local authority assessment, and not all care cost an individual has to pay. Currently two factors determine how much a pensioner pays towards these "eligible" care costs:
- Income - Pensioners must cover their own care costs until their remaining income is no more than pension credit plus 25% (around £170 per week for a single pensioner). This creates an "income floor" below which no pensioner should fall. But it means that no matter how far above this floor a pensioner's income is, the state will only step in if their care costs are high enough to bring them all the way down to the floor.
- Savings - Pensioners with more than £23,250 in savings are expected to pay for all of their care costs, regardless of income. For these pensioners there is a "trapdoor" in the income floor, through which the drop is potentially limitless, at least while their savings remain above this threshold.
The biggest change under the new system is that once someone's eligible care costs have exceeded £72,000, they no longer have to contribute any of their own income towards these costs. Both spending by the individual and by the local authority (if the individual is not required to meet all of their eligible costs) count towards the cap. So, in effect, a person reaches the £72,000 cap when their eligible care costs have reached £72,000, regardless of how much of their own income they contributed towards it.
In practice this means that the drop through the trapdoor in the current system is no longer limitless. Those pensioners who fall through the savings trapdoor (the threshold for which will increase from £23,250 to £27,000) will fall no further once they have spent £72,000, if they have not already fallen below the savings threshold.
But care costs of £72,000 are quite high. A person would have to have either a moderate care need for a very long time or a very high level of need. Typically care at home costs £15 per hour (source: Money Advice Service), so for those requiring 40 hours a week it would take 2.3 years, for those receiving 10 hours of care a week it would take 9 years to reach the cap.
For people requiring residential care who have much higher care costs and the possibility of having to sell their home, these proposals give some cheer. (Although, even after reaching the cap, they will still have to cover their non-care costs, like food and accommodation.)
But at the onset of care needs, pensioners receiving care at home do not know if they will ever reach the cap; probably only a small minority will. Under the current and future system these pensioners face depleting their savings or coping on the income floor for at least the short term. Knowing that in future years they will perhaps no longer have to pay is unlikely to provide much comfort.