Funding care for the elderly under scrutiny

The current system of funding care for the elderly is often seen as unfair because some people have to sell their homes and pay for their care spending the inheritance they hoped to pass on to their children, while others pay nothing at all.

The Government has begun a public consultation on proposals to reform the system and published a Green Paper called, Shaping the Future of Care Together, which highlights the time bomb facing us as the population ages. It estimates that there will be 1.7m people requiring care by 2026.

Their care bill will be too great for the taxpayer to support and so the Government is looking at three possible ways to meet the cost. One involves a dual approach in which the state and the individual share the costs, the second is an optional insurance scheme which would cost individuals up to £25,000 over a working lifetime and the third is a compulsory insurance scheme which would cost up to £20,000.

People who pay into the insurance schemes would receive care for free when they needed it.

The proposals may be a step in the right direction but are still only at the consultation stage and the current system is likely to remain in place for several years.

The capital threshold at which the elderly start paying for their care is only £23,000 – only a fraction of the cost of an average house - so it means many old people would still have to sell their homes while others get care for free.

Even if one of the new proposals does eventually come into effect, it will only cover the cost of the care – other expenses like accommodation and food will still need to be met by the individual or their families.

One way to ease the problem is for people to start planning now for their old age so they can minimise the cost and the stress. For example, it may be possible to protect some assets by using trusts. It needs careful planning but could save elderly people and their families thousands of pounds in future.

Please contact us if you would like more information about funding care for the elderly.