Money worries still a factor despite Government care cap – Birmingham Post Article 09.12.2021

Fearful about how to support yourself in old age especially if you have to go into care?

It’s worth thinking about it early doors and, if possible, come up with a plan.

Though this will have to take in lots of different factors, such as your age, health, where you live and your financial situation … so may have to evolve with time.

Best to stay independent as long as you can perhaps through adaptations to your home and technology that makes life a little easier. We are talking the likes of stair lifts and ordering food deliveries online.

Hire a cleaner and gardener.

Downsizing from house to bungalow, sheltered housing or retirement village.

Pay for carers to come into your home for short spells several times a day.

All this depends on cost and your financial means.

There has been much publicity of late concerning the Government’s determination to ‘fix’ the so-called care crisis.

Under the new scheme, from October 2023, there will be an £86,000 cap on care costs across an individual’s lifetime.

Anyone with less than £20,000 of assets won’t have to pay anything – the current limit is £23,250. People with between £20,000 and £100,000 will be eligible for some means-tested financial support on a sliding scale.

The Government also intends to tackle ‘persistent unfairness’ in the social care system by ensuring that self-funders are able to ask their local authority to arrange care on their behalf, so they can get a better deal. Currently, people who meet their own care usually pay higher fees than those who are funded by their local council.

But some experts say the new measures fall short of the comprehensive reform that’s needed.

Anita Charlesworth, the Health Foundation‘s director of research, told consumer champion Which: “With the cap set at £86,000, most people will be protected from catastrophic care costs, but those with modest assets and high care needs will still risk losing a high proportion of their wealth in future.”

The government so far says the cap will only apply to ‘personal care’ costs. This means hefty additional bills – such as for food and accommodation – in a care home will fall on the individual.

Top-up fees (where the elderly pay the difference towards a more expensive service) won’t count towards the cap.

In short, the state will only cover so much.

Hence, many will still need significant back-up in place.

The Government blueprint was predicated around not having to sell the family home, and, although fewer owners will likely need to do so, instances where this still cannot be avoided, either outright or via equity release, seem sure to be a factor.

Pensions and Isas are another option.

Savers could put aside money in an Isa to cover the charges, or perhaps earmark their tax-free pension lump sum.

With a cash or stocks and shares Isa you can save up to £20,000 a year tax-free. Any money you save into your pension benefits from tax relief of currently 20 per cent or 40 per cent.

Alternatively, pensioners in need of care can use a lump sum to buy an immediate needs annuity to help cover fees until they die.

This Is Money states: “The insurance payments, if made directly to the care home, will be tax-free.”

Advice site UK Care Guide says a care home annuity paying £10,000 a year would cost a 70-year-old £135,000 or an 85-year-old £55,000. Knowing you will have a regular income for life may provide peace of mind but you forgo any other access once it is set up.

Never forget, the future is inevitable.