The Dilnot Report – “Fairer Care Funding”

The number of over 85s in the UK today has now reached over 1.4 million, many of whom are likely to need some element of care1. However, there is a common misconception around the average length of time people spend in care which could lead to the wrong initial funding decision and a shortfall in fees or the erosion of an estate, both of which could be avoided.

Below are some key facts for consideration:

  • Those who self-fund their care live on average for 4 years2
  • 1 in 8 people live for 8 years or more in care3
  • Costs can add up quickly – Residential home care fees now average £25,000 a year, and nursing home care fees average £35,000 (fees of £50,000 a year are not uncommon in some regions)4
  • There is a risk of capital depletion with some types of investment vehicles if clients live longer than expected.

With these sorts of figures in mind the recent Dilnot Commission’s report “Fairer Care Funding” is welcomed. 

Council-funded home help and care home places for the elderly and adults with disabilities are currently offered only to those with under £23,250 of assets.

The Dilnot report said the threshold for Council-funded home help and care home places for the elderly should rise from the current level of £23,250, stating that a level of £100,000 with a £35,000 lifetime cap on costs would be “fair”.

The hope is that with the state paying for the high-cost cases, the insurance industry would be encouraged to develop polices which would cover any care costs below the cap.

The cap will not include so-called “hotel costs” for food and accommodation, so there is still coupled with the need to find the funds up to the cap level will hopefully encourage the industry to develop policies to cover this level. 

1. Office National Statistics 2011

2,3. Partnership Data 2011

4. Laing and Buisson, care of Elderly People, 2010/11

This newsletter article is for information purposes only and should not be viewed as advice.  The correct course of action for any given situation is always subject to your individual circumstances and therefore you should always seek professional advice before making any decisions.

Levels, bases of and reliefs from taxation can vary and their value depends on the individual circumstances of the investor.

The Financial Services Authority does not regulate National Savings and taxation advice.