GrumbleSmiles

This is a continuation of the previous blog entitled “DILNOT UPDATE 2” on the 6th March 2013.

The one key question that politicians of all parties will not face up to.   A “King has got no clothes” situation :-

WILL I HAVE TO SELL MY HOME  ?  

This is the Daily Mail’s total preoccupation with the “horror” of moving into residential care.

Headline after headline over the last three years has declaimed the gross unfairness of elderly people having to sell their own homes to pay for care, if they move into a residential home.     This idea has been so frequently repeated that it has become an accepted “no go area”, even by the Government.     No politician will stand up and suggest people should sell their homes to pay for care.

But why do people need to keep their house if they move into residential care?     Obviously if their spouse is still alive that is a different matter and is allowed for in the current system.  Otherwise there is no rational reason for hanging onto a house you can’t live in.    It is only the emotive argument that Mum or Dad’s legacy is being sold to pay for care, when others did not scrimp and save to buy their house and now get their care for free.

Failure to confront the reality of this situation is what holds back the release of billions of pounds that could begin to transform the lives of so many elderly people, who while they hang onto their house, cannot afford good quality care.

Yes, people worked hard all their lives to buy their houses, but it is house price inflation, more than hard work, that really added value to their houses.     The hard fact is that while they were paying off  their mortgages, people were not saving enough for their retirement.  Now, they need to think of their house as their retirement fund rather than hanging onto it to leave to their grown up children.

If they can do both they are lucky.    If not their first priority must be to look after themselves, which is what most children would want for them.

The “hang onto your house at all costs” message, so strongly advocated by the Daily Mail and often picked up by the voluntary sector, holds back homeowners from the reality of a better life.

My message is the opposite.    Cash in your house now and buy yourself a better life while you are still young enough to enjoy it.     Forget the idea that the State will look after you, it won’t.     All the evidence is that State funded care in both the NHS and the social care sector, is underfunded and poor quality.    It is only through homeowners looking after themselves by downsizing, that there is any chance of a significant amount of additional funds being available to improve the lives of older people.  Equity release is an alternative but it is prohibitively expensive.

The missing link, which Dilnot set out to solve but Government intervention in his report has sunk before it got started, is a viable and affordable long-term care insurance market.

The only sensible answer left is a new compulsory social care tax on everyone, to cover the cost of long-term care.

This is a continuation of the previous blog entitled “DILNOT UPDATE” on the 5th March 2013.

The devil is in the detail of the Government’s proposals on long-term care funding.   That must be why they need four years to work it out, which is why nothing will come into effect until 2017.

Here are some of the detailed questions:-

• What counts as care?

First of all, it won’t be all care.    It won’t be care you want, it will be the care Social Services think you should have.    So the idea of “personalised care” has gone out of the window, before it even got established.    Domiciliary care, i.e. care in your own home, is unlikely to qualify except where it is cheaper than residential care and then only for “critical or substantial” cases.

• Will it cover all residential care costs?

Almost certainly not, because the costs will be limited to the level defined by the local Social Services.    Many homes charge more than the basic level and you will have to pay the rest yourself.    So don’t expect a room with a view or a balcony if you can’t pay the higher charges.

• What about accommodation costs?

In future you will have to pay these yourself, or presumably with housing benefit if you qualify.    That is around £12,000 a year, which in theory you are already paying in your current home.

• So what will it cost?

The exclusion of accommodation costs presumably means that care costs will reduce.    If residential care currently costs around £40,000 a year, then minus £12,000 for accommodation, care should come down to £28,000 per year which means the £75,000 cap will require you to pay your own care costs for nearly three years.    If you add back the accommodation costs you have to pay yourself, then over three years will need around £111,000 – more if you stay in a better quality home.

If you’re still alive after three years in residential care,— which most people arn’t, —it’s only then that the Government will start to pay.    Unless of course your assets sink below £125,000, in which case a tapered level of state funding for care will be offered to you.

…………TO BE CONTINUED

It is now nearly three years since our politicians were so all consumed in finding a solution to funding long-term care.    This was in the run-up to the last general election.    (See all my earlier blogs on this subject by clicking on “DILNOT COMMISSION” in the TAG CLOUD).

Of course, politicians’ promises soon disappear after elections and sure enough the standard prevarication tool of a commission to look into the issue was set up.    The Dilnot Commission began its work in 2010 and reported its conclusions in July 2011 in its report which was called “Fairer Care Funding”.

Essentially they amounted to:-

• A £35,000 cap on residential care costs;
• Residents paying £10,000 per year for accommodation;
• State funding increased to those with up to £100,000 of assets – albeit tapered.

Andrew Dilnot’s laudable aim was to open up an insurance market to cover the  first £35,000 cost of long-term care.    This left the Government to fund, what the insurance industry would not cover.    What the insurance industry calls the “catastrophic stop loss” – i.e. the costs when the £35,000 runs out.

This was a something for everyone solution that might just have worked, were it not for the new-found “time of austerity” and the rising numbers of elderly people with long-term conditions.   The Government’s problem was the £2.3 billion price tag.

So wait another year and the prospect of another election begins to beckon.    So the Government “modifies” the proposals:-

• A raised £75,000 cap on residential care costs;
• An uplift on accommodation costs to £12,500 per year;
• Some state funding for those with less than £125,000 assets.

Oh and by the way!  ————- not implemented until 2017.

This is unlikely to open up an insurance market because the cost of cover will be too high.  For most people they will still end up paying their own costs at around £100,000 for the first two years.     What the revised proposal offers them is “stop-loss care insurance” beyond the first £75,000, which is a very small improvement on the current situation.

………… TO BE CONTINUED