WHEN is a ceiling not a ceiling? When it’s a cap.
The announcement last week of a £75,000 cap on the cost of long term care was a huge disappointment to many as this does not tell the whole story and will in effect help many less than anticipated. The figure is more than twice the cap recommended by the Dilnot Commission in 2011 at £35,000 and excludes an amount for bed and board.
Alongside the cap the health secretary announced an increase in the level of personal assets one can hold beneath which you receive means tested support towards care bills. This increase from £23,250 to £123,000 should it is estimated help up to 100,000 people a year and goes some way towards balancing the numbers.
Long term care costs are unpredictable and uncapped at present but if you consider the average amount payable each week and the time a person spends in receipt of this care, the cap is set at a sum many would not exceed currently.
Nearly a quarter of adults expect a relative to need long-term care in the future whilst fewer than one in ten plan to look after their loved ones themselves to avoid paying for care, with half of those expecting to fund care for others.
Nearly one in five adults expect to have to fund the cost of their own long-term care in the future. When asked how they would fund their own care if needed, nearly a quarter said they would use their property to pay for care. Just under a fifth of adults said they would use savings or their pension income. Should self funded long term care be required many will have to use the assets they have worked long and hard for. However, if steps are taken early, this may be avoided.
This is an area of planning that has seen significantly more interest in recent years and it is likely that more will look for ways to better plan towards the potential costs of providing protection against living past their savings.
l Dominic O’Brien is a Chartered Financial Planner and Director of Jamieson Christie Wealth Management Ltd. Please remember that the information given is for informational purposes only and is not intended to give or imply advice of any kind. Limits, terms and conditions may apply to one or more of the areas mentioned above. The value of investments and any income from them may fall as well as rise and you may not get back what you invested. The above is based on our understanding of the regulatory position as at February 2013.