More old people will pay for care
People who need residential care must pay for it out of their own pocket if they’re wealthy enough. At the moment, that means assets (including property) of £23,250 for residential care. Normally, the threshold increases in line with rises in inflation and asset prices. Ten years ago, the threshold was £18,500. But, as The Telegraph reports, the government has “quietly decided” to freeze the limit for at least two years. In effect, that amounts to a real terms cut in benefits. More old people will end up paying for residential care as a result.
But that’s only part of the bad news for older people. Councils will also squeeze the availability of free care places. To receive state-funded care, an individual’s medical needs are taken into account. Councils are only required to fund the two most severe levels of need. As a result of spending cuts, it’s likely that the remaining 28 per cent of councils that do more than the minimum will look to tighten their belts (indeed some already are).
It’s not all bad news for old people, however. The Telegraph says that funding care “quickly reduces the savings of older people”. That’s not quite true. There are a number of options, such as equity release and annuity products, that can slow the rate of attrition to something more sustainable. In the next couple of weeks, we’ll have a report out on exactly this issue. It looks at how councils can help more people access independent financial advice about care funding.