The Health Secretary Andrew Lansley has put together a commission of experts who are looking at capping the cost of long term care for pensioners to a maximum of £50,000, the equivalent of the average cost of two years residential care. If this goes ahead it would mean great news for thousands of pensioners who are forced to sell their homes each year to cover the rising cost of their long term care.

Once the bill of a pensioner’s residential care has reached £50,000 any remaining monies would be paid for by the state.

Currently, any care home or residential care charges are unlimited, and this system forces over 20,000 pensioners each year into using up their assets and selling their properties.  In a lot of cases the cost of their long term care wipes out their children inheritance.

Those supporting the proposal say that if people were aware of the cap they would be able to better plan for their futures, taking our insurance, annuities or equity release schemes to meet their care costs.

However, opponents to the changes dismiss this, stating that many pensioners will still be forced to sell their houses, particularly if both a husband and wife become ill and require long term residential care, potentially faced with a bill of £100,000.  They suggest that those who have paid taxes all of their working lives shouldn’t have to pay a penny towards their long term care.

They would like to see private insurance companies offer policies to ensure that pensioners are protected from the maximum of £50,000.

Opponents to the changes also reject the proposed ‘Death Tax’ which had been put forward by the Labour party before the general election last year.  The ‘death tax’ would have seen everyone pay £20,000 for an insurance scheme regardless of whether or not they needed long term care.

The assembled commission has found that 25% of pensioners won’t require any care at all, whereas 10% will require care that costs over £150,000, and 1% would require long term care that could reach up to £400,000.

In response to the opposition for the proposed changes, the review team stresses that an aging population means the State cannot afford to pick up the total cost and that capping the fees at £50,000 is the preferred option of the Commission on Funding of Care and Support.

The chairman for the commission Andrew Dilnot said “My impression is that what people want most is a resolution. There’s a pretty widespread feeling that it’s not unreasonable that people have to pay something, but they don’t want to face losing everything.”
Other options that are being considered are pensioners paying a percentage of their care costs with the rest of the bill being met by the state, or the state paying to a certain level and then individuals paying their costs past this point.
Public support was behind the capping option with a third of people agreeing it was a fair method. The commission’s report found that this option was favoured most by people aged 31 to 64 and from higher income backgrounds.

The benefits identified with capping were that it enabled people to plan for their financial futures better as well as limiting the individual’s liability, with the end result being less people having to sell their homes to pay the residential care bills.

Currently only people with financial assets, including property, of less than £23,000 will get their care costs paid for by the state however, the commission is also considering raising this figure or having it on a sliding scale as other options.