Dilnot Report – How Much Is Fair To Pay For Long Term Care?
What the Dilnot report means for the future of care funding
On July 4, 2011 the panel set up by the government to review the funding of long term care recommended a complete overhaul of the system. In my opinion, the Dilnot Report’s proposals represent a sensible way to clarify and simplify the rules for funding long term care. If adopted, they will provide a much fairer system for paying for the care of elderly and disabled people.
To aid the debate, I’ve put together this blog post to highlight the key proposals and where we are currently. Firstly, it’s worth looking again at some of the key findings of the report. Evidence collated by Andrew Dilnot reveals that:
- One in ten people aged 65 or over pay £100,000 towards their care
- One in four pay £50,000
- Every year 20,000 people sell homes to pay for their care
- In the UK, the typical 55 to 64-year-old has a total wealth of £200k
- My clients in the South East pay between £30,000 and £45,000 a year towards their residential and nursing care fees
What Dilnot is proposing is based on two key arguments:
- All care should be free or
- It is reasonable to pay something towards your care, but not to lose your home and everything you have saved
The current situation: Individuals only receive social services help if they have less than £23,250 in assets (including a home).
What Dilnot proposes: People with assets of less than £100,000 will qualify for help.
Limit on costs
The current situation: No limit to how much an individual pays for their care over a number of years – some of my clients have paid up to £220,000 over five years in a nursing or care home.
What Dilnot proposes: £35,000 cap on the amount any individual pays for long term care.
What fees cover
The current situation: Weekly fees do not distinguish between care and ‘hotel’ costs (accommodation, bills and food).
What Dilnot proposes: Formally introducing ‘hotel’ costs. Individuals will pay for these on a long term basis from their pension and benefit income, capped to an annual figure of £10,000 or less.
Means testing for young adults
The current situation: Means testing applies to adult social care even if the individual has had severe disabilities since childhood.
What Dilnot proposes: Those who enter adulthood with a care and support need should be entitled to free state support immediately.
The current situation: Specialist insurance and investment vehicles are available to pay for future care, but the general consensus is that the financial sector needs to offer something different.
What Dilnot proposes: More certainty about total personal liability for future care will allow the financial sector to offer more and clearer products for planning ahead.
Rules and regulations
The current situation: A muddle of rules with many people finding that when a family member needs care, they do not have a lot of choice or have their options outlined. Social workers often tell them they will simply have to sell their parents’ home to pay for permanent care.
What Dilnot proposes: Clear transparent rules that people understand.
Social Services Loans
The current situation: Interest free loans from social services are available. There is a power to loan funds, rather than a duty.
What Dilnot proposes: Make loan funding universal and allow social services to charge interest from the outset of the loan. This is designed to promote more loan funding. In practice, I find that loan funding is widely used. But putting social services under a duty to provide loan funding is a good idea. However, I think charging interest from the outset is a negative step.