Calculating long-term care funding requirements

Currently Mr Lowe warns anyone with assets of more than £23,250 in England, Wales and Northern Ireland and £24,750 in Scotland (excluding the value of the home if it is needed by a spouse or dependent), is unlikely to receive any state support.

Once a client’s assets drop below £23,250, Mark Stopard, head of product development at Partnership, says they will be expected to pay £1 towards their care bill for every £250 worth of assets they have until their assets drop below £14,250 when the local authority will pay all their fees.

When this happens, Mr Stopard says the local authority will look to pay their ‘standard level’ of fees so if the person is in a more expensive home then they may need to move to cheaper accommodation.

But he adds there is a slight caveat to this: anyone who goes into care can request a care needs assessment from their local council, which will suggest their requirements are critical, substantial, moderate or low.

“Each local authority has chosen a needs level - generally critical - at which they will provide funding when your clients assets dip below £23,250.

Under the system proposed by the Care Bill currently making its into legislation, the amount of care fees a person will need to pay will be capped at £72,000 in 2016. Sounds simple - but as you might expect, there is a catch.

Mr Stopard explains only care fees at the cost that the local authority is willing to pay will be counted towards this total - so once again the better homes may not be covered in terms of costs - and the individual remains responsible for hotel costs (i.e. food and lodging). These daily living costs will be capped at £12,000 a year at 2016 prices.

He says: “So for example, if the weekly cost of care was £700 but the local authority would only pay £300, your client would be responsible for £200 in hotel costs and £200 in additional care costs.

“This means that only £300 would count towards the cap and it would take around four-and-a-half years to hit the cap.”

In order to qualify for state assistance under the new rules, Mr Stopard says someone needs to have assets of less than £118,000 and have a certain level of need, likely to be ‘critical’ or ‘substantial’ but this is still being debated.

For those who don’t qualify but have assets under £118,000, Mr Stopard says they will be expected to pay £1 for each £250 they have below the threshold until they hit £20,000, when the local authority will pay all their fees.

Just Retirement’s Mr Lowe warns the cap will not reflect actual spending by self-funders who often have to pay more, particularly if they are seeking higher quality care.