Protection  

Partnership: At least 12% would benefit from £75K care cap

The average person in the South of England may have to pay over £210,000 overall before they reaching a £75,000 cap on long-term care costs, which the government is expected to announce today, Partnership told FTAdviser.

Yesterday (6 January), The Sunday Times reported that the government will set a cap on long-term care costs at £75,000, which is more than double the £35,000 cap recommended by the Dilnot Commission last year.

Jim Boyd, director of corporate affairs for long-term care annuity provider Partnership, told FTAdviser that if this cap is implemented, the average person in a single nursing care room in the South of England may have to pay over £210,000 before they reach the £75,000 cap.

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They will then only receive help for the personal social care element of their costs, which is typically about a third of the costs, as people have to meet all their general living expenses, hotel and personal social care costs before they reach the £75,000 cap. The cap then only applies to the costs of personal social care up to the prevailing local authority rate.

Mr Boyd told FTAdviser that, before people reach the cap, they will have to pay their ‘general living expenses’ of up to £10,000 a year themselves under Dilnot and any hotel costs over the local authority average rate (currently £461 per week). The actual average costs of a single nurse care room in Southern England is £817 per week. This means that person will pay roughly £42,500 a year before they reach the cap.

The average life expectancy in residential care is around 2.3 years. Partnership has estimated that someone will have to live on average for 5.3 years in residential care to reach the £75,000 personal care cap, which equates to over £212,500 for someone in the average single nursing care room in the South of England.

This means that the average self-funder will be dead before the £75,000 cap takes effect. Only 12 per cent of Partnership’s policy holders live for eight years or more in a residential care home, meaning that they may benefit from this figure, Partnership said.

Chris Horlick, managing director of care at Partnership (pictured), emphasised that if the personal care cap is set at £75,000, “few people going into residential care will be alive to benefit from it”.

He said: “It emphasises how important it is for people going into care to get appropriate financial advice.

“Failure to do so means that they might not purchase the correct financial product to protect them from the substantial costs of care. We estimate that someone who lived in a single nursing care room in the South of England would have to spend over £200,000 before they were able to benefit from the cap on personal care set at £75,000.”

Steve Lowe, group external affairs director at Just Retirement, added: “A confirmation of a settlement between government and citizens is a positive step and once the settlement is reached, we can all start to plan to work around that, but less positive is the amount.