Freezing Care Thresholds

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    The Telegraph has reported this week that thousands more elderly people will be forced to pay to stay in care homes as a result of unannounced cuts in funding. Ministers are effectively reducing the level of savings above which pensioners must meet their own fees.

    A Whitehall document shows that the reduction has been imposed to “raise additional revenue” and will have an “impact” on older people and their families.

    It means that more will be dragged over the means-test threshold for care home charges and will have to pay full fees, typically more than £500 a week.

    That will raise fears of greater numbers being forced to sell their homes to fund residential care in old age. Charities said the decision would hurt the vulnerable and cause “considerable distress”.

    Around 250,000 people aged over 65 are estimated to be funded by councils in residential care homes, and the figure is forecast to grow steadily in the coming decades. Charges are based on a means test, under which anyone with savings and assets, including a house, worth more than £23,250 must pay the full fees.

    A survey last year said that average care home fees were now more than £25,000 a year. In the Home Counties, they frequently exceeded £45,000.

    Anyone with assets above the threshold must pay full fees until their value has been reduced below the limit, when councils pick up some of the cost. That can quickly reduce the savings of older people who have passed on houses and other assets to their children as a tax-planning precaution against death duties.

    Normally, the threshold increases each year to take account of inflation and rising values of assets such as houses. Ten years ago, it was £18,500.

    But the Coalition has quietly decided to freeze the limit for at least two years. The move is likely to amount to a real-terms cut in the threshold of almost 10 per cent. A lower capital limit of £14,250 – above which councils pay part of the fees – has also been frozen. The decision was disclosed in a Department of Health document.

    Dated Jan 28, it makes clear that the move is to raise more money from elderly people. “In the context of the Spending Review 2010, ministers have taken the decision not to increase the capital limits,” it says.

    “The intention is to help protect the level and quality of social care services by enabling local authorities to raise additional revenue to pay for these services, from residential care charges.” The capital limits will not be reviewed until the next local government finance settlement in the autumn of 2012, the document says.

    In the meantime, the department will “monitor the impact of not increasing the capital limits on care home residents  and their families, and on local authority budgets”.

    An estimated 100,000 people in residential care finance themselves. Up to 20,000 pensioners a year are estimated to have to sell their homes to do so.

    Conservatives and Liberal Democrats fought the election promising new rules that would prevent people having to sell homes to fund care.

    In the House of Commons yesterday, David Cameron was challenged over the rising costs, and insisted the Coalition was acting to help older people. “Far from cutting the money that is going into social care, we have increased by £2 billion the money going into adult social care because we know how important it is,” the Prime Minister told MPs.

    The Department of Health said the freeze in the capital limit was “unfortunate” but necessary “in light of the current economic situation”.

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    About Matt Walkden

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