News
Long-term care advisers must ensure that their clients are not “inadvertently lulled into a false sense of security” by new proposals to cap care costs, according to insurers. Elderly people not eligible for
Landmark long-term care report ‘conceals hefty price of care’ In fact, the report suggests that
“What will hopefully change
full state funding will continue to pay 90% of the costs of residential care they incur today, even if all of the recommendations of the Dilnot report are put into action, according to immediate needs annuity provider Partnership.
MOUNTING COSTS Described by its authors as “a type of social insurance policy with a significant excess”, the report’s solution to the country’s care funding crisis rests on a partnership between the state and individuals (see box-out). Nobody will have to pay more than £35,000 towards their care costs, while those with assets under £100,000 will be fully funded by the state. Under such a system, nobody
entering residential care will have to spend more than 30% of their assets on care costs, estimates the Commission, convened by the Government last year and led by economist Andrew Dilnot. However, commentators have been quick to point out that the cap does not cover the hefty costs of living in a care home.
people contribute between £7,000 and £10,000 a year towards these “hotel” costs, which are typically two or three times as large as personal care and nursing costs taken together. Partnership estimates that its policyholders, who live on average for four years after entering care, often in high quality care homes (which can charge fees of up to £50,000 a year), may have to spend almost £200,000 over the course of their lifetime. Chris Horlick, managing director
of care at Partnership, also warned that local authorities would use their own tariff to determine how much care can be funded for £35,000, which is unlikely to correspond to the amounts charged by the care homes sought out by self-funders. “Many people going into care now
may think that Dilnot’s proposals will act as a safeguard for them,” he said. “For most they will not. They will need financial advice immediately if they are not to risk losing significant amounts of capital and income.”
NEW FUNDING PRODUCTS Andrew Dixson-Smith, managing director of advisory firm Care Fees Investment, believes that the changes are unlikely to reduce the number of people who have to sell their home to pay for care. However, he welcomed the report for drawing attention to the importance of care fees planning.
YOUR GUIDE TO THE DILNOT REPORT PROPOSAL
A cap of between £25,000-£50,000 on individual contribution to adult social care costs (suggested £35,000).
Threshold for becoming a self-funder increased from assets of £23,250 to £100,000.
Contribution of between £7,000-£10,000 a year for living costs in residential care (food and accommodation).
People will become eligible for state support and the
cap on care costs once their needs are assessed to be “substantial”.
August 2011
www.hi-mag.com CONCERNS
Can the Government afford to pay costs in excess of the cap? The Commission estimates that a third of all people entering care would reach a £35,000 cap.
Most elderly people have assets in excess of
£100,000 and would still need to sell their house to pay for care. However, anyone unable to afford care charges without selling their home would be able to take out a deferred payment.
These are considerable costs for those who live for long periods of time - 12% of Partnership’s policyholders will live for 8 years or more.
Already, 72% of councils only provide care for people with “substantial” or “critical” needs. People with
moderate or low needs will not be eligible for support or capped care costs.
MIDDLE AGE CANCER UP 20% The cancer rate in middle-aged men and women has increased by almost 20 per cent in a generation, according to new figures from Cancer Research UK. Among women in their forties and fifties cancer rates have risen by more than 25%. In 1979 44,000 people, aged 40-59, were diagnosed with cancer in Britain but the latest figures for 2008 show almost 61,000 people in the same age group have been struck by the disease.
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HealthInsurance
as a result of any new legislation is that people will then be aware of the fact that a known level of financial commitment is required for the purpose of meeting their care needs, giving them the opportunity and incentive to pre- fund for alternative methods of covering the costs”, he said. He believes that the legislation
expected to follow the report could bring a new range of funding products into the market. Dilnot suggests that clarity around the state contribution to funding could enable insurers to develop vehicles such as disability linked annuities and critical illness insurance that can be converted to fund care needs. Stephen Lowe of annuities
and equity release provider Just Retirement said that the proposals should trigger greater uptake of equity release. However, he warned that the proposals could prove “a bit too drastic for the Government to accept”. While the Government has officially welcomed the report, care services minister Paul Burstow said it would take time to consider the solution and its trade-offs, “particularly in light of the current economic climate.” A bill on social care is expected
next year, with changes implemented in 2013 at the earliest.
HI
HCA ACQUIRES ROOD LANE HCA International, which runs six private hospitals in Central London, has acquired Rood Lane Medical Group, the private primary care and corporate healthcare provider which has offices across the City and Canary Wharf. Terms of the deal had not been disclosed as Health Insurance went to press. There are no plans to change the Rood Lane brand or management as part of the acquisition and Dr Gill MacLeod, chief executive of Rood Lane, said GPs and other clinicians there would come under no pressure to refer extra business to HCA hospitals. Read more about private primary care in the next issue.
BOSSES AND STAFF ON SICKNESS There is a vast difference between the support employees expect from their employer when they go off sick and the support they actually receive, according to Aviva UK Health’s latest absence management survey. Forty per cent of employees want their employer to give them as much time off as they need when they are unwell. While 60% of employers are happy to offer their staff flexible working hours, and 18% say they would amend their employee’s responsibilities, just 17% say that they would be able to give them as much time off as they need to fully recover.
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