Dilnott: A Great Opportunity
1. Loan Scheme
At present most people going into care can use the deferred payment scheme. Under this the Local Authority will pay for the care but recover the cost when the property is sold or when the client dies, whichever comes first. There is no interest charged until that happens. The Government have announced a universal scheme whereby the Local Authority will fund the care so, on the face of it, the client will not need to sell their house to pay for the care costs BUT the property still needs to be sold after the client dies and the sale proceeds will still be lost for care costs AND interest will be charged from day 1. AND in practice most people’s houses are sold when they go into care and I expect that the rules will require that the loan is repaid at that time. Accordingly in practice there will be no change from the present position and at best it will simply postpone the problem rather than avoid it. The loan scheme will not stop people losing their home to pay for care costs. They will simply lose them later.
2. Cap on Costs
The Government has accepted this in principle but of course there is no decision on the amount of the cap. It is unlikely that any cap will be introduced before 2015. Dilnott recommended a cap of £35,000. Listening to the Dilnott interview today, I think he expects the cap to come in at £50,000. So no one will pay more than £50K? Well for a start that’s each so a couple going into care will pay probably £100K. AND this cap only covers the care element not the hotel element. Dilnott recommended that the hotel element should be capped at £10K per annum. Of course there is no decision on that yet but it is quite possible that if there is a cap on the hotel element at all, it will be capped at £20K per annum.
Actual care costs could be £20K per annum per person plus £50K for the care element. Accordingly, if a client is in care for 5 years the care costs might well be £100K + £50K= £150K. And that could be each.
3. Means Testing
At present Government support kicks in when your capital gets down to £23,250. It is suggested that this limit be raised to £100K which the Government may well accept. However most people have a house and accordingly their assets are well in excess of £100K. The excess would therefore still be vulnerable. It is likely that the lower limit will remain at approximately £14,250 and that Tariff income will apply. Accordingly Tariff might well be £343 per week or £17,836 per annum out of capital.
Accordingly Home Protection Plans still make sense. Never forgot that an FPT is not simply for care costs but for 6 other benefits which should never be underestimated. This might be a good time to contact all your existing Home Protection Plan clients to let them know what the changes mean and that their Home Protection Plans still make good sense. With all the current publicity, there is no better time than the present to invest in Home Protection Plans.