The cost of long term care – a social time-bomb?
Some might say that our national focus on home ownership has produced an asset rich but cash strapped society. The end result is that the family home often has to be sold to finance long term care for the elderly.Last year a Law Commission proposed that the guiding principle of care and support should be to focus on the needs and aspirations of the individual rather than those of local authorities or service providers, and recommended simplification of the system for carer’s assessments and service provision. The Dilnot Commission also reported on social care funding, and recommended capping the assets used to pay for care, and greater access to means-tested benefits for those needing care. It also placed greater emphasis on deferred payments and reducing the need to sell the family home.
It is evident that the Government largely accepts the recommendations of both: its Draft Care and Support Bill aims to consolidate the many Acts governing the state’s role in providing care, and represents the biggest reform to social care legislation since the birth of the NHS; its Consultation Paper - Caring for our future – largely accepts the ideas of Dilnot in respect of funding, but points to the structural deficit and defers a final decision.
So has this ticking socio-economic time bomb been defused, and can owner-managers rely on the Government to get this right and allow assets to be protected for the next generation?
If the reforms are implemented with the proposed funding caps, they will offer greater protection for individuals who should find it easier to understand funding and entitlements, and to make appropriate choices. However, with more people given access to state funded care, there would be greater state funding of private placements which would not only restrict the supply of private placements, but could well force down or freeze rates.
The result? Tighter margins for care providers putting a strain on profits, and potentially jeopardising jobs; ultimately the quality of care might be threatened, and providers might fail or withdraw from the market.
The bottom line is that business people should be prepared to make provision at key moments in their life to make sure that liquid funds are available to meet these costs. If not, too many of us may be reliant on a system that is likely to fail.
Glen Miles, partner, advises on tax planning, trust and estate administration and asset protection. He has a particular interest in the needs of vulnerable people and their families. He can be contacted on 01622 656500 or by email at firstname.lastname@example.org.
Article first appeared in Kent Business
Published: 10 Dec 2012