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Govt set to reveal details of £75k LTC cap

Economist Andrew Dilnot
Economist Andrew Dilnot

The Government is set to announce a £75,000 cap on the costs people pay for long-term care and an increase in the means-tested threshold from £23,250 to £123,000.

Health Secretary Jeremy Hunt is expected to announce the plans for social care reform in a statement to the House of Commons today.

Hunt is also expected to set out the reform will be part-funded by freezing the inheritance tax threshold at £325,000 for individuals and £650,000 for couples for three years from 2015.

In the Autumn Statement in December Chancellor George Osborne set out that the inheritance tax threshold would increase by 1 per cent from £325,000 to £329,000 in 2015/16.

The long-term care reform will also be funded by the state pension reforms announced last month, which will see the Government raise over £6bn through scrapping contracting out.

The introduction of the cap follows a report into the future of long-term care in July 2011, led by economist Andrew Dilnot. The Dilnot Commission called for a cap on individuals’ lifetime contributions to social care costs of between £25,000 and £50,000, with £35,000 the recommended figure.

Dilnot also suggested increasing the means-tested threshold to £100,000.

Saga director general Ros Altmann says the Government has adopted the £100,000 recommended means-test level, but chosen a higher LTC cap of £61,000 in Dilnot 2011 terms. She says the £75,000 cap and the £123,000 mean test represent what the Government’s new social care model will be based on after adjusting for inflation and once the system is introduced in 2017.

The £75,000 cap excludes so-called “hotel costs” such as food and accommodation. But the Financial Times reports the Government is set to bring in a separate annual £12,000 ceiling on hotel costs, with the Government paying if costs go above the ceiling.

Dilnot told Money Marketing in January 2012 he would be satisfied with a cap of between £50,000 and £60,000 but warned against it being set much higher.

He said: “Going significantly beyond £50,000 in 2011 prices would begin to make the cap significantly less effective and it would stop having the effects we saw as most important like risk pooling.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Capping hotel costs, is akin to rent control. Care home providers are going to either be more reluctant to take on new residents or considerably more choosy about the financial status of an applicant.

  2. So what are the legal inheritance tax/care fees mitigation measures?

  3. I agree that elderly care should be looked at.
    I also agree that in view of the very deep doo- doo we are in sacrifices need to be made, benefits cut and taxes raised.

    But what a load of complete idiots this government is. This is like a bankrupt using someone else’s money to give money to charity.

    The savings should be used to reduce the debt – not just the deficit – that is if you understand the difference Dave.

    Benefits can be handed out once we are solvent – and not before.

  4. Don’t worry Harry – I doubt anyone will be getting anything out of this. It’s massively complex and most people will never get near the £75K cap because what counts towards it has been carefully worded to ensure that they don’t.

    When Jeremy Hunt says that people will no longer need to sell their homes to fund their care what he means is that people with assets equivalent to those of a privileged cabinet minister will not need to sell their homes. However, the plebs certainly will.

    It makes me sick that this is being sold to vulnerable people as something that it is not. It will be a massive disappointment.

  5. It is clear that the Gov’s policy is that the liabilities of the elderly will be kept to the elderly. Viz people who have means in excess of the IHT threshold will pay for their own care and when they die their wealth will be plundered through IHT to pay for those below the £123k threshold. As you are dead you cant complain about it. But what you can do is spend the wealth. It is a policy worthy of Balls and Brown.

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