2013 Budget - care home fees threshold drop leaves more for elderly

In the 2013 Budget George Osborne announced that, following recommendations made in the Dilnot Report, he has decided to increase the amount of capital that an elderly person can possess before they become liable for settling the social care element of nursing home accommodation. These changes will not, however, come into effect until 2017.

At the current time an individual is considered to be ‘self-funding’ if their assets exceed £23,250. With nursing homes charging an average of £900 per week, it does not take long for an elderly person’s lifetime savings to reduce to £23,250.

Once the magical £23,250 limit is reached (and it should be noted that a claim must be lodged with the funding authorities several months prior to the balance of savings actually dropping to this level as it can take many months to process a claim for funding), a sliding scale of charging is implemented until the elderly person’s savings have reduced to £14,250 when that person will finally become fully funded by the State. The health authority then becomes responsible for nursing care and the local council for social care.

However, most elderly care home residents qualify for nursing care long before becoming eligible for social care funding, as this is based on medical need. A resident can be fully funded with regard to medical costs while being responsible for paying all of their social care costs. Social care includes the obvious items such as assistance with personal care (washing, dressing, eating) as well as the provision of accommodation generally, light, heat and power etc.

The 2013 Budget has amended the levels at which full funding for elderly care becomes available so enabling the elderly to retain more of their lifetime savings which can then be passed to their children or wider families under the terms of their will. From 2017 therefore, assistance with care home fees will be available once an individual’s savings reaches £118,000. Fees will continue to be paid on a sliding scale until the level of capital drops to £72,000 at which point the elderly person will become fully funded. This represents an increase of £57,750 and can only be seen as a considerable improvement on the current position.

For further advice please contact our wills, trusts & probate team.

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