Middle classes face £35k bill for old age care

The middle classes should pay the first £35,000 of their old age care and be encouraged to take out insurance to cover costs, according to reports.

The Observer understands this will be a key proposal in a government-commissioned review into the future funding of social care to be published next week.

It's article supports comments reported by COVER made by Nick Kirwan, assitant director of health and protection at the ABI, at the Protection Review last week.

Kirwan suggested that a self-funding limit of £50,000 could be put in place with the government willing cover any extra.

Currently, social care provided by councils is means tested. If someone needs residential care and has more than £23,250 in savings, capital or assets they have to pay for their care in full.

Under the proposals from economist Andrew Dilnot, it has been reported there would be greater investment and a more generous means test that would make more people eligible for cover from the state.

However, those with better than modest assets - the middle classes - would be required to cover costs. The amount they would need to pay would be capped, which would encourage insurers to offer cover, the Observer understands.

The recommendations are already causing a split within the coalition government, the paper reports. One senior Liberal Democrat is claiming chancellor George Osborne wants to "strangle the proposals at birth".

It is understood deputy prime minister, Nick Clegg, is in favour of the proposals but a source said David Cameron and Osborne appeared keen to ditch the report because of the potential political pitfalls and financial commitments involved.

Dilnot will say that there should be government investment of up to £3bn and that people should pay between £35,000 and £50,000 towards the costs of their care before the state steps in.

But, crucially, the report will set out how conditions could be created in which a market for insurance would thrive, and the system would rely on the middle classes being encouraged to purchase cover for care costs.

Under the current system, there are believed to be around 800,000 older people who need care but do not receive it from the state, a figure that will increase to one million by 2014.

Over the weekend, nine key organisations, representing around 17 million people, wrote an open letter to Cameron demanding he seize the opportunity provided by Dilnot's proposals.

The organisations, including Age UK, the British Heart Foundation and the Alzheimer's Society, which have never before come together to demand action, say Dilnot's proposals are "important and substantial".