I am an IFA looking to enter the LTC market. Could you please explain what the new care bill means and where I can help clients?
Nigel Barlow, Partnership
The Care Act presents IFAs with a valuable opportunity to enter the growing long-term care market and play a significant part in the new adult social care system in England.As part of the major reform plans, which include a new funding model, there is a new duty on local authorities to provide information and advice to people on how to access financial information and advice, which is independent of the local authority.
There is now a greater emphasis on the role of regulated financial advice for those who have to fund some or all of their care, with recently published draft guidance stating that local authorities “should actively help and direct a person to a choice of adviser”.
The first phase of the reforms, which will include this information and advice offering, will be implemented in April 2015, with the so-called ‘cap’ and changes to the upper and lower capital means testing thresholds introduced in April 2016.
While the new system remains complex, this new guidance provides IFAs with an excellent opportunity to engage with local authorities in their area to ensure that, where appropriate, self-funders seek regulated financial advice so they can make informed decisions on how best to fund their care needs.
With an estimated 24% of self-funders falling back on state funding, local authorities could see this advice as an integral part of the system.
Janet Davies, Symponia
The Care Bill will make very little difference to your business strategies.
The much maligned care cap applies only if you meet the criteria set as ‘substantial’.
It doesn’t relate to the full weekly fee: just the amount needed for ‘care’, which is estimated to be £270 per week. This excludes social care, food and accommodation.
Meet Gladys. It’s June 2016 and she has moved into a care home. She has a house and other savings taking her total capital to just over £350,000. Her weekly fees are £950. Gladys meets the criteria. This means that the meter on her account will start.
At a depletion of £270 per week, Gladys will have spent her care cap in 266 weeks. However, and this is the key, to have eroded her entire care cap of £72,000 she will have actually spent £252,928.
Kay Ingram, LEBC Group
The Care Act 2014 introduces changes to the way in which personal care is funded. From 2016 onwards, there is a cap of £72,000 on the cost of care fees to be funded by the individual, costs in excess of this being met by their local authority.
However, the way in which the rules apply are more complex than that, and some experts believe that individuals will have to fund almost double the £72,000 before receiving help from their local authority. This is because not every £1 spent on personal care either now, or in the future, will count towards the £72,000 cap.
The following are excluded from this:
- Money spent on care fees before April 2016;
- The cost of accommodation and food;
- Amounts spent above the local authority’s ceiling.
There is much support available already. Those with income of their own and assets in excess of £23,250, will always pay something towards their care costs, but many forego the generous tax-free and non-means-tested benefits available.
They needlessly spend their own money paying all of their costs, or choose a lower cost option for fear of running out of funds. A disjointed care funding structure with NHS, DWP and local authorities all involved makes help difficult to access.
From 2016 local authorities will be required to help all care recipients to access independent regulated advice on care costs, so any new adviser should get qualified to meet this advice need.