The phrase Dementia Tax is the one being applied to the Conservative Party’s proposals for the funding of Social Care, if as seems likely they are re- elected on June 8th.
The current position is that a person going into residential care must leave their home to obtain the care they need and the care is very expensive. This justified the forced sale of the main residence. Thousands of people every month are forced to sell their homes to pay for residential care under the current scheme.
Those people who are able to stay in the home receive domiciliary care. Until now they have had to pay if their savings total more than £23,250, but crucially the value of their property was excluded because they were still living in it.
Care is free when an individual’s total savings fall below a lower limit of £14,250 with a sliding scale of contributions towards care costs between the lower and higher limits, being £23250 at present.
Under the new scheme, those people who use residential and domiciliary care will face the same charging structure. They will be assessed to get a picture of their finances and if their combined savings and property are valued at more than £100,000, they will need to pay for their care.
If they want to hang on to their home, they can defer payment. The state will deduct the cost from their estate when they die. Local authorities already offer a Deferred Payment Agreement (DPA) which allows people to secure care fees against their home once the property is sold, which can be on their death, or sooner, if they choose. The cost includes interest payments charged by the council
It is not clear whether an interest rate will be applied to charges if payment is delayed until death; it seems a distinct possibility if it mirrors the current DPA scheme. It is not clear how people receiving care will be protected from over-charging by private domiciliary care providers, which may seek to exploit clients who can pay more once their home is included in the calculation of savings and wealth.
We have set out below the potential impact of the so called Dementia Tax. If elected the detail of the scheme will be published in a Green Paper, prior to becoming law. We suggest that now may be a very appropriate time to re visit your Will and consider how you can protect your assets. We offer home visits in the Newcastle, North Tyneside and Northumberland areas and a free, no obligation initial meeting to discuss your own individual circumstances and how we can help you.
Contact us today on 0191 262 5133 for a free initial consultation with our specialist Jane Hucknall.