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30 October 2009

Man clutching headIt’s your 65th birthday.  A pile of cards drop through the letterbox. There’s also two brown envelopes.

You decide to get those out of the way before enjoying the good stuff.

You open the first brown envelope.  Inside is a letter telling you that you are no longer entitled to the middle rate of the care component of disability living allowance because you have reached the age of 65.  You must now contact your local authority for an assessment of your care needs and a means-test.

You open the second brown envelope.  It’s a tax bill for £20,000.  The letter explains that this is a one-off payment to cover any care you may need in the future, excluding accommodation costs.  You can pay it now or wait until you die and have it recovered from your estate.

You don’t much feel like opening your cards now, do you?

Happy Birthday from the National Care Service!

This may sound like alarmist nonsense, but it’s one possible future being proposed if the National Care Service is introduced.

We’ve dealt with the issue of the threat to disability living allowance (DLA) elsewhere on this site.

It now seems clear that the government is considering abolishing at least the care component of DLA for all disabled people aged 65 and over as well as attendance allowance (AA).  The money saved will be paid to local authorities and it will be their job to assess your care needs.  But their assessment may not find the same level of needs that your DLA assessment found.  In addition, unlike DLA, there will be a means test even if you are found to have care needs, so you may not qualify for any help at all.

Even if you are assessed as having care needs and you pass the means-test, the local authority are legally entitled to take into account their own budgetary requirements.  So it may be that although they agree you have care needs, the local authority can only afford to meet the needs of people who are more severely disabled, in their view, than you are.

So you may still not end up with any help.

But raiding DLA and AA won’t pay for the proposed National Care Service on its own.

What few people seem to realise is that the care green paper contains several options for paying for care.  One option, which may well be favoured by the government, because it puts most power in the hands of the state and leaves the least choice to individuals, is the ‘comprehensive’ option.

Under this option everyone would be liable to pay a one-off tax on reaching 65 years of age.  The green paper suggests that it would be in the region of £17,000 - £20,000.  Payment would be means-tested,  so some people with very little in the way of savings or assets, such as a house, would not have to pay anything.  Others might have to pay only a proportion of the £20,000. 

But many people would  have to pay the full sum whether they ever received care from the state or not.  The tax could be paid immediately or you could put off paying until you die and have it recovered from your estate when, for example, your home was sold.

What if you actually have to go into a care home, though?  The whole point of the National Care Service, as set out in the care green paper, is to allow older people to have access to free care rather than having to sell their home to pay for it, isn’t it?

Well, not exactly.  The green paper points out that accommodation costs, including cleaning, food and laundry are things that people would have to pay for whether they were in care or not.  So you still have to pay those costs yourself.

The green paper estimates that if you were in care for two years, the cost of care would be about £25,000.  This cost would be met by the National Care Service.  The cost of accommodation would also be about £25,000. You would be expected to pay for this yourself if you had savings or assets.

In deciding how the system might work, the government have ruled out two options.

The first is leaving things as they are.

The second is paying for care through general taxation, such as income tax, because they believe this would be unfair on people currently in work.

But if the comprehensive option is adopted, a bonus rich banker who has tens of millions of pounds worth of property and investments will pay the same £20,000 tax as an ordinary person with only the house they live in and a modest amount of savings.

Many people think this would be unfair and that, in fact, general taxation is the fairest option by far.

If you have an opinion on all of this, it’s not too late to have your say by visiting:

http://careandsupport.direct.gov.uk/greenpaper/execsum/

or emailing:

careandsupport@dh.gsi.gov.uk