A new report by the Chartered Insurance Institute (CII) shows that four in five people do not know the cost of long term care, and even more worryingly a staggering 50% think it is provided free of charge.
The report from the CII called, “Who cares?” shows that the public is generally unaware of the cost of long term care and the need to make provision to meet these costs.
The current average care bill is £26,000 per year with the average stay in a care home lasting for two years.
Pensioners currently have an average income of £10,000 per year, leaving a huge funding shortfall, which the report confirms.
Director of policy and public affairs at the CII, David Thomson, said: “There is clearly a massive disconnect between public perception and reality. 80% of the public have no idea of how much their long-term care will cost and consequently are unlikely to be making any provision to meet that cost. Even more worrying is that 50% of the public think long-term care is entirely free at the point of use. The reality is starkly different.”
He continued: “Our research shows MPs have very little appetite for a model that is fully funded by the state, over 50% preferring instead a partnership model similar to that outlined by the Dilnot Commission. Yet even with a model as outlined by the Dilnot Commission the funding deficit still remains significant, meaning people will have to consider using capital tied up in non-pension assets such as property.”
The Dilnot Commission was set up to make recommendations for the future of long term care. When it reported earlier in the year it recommended a fundamental shake up of how costs of long term care are met.
The report recommended capping the amount that an individual would have to pay during their lifetime for their long term care at £35,000. Above the cap the state would meet the cost, regardless of the wealth of the person receiving care.
In addition people would still be liable for costs of accommodation and food whilst in care, however this would be capped at £10,000 per year.
At present the state offers no help to the costs of care if an individual has assets over £23,250, the commission recommended that this level be increased to £100,000.
If considered together these two recommendations would ensure that no individual would spend more than 30% of their overall wealth on the costs of care, This is significantly lower than today, when it is possible that someone in care could spend up to 90% of their assets on the cost of care.