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The Act received Royal Assent on 14th May, but it will not come into effect until April 2015. However, those hoping the Act will prove to be the answer to their concerns regarding privately funding care may be disappointed. A report prepared by the Faculty of Actuaries suggests few people will actually benefit from the Social Care Cost Cap.
There are three types of care costs: daily living costs; local authority set care costs; and top-up care costs. The cap only applies in relation to local authority set care costs.
The report suggests that just 8% of men and 15% of women entering care aged 85 today are likely to reach the new social care cap. The report found that although the cap is set at £72,000, on average people are expected to spend around £140,000 on care costs before reaching it. This figure can increase to around £250,000 if an individual is in long term care for 10 years, even allowing for the cap. The report's authors also found significant regional variations in expected care costs and the time it is expected to take for the Social Care Cost Cap to apply.
There are also regional variations to take in account when assessing the amount of funds likely to be spent on care.
The report cites recent research data which found that 1 in 3 women and 1 in 4 men aged 65 today are likely to need care, yet the average disposable income for retired households in 2011/12 was only £18,700 - well below the level required to fund the average long term care costs before reaching the cap.
You can find out more about these changes and access the full report on the Institute and Faculty of Actuaries website.
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