Public urged to buy insurance to pay for £75,000 care bills


Millions of working Britons will need to take out insurance to pay for their care in old age in addition to saving for a pension, under government plans.

Jeremy Hunt, the Health Secretary, will tomorrow announce a £75,000 cap on the amount pensioners have to contribute towards their care, while significantly increasing the value of assets people are allowed to have before they lose state help towards their bills. The moves are designed to prevent people from being forced to sell their home or handing over all their savings to pay for their care.

The £1bn shake-up, which is due to come into effect in 2017, will partly be paid for by the contentious step of freezing inheritance tax for the next three years – a proposal that will trigger anger on the Tory right.

But Mr Hunt said yesterday: "The point of what we are doing is to protect people's inheritance. The worst thing that can happen is at the most vulnerable moment in your life you lose the thing you worked hard for, that you saved for, your own house."

He told BBC1's Andrew Marr Show that by establishing the £75,000 limit it enabled insurance companies to design products – alongside pensions – that will meet the costs of any care below that level. Mr Hunt said: "We need to change the culture in our country so that, just as people make provision for their pensions in their 20s, their 30s, they understand they need to make provision for when they're retired. So we also need to be a country where people prepare for their social care."

The plans – to be unveiled by Mr Hunt in a Commons statement – follow years of agonising by all parties over how to meet the spiralling cost of caring for a rapidly ageing population.

The Government appointed the economist Andrew Dilnot to draw up plans to reform the social care system. He recommended setting a cap of £35,000. This was rejected by the Treasury as too expensive and after months of wrangling ministers have decided to set a limit of £75,000.

Nick Clegg, the Deputy Prime Minister, who said reforming the funding of care was a priority for the Coalition in the second half of its term in office, said yesterday that under the plans no one would have to sell the family home in old age "because they developed the wrong kind of illness".

Mr Hunt said the Coalition's commitment to the issue was demonstrated by its decision to allocate £1bn a year to social care reform at a time when budgets were being squeezed. But he risks a political backlash by raising some of the cost by extending the current freeze on inheritance tax for another three years.

Anybody bequeathing more than £325,000, or £650,000 for couples, has to pay 40 per cent tax on anything over those levels, which have not been raised since April 2009 despite inflation. The move will affect some 5,000 wills a year and could leave some families £95,000 worse off than if the tax had been raised in line with inflation.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + Commission: SThree: Are you great at building rela...

Ashdown Group: Database Analyst - Birmingham - £22,000 plus benefits

£20000 - £22000 per annum + excellent benefits: Ashdown Group: Application Sup...

SThree: Recruitment Resourcer

£20000 - £25000 per annum + Uncapped Commission: SThree: Do you want to get in...

Ashdown Group: Project Manager - Birmingham - up to £40,000 - 12 month FTC

£35000 - £40000 per annum: Ashdown Group: IT Project Manager - Birmingham - ...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before