Dementia is a big and growing problem (Part 2)
In Part 1 we looked at the astronomical cost of Care. In Part 2, we look at how Advisers can help.
Means tested support starts when capital is below £23,250
The financial limit, known as the ‘upper capital limit’, exists for the purposes of the financial assessment. This sets out at what point a person is entitled to access local authority support to meet their needs. The upper capital limit is currently set at £23,250. Below this level, a person can seek means-tested support from the local authority.
Where a person’s resources are below the lower capital limit of £14,250 they will not need to contribute to the cost of their care and support from their capital.
The Government is proposing to replace these capital limits with a single floor set at £100,000. They have also said there will be an overall cap on how much someone has to pay – though they have not said what this cap will be. Retaining this £100,000 in the family home is the primary aim. Retaining this amount in a pension is not the aim.
Flexi-access drawdown is means tested
With flexi-access drawdown becoming more popular, it is important to understand how this is assessed for means testing.
The basic rules today
- If a person is only drawing a minimal income, or choosing not to draw income, then a local authority can apply notional income. This must be the maximum income that could be drawn under an annuity product. If applying maximum notional income, any actual income should be disregarded to avoid double counting.
- If a person is drawing down an income that is higher than the maximum available under an annuity product, the actual income that is being drawn down should be taken into account.
It is worth pointing out that there is a deprivation of income rule. Stripping out your income at the last minute is ignored.
It will be interesting to see if these rules change when the Government consults on its proposed policy.
How we advisers can help you.
- During our Reviews we will probably have a conversation about this subject. We will highlight the risks of dementia to you and the impact it can have on your income and savings.
- We will the help you to put a plan in place to ensure part of your financial plans takes into account if you or a loved one is diagnosed with dementia.
- And then we would regularly review your situation.
Remember, Government policy is set to change and the details will have an impact on all of us.