What is the “dementia tax”?

What is the “dementia tax”?

It’s a name used by some to describe the Conservative’s proposals for adult social care.

The party’s manifesto put forward three key proposals for England:

• At the moment councils pay for all or part of a person’s social care if they have less than £23,250 in capital. The manifesto proposed raising this limit to £100,000.
• At the moment the value of a person’s home is only counted in this limit if they are in residential care or nursing homes. The manifesto proposes including the value of anyone’s house, even if they are still living in it and needing care at home.
• At the moment people in residential care or nursing homes can put off paying for their care—until after their death if they want to. The cost of their care is then taken from their estate after their death, or the value of their house once it is sold (or can be paid for by the individual or a relative). The Conservative manifesto proposed extending this to people who receive care at home too.

The manifesto argues these measures will put residential care and home care means-testing on an equal basis, account for property assets built up by many older people, and ensure that individuals’ assets aren’t depleted to £100,000 or less.  

Following the launch of the manifesto Sir Andrew Dilnot, who chaired a commission into adult social care in 2011, said that “what’s being done on the means test will help some people, though many people, the majority of people who are getting care—not in a residential care home but in their own homes—will find themselves worse off.”

Adult social care is devolved so the UK government is only responsible for it in England.

What might these changes mean?

Overall people in residential care will benefit from the proposed changes while people in need of care at home will either find their situation unchanged or lose some level of eligibility for care, according to analysis by the Institute for Fiscal Studies.

Out of those in their 70s who would get support at home if they needed it under current rules, an estimated 12% to 17% wouldn’t be eligible under the rules proposed in the manifesto according to the IFS.

That’s because under existing rules, their homes aren’t taken into account. Under the proposed rules, the homes of this 12% to 17% are taken into account and that pushes them above the £100,000 limit.

This only takes account of the changes proposed in the manifesto, it doesn’t factor in the cap discussed since.

In 2011 estimates produced for the Dilnot Commission suggested that one in ten people would face future social care costs of more than £100,000 from the age of 65. We don’t have figures for how many people would face this level of costs today.

Why is it called a “dementia tax”?

The phrase ‘dementia tax’ isn’t a new one; it’s been used in the UK for at least a decade.

In 2011 the Alzheimer’s Society said “People with dementia face the highest costs of care of any group and have to pay the most towards their care. This is why charging for care is described as ‘The Dementia Tax.’”

In 2016/17 the average cost of residential care for older people was between £590 and £648 a week, according to figures from healthcare information providers Laing Buisson. For people with dementia residential care cost an average of £631 to £689 a week.

The majority of people in residential care have dementia—around 69% across the UK in 2014, according to academic research for the Alzheimer’s Society.  Around one third of all dementia patients live in residential care, with the rest living in the community.

Around 60% of people receiving care at home also have dementia, including those not formally diagnosed, according to a report from the UK Homecare Association in 2013. We’ve asked the Association for more details on the source of this figure.

Any healthcare needs that dementia patients have can be looked after by the NHS. However, much of the care needed by people with dementia is with day-to-day tasks such as eating, washing, dressing and household chores. This social care is provided formally by councils or private providers, or through informal care from friends and family.

Of course, not everyone receiving adult social care will have dementia. Social care is provided for people with learning disabilities and mental health needs, as well as physical conditions. The new rules proposed by the Conservatives would apply to these other people just as they would for people with dementia.

What’s this about a cap?

Several days after the Conservative manifesto was launched the Prime Minister said that there would be a cap on the total amount any one person would have to pay towards their social care costs.

She said that “this manifesto says that we will come forward with a consultation paper, a government green paper. And that consultation will include an absolute limit on the amount people have to pay for their care costs... We will make sure there’s an absolute limit on what people need to pay.”

There are no details on what this cap might look like yet. The Coalition government legislated for a cap of £72,000 in 2014, but this was delayed until at least 2020.

Following this announcement the Nuffield Trust think tank said “It is good that these proposals now include a lifetime cap. This goes some way to addressing one of the big problems with the social care system, which is that the neediest can pay a very disproportionate amount for their care... The crucial remaining questions are at what level the cap is set, and whether it will be backed by the additional funding needed to make it work.”

So will people have to sell their homes?

Not in their lifetime, if they used the scheme currently available to those in residential care.

The individual’s home may need to be sold after they die in order to pay the council for care costs. It is also possible to do this during their lifetime or it can be paid back on the individual’s behalf.

Whether people would have to sell their homes at all under the Conservatives’ plans would depend on the level of the spending cap set and the cost of the individual’s care.