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Supported Living and Ageing Well Strategy: Extending the Life of the Long-term Care Insurance Scheme

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Monday 29 June 2020

Benefit rates for people in care homes will increase from October, if the States approve proposals from the Committee for Employment & Social Security. But the people in care may also have to pay more.

ESS say that, at present, the combined amount of the long-term care benefit rate and the basic co-payment paid by the person in care is too low to ensure the stability of the private care market. It's also insufficient to promote investment by the sector in care provision that we will need in future.

ESS base their findings on analysis of the financial accounts of all care homes, benchmarking their profitability against a Laing Buisson methodology. They have also heard directly from the care home owners about their financial challenges.

Deputy Michelle Le Clerc, President of the Committee for Employment & Social Security, said:

'Guernsey and Alderney care homes are an important part of social care provision and we need them. But we have recently seen two homes close, with no investors prepared to take them on as going concerns. That definitely tells a story.

In recent years, the care homes have increasingly had to charge top-up fees, in addition to the basic co-payment from the individual and the benefits from the Fund. This includes the not-for-profit homes. In fact, some of the not-for-profit homes are the ones that are finding it the hardest going.

We're asking the States to agree increases in the long-term care benefit rates from October, instead of waiting for January, when benefit rates usually change. The increases are well above RPIX (being between 8.5% and 12.5%).'

If the States approve the proposals, the benefit rate for residential care will increase from £463.89 to £521 per week.

Residential with dementia care will increase from £611.24 to £681 per week.

And nursing care will increase from £866.11 to £940 per week.

The co-payment, which is the minimum that must be paid by the person in care, will increase by £20 from £209.37 to £229.37 per week. ESS are proposing that it should increase further over the next two years to be £280 by 2023.

ESS describe the options for making the scheme financially sustainable, but do not make firm recommendations in their current report.

Deputy Le Clerc said:

'We've agreed with the Policy & Resources Committee that the measures necessary to make the Long-term Care Fund sustainable - and the Guernsey Insurance Fund for that matter - must be included within the overall review of taxation and the recovery from COVID-19 Revive and Thrive strategy.

I'm a bit disappointed that we have not been able to finish the States term with firm proposals for the financial sustainability. We've done a lot of work and have identified the main options. This work will have to be taken forward by the new Assembly, and the decisions will not be easy.

If the solution is to be on the same basis as now, and addressed just by increasing the contribution rate, the current rates of 1.8% for people under pensionable age will have to increase by 0.9% for the current scope of long-term care benefits. If we extend the scheme to cover care in your own home - which in principle we think we should - it adds a further 0.4%.

So contributions might need to increase by 1.3%. Although it looks like a small figure, it would mean people paying 70% more than they do now in long-term care contributions.

If we rely only on contributions, it places a heavy weight on our younger contributors who may be decades away from the time when the needing long-term care becomes more likely. So our Policy Letter does identify alternative ways of funding. These include the option of requiring some contribution from assets, whether that is savings or property.

We're very conscious that the scheme was originally set up on the understanding that it would not require a person's former home to be sold to pay for care. Our Policy Letter recommends investigation of a States-run or supported equity release scheme so that people might make a contribution towards their care costs without actually selling their former home. We use the example of perhaps paying the first £30,000 before being entitled to benefit from the Fund. Such a system, which applies in Jersey, would still preserve nearly all of the capital value of the former home.

We're hopeful that when the Policy Letter is debated, the States will approve the new benefit rates for October, and also give some indications on the preferred financing solutions.'


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