Long Term Care and Nursing Costs on the Isle of Man.

There is a perception amongst some locally that the present system on the island is unfair in the way that it uses a person’s capital and assets to pay for care.

To those who share this opinion, it’s hard to get past the view that such a system appears heavily biased against those who have worked hard and accumulated assets throughout their lives. Indeed, whilst health care is a universal service, free for all at the point of need, social care is not – unless you don’t have any assets and then it is

We’ve always had a sort of inheritance belief here on the island, which is why I suspect inheritance tax has always been frowned upon. So it seems absolutely crazy that we have a system which is very clearly unfair and very clearly biased against those who have assets.

The rules as you might expect can be complicated, but work around the theory that the Government will pay a maximum amount (capped) towards the weekly care home costs, which then has deducted from it any income you have arising from other sources (including basic state pension/private pensions/investments etc) – and for the purposes of the Governments calculations any assets valued at more than £13K are considered to produce income of £1 per week for every £250.

So for example, if you had capital of £20K then you’d be treated as having a weekly income of £28 from it, which would then be classed as being income.

What’s worse is that any capital that you have gifted away in the previous ten years (before entering care) may be deemed as an avoidance measure in order to gain more income support, and therefore even though you may no longer have these assets they could still be included for the purposes of calculating your income.

 

In fairness, Tynwald hasn’t been completely blind to this and they are now considering a number of options to replace the present system;

• Modified Manx offer
• Threshold and Cap schemes
• Asset Protection Guarantee
• Free personal care (Scottish Model)
• Hypothecated Tax/Social Insurance Model
• Mixed (Jersey Model)

So let’s take a look at these in more detail:

Modified Manx Offer

This is actually keeping things more or less as they are at present. There could in time be some changes to the threshold levels – but these would be in keeping with the spirit of the existing model. Given that this is highly unpopular and forcing a rethink, it seems bizarre that this would even be an option – but it is.

Threshold and Cap Schemes

This is where the Government sets a threshold of capital that you’re allowed to keep (before determining eligibility), alongside a cap on the maximum amount that you would be required to pay towards the fees. This is very similar to the proposal the Conservatives had in their doomed 2017 general election manifesto – but don’t let that put you off as it’s a popular way of approaching this funding in other European countries. The downside is that it’s a very much ‘one size fits all’ approach.

Asset Protection Guarantee

This is a modified version of the Threshold and Cap system where essentially each person generates a ‘personal’ threshold and cap subject to their circumstances, and attempts to equalise the problems generated by the ‘one size fits all’ system above, wherein those areas of high property prices might benefit from the cap while areas of low property prices may benefit from the threshold.

Free Personal Care

This is the model that they have in Scotland. As well as being expensive it also generates a sort of ‘needs based cliff edge’ where you’re either assisted according to your needs or you’re not – because it does not have the graded levels of support that is usually available in a means tested system.

Hypothecated Tax Model

This is where we set aside a special tax specifically to pay for our needs. It isn’t actually in itself a model just a theory about how we would pay for social care. There has been a lot of discussion in the UK about introducing a ‘health tax’ but the problem is the same as we have with NI contributions and other taxes – in the end Governments just tend to use it as another form of revenue and spend it on their priorities, not necessarily the reason it was introduced.

Mixed (Jersey Model)

Jersey were able to devise and roll-out their own model, in reaction to local demands, that protects assets (particularly housing assets) while reflecting a realistic expectation of private payment and supporting those who cannot afford to pay. To qualify for Long Term Care (LTC) the person needs to be assessed for the three parts of the scheme:

• LTC benefit
• LTC support
• LTC loan

The LTC benefit is available to individuals to meet the costs of their care once they have paid for their own care costs up to a certain level, known as the Care Cost Cap.

LTC support is a means tested financial support and is available to help meet care and living costs in a care home.

Financial support is also available to homeowners facing high care bills through a property loan secured against a family home. Whether an individual can access a property loan is dependent on the value and type of assets held by them or their partner.

Conclusion

We’re all living longer – I have said that often enough.

The question is how are we going to fund this part of our life in a manner which is fair and even handed? In my opinion, we need to take a leaf out of Jersey’s book and find something which takes account of the unique circumstances of our island and which maybe takes a blend from a number of the different possible approaches. I also believe that marrying both health and social care together would make the transition more seamless.