THE GOVERNMENT will not be able to meet the crushing cost of long-term care for the elderly and must introduce tax breaks to avert the looming crisis, according to one of the UK’s leading insurers.
Gary Shaughnessy, chief executive of Zurich’s UK life insurance business, told City A.M. that demand for long-term care is set to soar as life expectancy grows, and individuals should be offered incentives to plan ahead.
“In the future the state will not be able to afford the cost of long-term care for the growing number of elderly people,” he said. “The government must consider offering tax breaks at retirement for those willing to invest part of their pension – perhaps around £10,000 – in some form of insurance for long-term care cover.”
His comments come as the government prepares to respond to the Dilnot report into long-term care funding. It is expected to introduce a £75,000 cap on the total amount an individual must pay towards their care home costs before the state picks up the rest of the bill – more than double the £35,000 recommended in the report.
Shaughnessy fears such a cap will force people to set aside a substantial sum to cover the eventuality that they need long-term care at the end of their life.
He believes the insurance industry can help spread the risk with product bought at retirement that will cover care costs up to the cap. This would leave the elderly safe in the knowledge that they are covered for all eventualities and free to spend the remainder of their savings how they see fit.
Research by Zurich suggests that if the government offered incentives for people to provide for some of the costs of care, it would be in a much stronger position when it comes to asking people who need long term care to make a contribution.
Health secretary Jeremy Hunt said: “We still have a long way to go if this country is going to be one of the best places in Europe to grow old. There is no doubt capping costs – the principle recommended by Dilnot – is the best model – the key question is how to fund it sensibly given the current deficit. We are looking at how to achieve this, along with taking action to ensure people do not have to sell their homes to pay for care.”