The Ever-Expanding Safety Net
The gradual demographic shift to an aging population is causing governments to reevaluate how to ensure that appropriate funding is in place to provide for long-term care.
A recent article on the BBC website references the work of a task force commissioned by the British government to consider the feasibility of three different models for the funding of post retirement long term care.
The three plans are:
Partnership - The state guarantees a base level of care, leaving the individual to fund the difference;
Insurance - The same as partnership, except that the government would help set up insurance schemes for people to pay into to cover the difference; and
Comprehensive - Payments of up to £20,000 to be paid by an individual after retirement. In exchange, all social care, except accommodation costs, would be paid for by the government. The payment by the individual could be paid in a lump sum, through installments, or garnished from his or her pension.
The authors of the proposals note that many people will be better off under these models as the average cost of social care for a 65-year-old is £30,000 over the rest of their lifetime. Another aspect of the proposals allows deferral of the costs of residential care until death when the outstanding bill would be a charge against the individual's estate.
Of course, the accepted model will depend on the outcome of a vigorous political debate that will have to weigh the sacrifices required to fund the costs of caring for an aging population.
David M. Smith
