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Inheritance Levy for Long Term Care

The Government have proposed a £12,000 levy to fund treatment for the elderly which was announced in a green paper on long term care. Instead of forcing house sales to fund health treatment a single payment can be ma d e to t h e Government which could be paid on retirement or deducted from the estate after death. The proposal is designed to help fund nursing home bills and cope with an aging population, preventing the sale of homes to meet massive bills. The proposal has been deemed controversial with many seeing it as a new stealth tax but a study by Aides on consumer focus groups estimate that up to 80% of the population would rather pay the one of insurance payment rather than risk losing their homes and savings. Currently one in five people will need care in their old age and anyone with savings over £22,250 will have to pay towards the care which costs an average of £600 per week. The one off fee would ensure free long term care and would avoid the “unfair lottery” of the current system as described by Patricia Hewitt, the former health secretary. She also commented that she thought “people would be willing to trade a certain amount of their inheritance for the reassurance of knowing that their elderly parent was going to be looked after free of charge”. The proposal is just one of several options for reform outlined in the green paper which is to be published this month. A ‘radical rethink’ was promised in the pre budget report of 2007 and suggestions have been made that the reform is an attempt to win back the vote of the elderly population. It has been estimated by charity Counsel and Care that the inheritance tax levy could raise up to £2.9billion, which could then be used to spread the cost of elderly care. Last year it conducted a study in which it found that the biggest concern for pensioners was how to pay for a place. Yesterday its chief executive Stephen Burke welcomed the possibility of a levy. He said: “It would be a social insurance scheme and a way of people sharing the risk and the cost of care. We are facing a massive funding shortfall at the moment. A lot of people think that the current system is unfair and inconsistent. This idea would allow for people to be clear about what they have to pay for and what they would get and we would welcome such a proposal.”

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