A market for insurance to pay social care bills was put forward today by care minister Norman Lamb as he published detailed plans for how the £72,000 lifetime cap on care costs might work.
There will also be access to independent financial advice to help everyone understand their needs and plan for the future.
The Department for Health said the sweeping reforms would give more peace of mind over the costs of old age or living with a disability and end the unfairness of unlimited care costs, identified by the independent Commission on the Funding of Care and Support, which was chaired by Sir Andrew Dilnot and reported in 2011.
In a consultation paper, published today, the Liberal Democrat minister new products might be developed by the financial services sector, which was looking at how pensions and expanded life or health insurance could help people plan for their old age.
Lamb is seeking views in the next three months on proposals including:
· annual 'care account' statements to project when someone will reach the cap or qualify for additional financial support;
· the option of joining a not-for-profit 'deferred payment' scheme, where the local council pays people's residential care fees and the person is able to repay from their estate, allowing them to keep their home during their lifetime.
From 2016 there will be a £72,000 cap on eligible care costs, additional financial help for people with less than £118,000 in assets including their home and, from 2015, a scheme to prevent anyone having to sell their home in their lifetime.
Lamb said: 'These reforms bring reassurance to millions of people by ending the existing unfair system so no one need face unlimited care costs or the prospect of selling their home in their lifetime.
'No one wants to face an unknown future. This overhaul of the way care is paid for gives people the certainty and peace of mind we all deserve.'
At the heart of the new system is an assessment of a person's care and support needs, helping them to receive help that could prevent or postpone their need for formal care. The assessment will establish whether a person's needs are eligible and allow councils to track care costs, taking over payment once the cap is reached.
For the first 12 weeks in residential care, no-one will be expected to use the value of their home to pay their fees, the paper confirmed. The option of a deferred payment will help an estimated 40,000 people who sell their home each to year to pay for residential care. Local authorities will be able to charge interest to pay the running costs of deferred payment schemes, but a cap to protect those in care for a long time will be considered.
The department said fewer than 50% of people were aware they might need to pay for their care and support. So the Care Bill set out legal duties for authorities to provide local people with information on the costs of care, the financial support available, on financial products and other options, and on practical arrangements such as appointing a lasting power of attorney.
The consultation is also looking at how councils can arrange access to independent financial advice and encourage people to think about their future needs, and what the lower cap might be for those who have eligible needs and who are below state pension age.