New Policy Brief - Long term care

The Policy Centre has published a New Policy Brief - Long term care. The summary is set out below.

Long-term care is a significant public policy issue in many countries.

The key issue is that with an ageing population a growing number of elderly people cannot look after themselves and need support.

The Long-Term Care (Jersey) Law 2012 provided for the introduction of the Long-Term Care Scheme with effect from 2014, funded by an additional tax on income and a government contribution.

Eligibility for the scheme depends on meeting residential requirements. The support covers care and living costs in a care home, care costs in own home and, if eligibility requirements are met, income support to meet living costs.

Taxpayers pay an additional 1.5% tax to fund the scheme. The rate was introduced at 0.5% in January 2015, increased to 1.0% in January 2016 and to 1.5% in January 2020. The government also makes a contribution. In 2024, contributions totalled £47 million, the government grant was £37 million, and benefits paid totalled £82 million.

There have been two actuarial reviews of the scheme. A review as at December 2021 concluded that contributions were more than sufficient to meet levels of expenditure, and that that was expected to remain the case until 2029. Thereafter, the breakeven contribution rate was projected to increase to 2.0% by 2041 and to 2.5% by the end of the projection period (2047).

However, benefit payments have increased more than anticipated, largely because of an increase in the number of people receiving benefits. This has prompted the government to plan for an increase in the funding rate by 1.0 percentage point to 2.5% from January 2027. A review of the scheme is also being undertaken. That review will need to analyse how the cost of the scheme has risen much more than had been anticipated in the most recent actuarial review.

There are four options for addressing the increased costs –

• Tightening the eligibility criteria, such as increasing the period for which costs must be paid before there is an entitlement to benefits.
• Reducing benefits, for example meeting a smaller proportion of the cost of care.
• Increasing the contribution rate as envisaged in the proposed budget.
• Increasing the taxpayer contribution.

None of these options is politically attractive, but one or more of them must be pursued. That requires a political decision to be taken

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