You probably know by now that last week’s snap election was a disaster for UK Prime Minister Theresa May and her Conservative Party. But you may not know that one issue that cost the Tories their strong parliamentary majority was a proposal that came to be known as the “dementia tax.”  It is a story that has some important lessons for the US.

In the run-up to the election, May proposed major changes in the way the UK provides long-term care.  The Tory manifesto’s aim was to make public support for services more broadly available to low-income people and provide more equal assistance to those living at home and in residential care. But that was not how it played to voters. Hence: the dementia tax.

To understand what May proposed, you first need to know how the UK currently funds long-term care. It is not simple.

How Long-Term Care Works Today

If the care you need is primary medical in nature, it is provided, at no cost, by the National Health System (NHS). However, if it is mostly social support and personal assistance, it is provided by local governments. Much like the US Medicaid system, the level of assistance varies by jurisdiction, though in the UK it may often be towns or cities.

No matter where you live, public support is based on assets. The test varies within the UK, but in England you are not eligible for public benefits unless you have £23,250 or less (equal to about $30,000 US).  Depending on where you live, you may still have to pay some share of your care costs even if your assets are below the threshold.

If you live in residential care (such as the UK equivalent of assisted living) or in a nursing home, the value of your home is counted towards the £23,250 limit. However, you may put off paying your share of care until after death, when the government will collect unpaid costs from your estate or from the sale of your home.

The rules are different if you receive care at home. In that case, your house is excluded from the £23,250 cap on assets but you must pay the bills as they come.

May’s Plan

May proposed to raise the income limit to £100,000 for everyone (about $127,000 US), including the asset value of homes no matter where they are living. She would also allow everyone to delay paying their share of care until after death, even if they are living at home. Thus, her plan would put everyone on the same footing no matter where they are receiving care.