Insights

Social Care charging reform – an update

We have previously discussed the reforms that the Government are introducing on the way social care is paid for. The reforms, in short, are:

  1. A cap on care costs of £86,000 (introduced from October 2023) – this is the maximum that anyone will have to pay for their “eligible care needs” during their lifetime.
  2. A new lower means test threshold of £20,000 of assets (increased from £14,250) – people with assets below this figure will not have to spend any more capital on care.
  3. A new upper means test threshold of £100,000 of assets (increased from £23,250) – people with assets above this figure will have to pay the full cost of their care.

At that time, we knew that there were some important details missing that would be clarified “later in the year”. We now have some of this detail.

30th November 2021


So, what’s new?

1) “Board & Lodging costs”

At the time of the announcement, it was clear that any charge for the normal cost of accommodation would be discounted as part of the cap, but there was no detail of how much this charge would be or how it would be calculated. We now have clarity that this charge will be a universal national amount of £200 per week, which will cover all settings where care is delivered i.e., at home as well as in a care setting.

2) Minimum income

The Government has now confirmed that the minimum amount of income for those receiving financial support for their care needs that can be retained will now increase in line with inflation. This changes with effect from April 2022 and is an important modification from the current system. The amount differs depending on where care is delivered. Please contact one of the Later Life team for further information.

3) How is the cap calculated?

One important aspect that was missing from the previous announcement was how progress towards the cap would be calculated. We now have a clearer picture of this:

1) Every person wanting to utilise the cap will need an assessment by the local authority of their needs before the changes take effect in October 2023. This will doubtless cause a problem as we are very aware of limited local authority resources at the moment, let alone when all the current “self-funders” need assessing too!

2) The amount that will count towards the cap, including for those receiving some local authority financial support, will be the actual personal contribution made by the individual towards their assessed cost of care, not the full amount. This is a major change to how this was originally recommended by the Dilnot commission in 2011, and the most controversial aspect. In fact, this approach was initially ruled out as ‘unfair’. In short it will mean that it will take significantly longer for the £86,000 cap to be reached than it would appear, and those with modest assets will end up spending a higher proportion on care than those with high levels of assets.

4) What will people have to pay for their care?

1) Those with capital above the new upper threshold of £100,000 will need to fully fund all their care.

2) Those with capital below the new lower threshold of £20,000 will only have to pay ’what they can afford from their income’. This follows on from the point above about minimum income.

3) Those with capital between the thresholds will pay what they can afford from their income as above but will be deemed to have £1 per week income for each £250 of capital above £20,000, called Tariff Income. With the upper threshold of £100,000, initially the tariff income will be £320 per week (£100,000 – £20,000 = £80,000, divided by £250 = £320 per week income) which will lead to the erosion of that capital quite quickly.

5) What might this mean for me?

1) At this point, there is still insufficient information to be able to provide a worked example. We expect more clarity next year once the consultation process is complete. It is clear though, given the above points, that it will take a long time for people to hit the cap

2) Everyone will also need to continue to pay the Daily Living Costs amount of £200 per week once the cap is reached.

3) More detail is expected from the Government following the development of the important statutory guidance, due for publication in spring next year.


Summary

It certainly helps to have a little more clarity on how this new regime will work, but we look forward to more detailed worked examples from the Government. Their current examples are lacking in detailed calculations. We also look forward to updated detailed guidance next year, so we can further develop our understanding. In the meantime, we hope that you can see that the reforms on how care is funded is, as ever, not quite as simple as they first appear. The devil is always in the detail! Advice in this specialist area is essential so that you can make informed care decisions. For further help, please don’t hesitate to contact your usual Old Mill contact or one of the Later Life team.