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Social Care Costs – one size cap doesn’t fit all

Social Care Costs – one size cap doesn’t fit all

The Government’s proposals for funding social care costs passed through The House of Commons this week.  Whilst there is progress towards solving this huge issue, with a care cap of £86,000, the proposals are more complicated than they seem. 

We’ve been through them with a fine toothcomb to provide this guide to social care costs; one cap certainly doesn’t fit all.  7 key points to consider: 

  • The new £86k cap only includes privately funded contributions to care
  • Care for dementia, unlike that for other diseases, is still not included in NHS funding
  • Everyone will have to pay a “daily living allowance” of £200 per week
  • Everyone with assets above £20,000 will have to contribute a “tariff income” levy which is separate to any calculations for the care cap
  • The £86k cap is not proportional to a persons assets – it is a fixed amount, not a sliding scale depending on what you own/have
  • Top up fees for privately funded places in care homes will need to be paid by the individual after the £86k cap is reached
  • Some people may still need to sell their homes to pay for care

1. From April 2023 no-one will have to pay more than £86k for care costs

This is good news. It ends some of the uncertainty as to the maximum anyone may have to pay for their care. 

The less good news is that the £86,000 cap will only be reached through privately funded care, ie care that you pay for yourself. Any contributions made by local authorities, and the NHS, will be excluded.

The other less good news is that it is for care costs alone; a daily living allowance covering food and accommodation at home or in a care home is not included in this figure. This element has also been capped at £200 per week (at home or in a care home).

Alongside this exclusion is also “tariff income”, an amount approximately £200 per week, levied on assets above £20,000 towards care.

So, on the surface it would appear that everyone except those with the minimum means will have to pay £86,000 before becoming eligible for funding. More of the implications and why this matters below.

2. The care funding 'floor' has been raised to £100,000 from April 2023

Currently if you have more than £23,500 in assets in England you are responsible for all care costs.  From April 2023 this is increased to £100,000. 

The good news is that people get to keep more of their assets at the point they become eligible for care funding support.

However, anyone with assets between £20k – £100k will still have to contribute the “tariff income” of approximately £200 per week, depending on the amount of assets owned.

3. Means tested support will be available for those with assets between £20k - £100k

From April 23 anyone with assets between £20k – £100k will be eligible for some means tested care support from the local authority. Essentially more people will get to keep more of their assets, and be eligible for care support because the threshold has been raised to £100,000; more people will not have to run their assets down below £100k before becoming eligible. 

4. No-one with assets below £20,000 will pay for their care

*Those with the least in assets will not need to pay for any of their care. 

The kicker here is that if people with no assets but income (pension etc), will pay the tariff income contribution.

Implications of these proposals

When Sir Andrew Dilnot first brought in his social care reform proposals a decade ago one of the fundamentals was creating a link between means tested care and the care cap;  ie local authority funded care should be included to some degree in any care cap calculations. This has now been de-linked under the current proposals.

What does de-linking means tested care from the new £86k care cap mean?

“if you’ve got more, you keep more” because the £86,000 is a fixed amount for everyone with £100k plus in assets. In practice this plays out as follows:

If you own a home worth £750,000 and you spend on privately funded care to the £86k cap – you are left with £664,000.

If you own a home worth £100,000 and you spend on privately funded care to the £86k cap – you are left with £20,000 (£20k because this is the minimum below which no-one needs to pay for their care).

The £86,000 is not proportional to individual assets, what you own, and aside from “the more you have, the more you keep” implication, there will likely be some people who will still need to sell their homes to pay for care. (If there is a remaining partner or spouse living in the home, then it is not included in the care cap calculations).

Care homes charge higher rates to private funders for the same room and service that they charge for local authority funded places. People will still, on current information available, continue to have to pay any “top up” fees to remain in that care home once past the £86k threshold. Ie if your personal choice is to remain in a more expensive care home than one which the local authority would pay for, then you will have to pay the difference in the costs in order to stay there.

The less you have the longer you pay

A slightly separate argument, but also important, particularly for financial planning purposes:

If you are privately paying the full £860 per week for care, then you will reach the care cap of £86,000 in 100 weeks (just under 2 years);

If you are part paying contributions towards the £860, with other contributions from the local authority to make up the total then it will take proportionately longer for you to reach the £86,000 care cap figure.

So, whilst the numbers don’t change, it comes down to timing and planning to reach the £86,000 care cap.  It could mean someone deciding to refuse means-tested care and running down their assets* that  to reach the cap faster, or to hit the funding floor of £20,000 more quickly. 

*this is known as deprivation of assets – something the local authority will penalise if it is found to be deliberate. 

What happens next?

The Govt. is due to publish a White Paper which should lay out all the proposed reforms to health and social care, including these funding proposals.  Whether the bigger context of the broader approach in the White Paper will alleviate the concerns is anyone’s guess.  The House of Lords will also receive the current funding proposals to debate; whether they send them back to The House of Commons to be amended is also anyone’s guess for now.

The Age Space view

The burden of social care funding remains on the individual and the family, particularly as dementia care is still not funded by the NHS in the same way as other diseases/conditions. The care funding cap is progress, but without a link to means-testing it is not proportional to the assets individuals have, not a fixed rate for all.  And, things like the tariff income, care home top-up fees are all important parts of the whole…one size of cap certainly doesn’t fit all.