Before an individual can receive publicly funded adult social care they will be assessed to make sure their needs are high enough and their assets – for example, their savings or home – are low enough.
The Government has recently announced that from October 2023 no-one will pay more than £86,000 for their care costs during their lifetime for care either at home or in a care home.
Adult social care funding has been under pressure for several years and it is argued that this has lead to a wide range of issues including;
- An increasing number of people not having their care fees met
- People not eligible for local authority support facing care costs of over £100k which may mean them having to sell their home
- Financial stability of care providers in question
- Workforce issued within the care sector with over 100,000 vacancies due to poor pay and employment conditions.
The key points to note:
- Nothing will happen until 2023. Counting towards the fee cap will not begin until then, so this is no help to those currently receiving assistance.
- The cap only applies to Care costs and not the full cost of care. It does not include the costs associated with providing accommodation and food – so called ‘Hotel’ costs. The more expensive the care home, the higher these hotel costs. The real level of counting towards the cap is expected to be between £16,000 and £20,000 a year. It could therefore take 5 years to reach the cap.
- Only those deemed eligible by the Local Authority will be counted towards the cap. At present less than 50% of those applying for Local Authority assistance are granted it and by no means all of them will be eligible for the cap. The process as written in law in the Care Act 2015 would only apply to those with higher levels of need who are likely to have shorter life expectancies. Estimates from 2016 suggested that only 11% of those needing care would ever reach the care fees cap.
- The means test threshold is increasing from the current £23,250 to £100,000. This means those with assets under £100k will be eligible for some state support. Anyone with less than £20,000 of assets won’t have to pay anything towards their care from their assets. However, even if an individual does not have to contribute to the costs of their care from their assets, they may have to still contribute from any income they have apart from £24.90 per week for their own expenses.
The reality
A central aim of the ‘capped cost’ reforms is to achieve peace of mind among the population about their protection from catastrophic care costs. However, by uprating the value of the ‘cap’ and means test thresholds with inflation, there is a strong risk that the ‘capped cost’ reforms will leave individuals in a continual state of alarm at their growing liability for their care costs, i.e. that it will have precisely the opposite effect intended.
In addition, considerable local variation will exist in when individuals reach the ‘cap’, potentially creating confusion among the public and undermining the aims of the reforms around clarity and peace of mind.
The ‘cap’ on private expenditure on assessed care costs under the ‘capped cost’ reforms is fixed at £86,000, and progress toward the ‘cap’ will be metered on the basis of a council’s ‘usual cost’ rate minus the standardised ‘living cost’ contribution of approx. £250 per week.
However, because of differences in ‘usual cost’ rates across England, in part reflecting differences in local care markets, there will be very large differences in when individuals reach the ‘cap’.
To meet its objectives, the ‘capped cost’ model needs to enhance peace of mind among the (older) population about how much they will have to spend on care. Although a single ‘cap’ of £86,000 across England will apply, this will mean very different things when measured in ‘Years of care’ that people pay for before they reach the ‘cap’, which could be anything between three and eight years in different parts of the country.
Additionally, there has to be some tackling of the ‘persistent unfairness’ in the social care system to enable self-funders to ask the local authority to arrange care on their behalf so they can get a better deal. Currently people who fund their own care usually pay higher fees than people who are funded by their local council. In particular, this means that a person’s Personal Budget – i.e. the cost of care they are assessed as requiring by their local authority – will almost always be lower than their actual private expenditure on care.
Many people will learn about the ‘cap’ on care costs by talking to friends and family, and it is inevitable that some people will talk about the ‘cap’ in relation to how many years in residential care that someone will have to pay for before they reach the ‘cap’. Ultimately, the wide differences in how long it takes people to reach the ‘cap’ could create confusion, misunderstanding as well as accusations of unfairness, since people are far more likely to live for three years in a care home than for eight. And remember, the care cap does not cover all costs – accommodation and food costs are not included in the cap and only those people deemed eligible by the local authority will be counted towards the cap.
The vast majority of domiciliary and residential care in England is provided by the independent sector, with prices determined by the operation of market forces. Most local authorities have a ‘usual cost’ rate which is the standard amount they will pay for different types of domiciliary and residential care, but which are almost always below the average amount that private individuals pay for care.
Indeed, it is widely accepted that in response to the downward pressure on fee levels paid by local authorities, some residential care providers are then forced to charge more to private individuals in order to remain sustainable, effectively resulting in a ‘cross-subsidy’ from self-funders to local authorities.
The difference between what self-funders and local authorities pay for care has very significant implications for the operation of the ‘capped cost’ model. Ultimately, this undermines the extent of asset protection provided by the ‘capped cost’ model: By the time individuals reach the ‘cap’, the vast majority will have paid more toward their care costs than £86,000, even after taking account of ‘living cost’ contributions.
Beyond the ‘cap’, individuals will go on making out-of-pocket payments for their care costs because their Personal Budget will be lower than what they pay for care. For some self-funders in residential care, this could amount to hundreds of pounds each week.
In short, the ‘capped cost’ model will not cap the private costs of care. The Dilnot Commission estimates that 1 in 10 people might pay more than £100,000 for their care.
It’s clearly apparent that the new proposals are not a million miles away from current legislation meaning that planning ahead is just as important as ever in order that families remain in control of the destiny of their loved ones.
Beneficial Trust & Will Company has been providing Estate Planning services to families for more than 20 years and with our help you can do the same for your clients to help preserve their wealth and ensure their families inherit in the future.
Sources:
The Strategic Society Centre
The Kings Fund