In September 2021 the government set out its proposed plans for adult social care reform in England. Most importantly, this includes a lifetime cap on the amount people will need to spend on personal care. The plan also includes a more generous means test for local authority support. The purpose of this reform is to allow people to be able to maximise and retain assets, for example, to pass on to their family. Here, we explore the impact of this reform and whether this is as good as it may sound.
Current Social Care System
The current care system does not have any cap so there is no limit on the amount someone may have to pay for care fees. This can of course be extremely expensive and have significant impact on a person’s assets.
Currently, if a person needs care services they will have to fund this themselves if they have assets worth over £23,250. For assets between £14,250 and £23,250 a contribution towards the care costs applies. A person does not have to pay for care costs if they have assets below £14,250.
From October 2023, the government plans to introduce a new £86,000 cap on the amount anyone in England will need to spend on their personal care over their lifetime to meet their care and support needs. The cap will be implemented for adults of all ages, without exemption.
In addition, the upper capital limit, i.e. the point at which people become eligible to receive some financial support from their local authority, will rise to £100,000. This is a significant rise from the current limit of £23,250. This new upper capital limit will apply regardless of the circumstances or setting in which an individual receives care. The lower capital limit, i.e. the threshold below which people will not have to pay anything at all for their care will increase to £20,000 from the current £14,250. Anyone above the upper capital limit of £100,000 from October 2023 will be classed as a self-funder.
The means test for financial support will continue to work in the same way as it does currently by determining what someone can afford to contribute towards the costs of their care based on the amount of assets and income a person has.
It is important to note, however, that the cap will not cover the daily living costs for people in care homes and people will remain responsible for their daily living costs throughout their care journey, including after they reach the cap. In reality, what this means is that even under the new capped system, everyone will still remain responsible for living costs, such as rent, food and utility bills and this will apply equally to those in a care home as to those in their own home. Instead, the cap only applies to personal care costs. The term ‘personal care costs’ refers only to the components of any care package considered to be related to personal care, not accommodation costs. These costs will be set nationally at a notional amount of £200 per week. The reasoning behind this is that such costs would have to be paid generally regardless of care circumstances.
This approach is intended to ensure a level playing field between those who receive care in a care home and those receiving care in their own home. Where someone’s needs are being met in a care home these costs, referred to as daily living costs, are the proportion of residential care fees not directly linked to personal care, and these will not count towards the cap on care fees.
From October 2023, anyone assessed by a local authority as having eligible care and support needs will begin to progress towards the cap. This applies to new care users or existing social care users. But, note that costs already paid out before October 2023 will not count towards the cap. The local authority where the person resides will start a care account, which is personalised to the individual and they will monitor their progress towards the cap.
The local authority will assess the person’s care and support needs and then consider how those needs will be met, for example, whether someone’s needs are best met in a care home, whether they should have support in their own home and for how many hours, or whether they could benefit from community-based services. It is this agreed provision that forms the basis of the costs which count towards the cap, less the daily living costs for those receiving care in a care home. Anything above that assessed level of need can be paid for additionally but will not count towards the care cap.
It is also worth noting that the cap only applies to the cost of the care home willing to be paid for by the local authority, which may not be the preferred or most convenient choice. People receiving care, or someone on their behalf, may choose to make additional payments for a superior or alternative choice of accommodation or care arrangement. However, these top-up payments will not count towards the cap and will still be payable by the person once the cap has been reached.
When a person reaches the cap, the local authority becomes responsible for meeting the person’s eligible care and support needs and for paying the cost of the care needed to meet those needs.
The level of the cap, the upper and lower capital limits and the notional level of daily living costs will be reviewed and updated annually.