Care Fees: Proposed Funding Reforms

In September 2021, the government set out its new plan and proposed reforms for Adult Social Care in England.

As it stands, those who have capital above £23,250 are classed as self-funders, and those who have capital below £14,250 are classed as state-funded. However, this is now set to change.

Changes to the current limits

There is a change to the current limits within the government’s new plan for social care. The upper capital limit is currently set at £23,250, however, in the proposed reforms, this will rise to £100,000. Likewise, the lower capital limit is presently set at £14,250 but is set to rise to £20,000. The government says that those with less than £100,000 of chargeable assets will never contribute more than 20% of these assets per year.

On top of this, the government has also proposed a cap, limiting the amount people will spend to meet their care and support needs. The cap will only apply to personal care costs and will come into force in October 2023, with the limit being £86,000. This does not cover hotel, accommodation, food, or utility bills. Once the cap is reached, the local authority becomes responsible for meeting only the person’s support and care needs.

What’s the reason for the cap?

The reasoning behind the cap is to ensure a fair playing field between those who are receiving care in a care home and those receiving care from their own home. However, can this be said to be fair? Those with different income levels will reach the cap at different points as, ultimately, wealthier clients will reach the cap quicker than those with less wealth. Those with less wealth will spend most of their assets on care fees.

The cap does not include the client’s daily living costs and ‘top-up fees’ that may be required. Therefore, none of these costs will be taken into account in reaching the £86,000 cap.

What does this mean?

As mentioned above, the cap only covers personal care costs. Their daily living costs are excluded from the cap, including rent, food, and utility bills. This applies to those residing in a care home or those in their own residence. So even if the client has spent a total sum of £86,000 on their care and support needs, they will still need to pay for their daily living costs. Research found that this could see more than 70% of the client’s savings and wealth go towards care costs, if not more. Also not included in the cap are those who pay top-up fees. These payments will not count towards the cap and even when the cap is reached, they will still be payable.

It is vital that clients are aware of the possible reforms when planning for the future.

To learn more about long-term care planning and the possible implications of these reforms, attend our course on LPA’s, Deputyship, Financial Assessment and Challenges.