The government has announced some significant changes to the way that people will have to pay for the care they receive in older age. The reforms are aimed at those who need care as they get older, not those who receive support at an earlier age.
These changes are not intended to come into effect until October 2023 and only broad proposals have been announced. The government has yet to give us details of how the proposals will work. However, we do have some insight into how the system may work from previous proposals.
The new proposals may well follow those set out by the Dilnot Commission 10 years ago – it proposed some reforms to the system whereby older people paid for or contributed towards the cost of their care. Those proposals, having been accepted, were withdrawn shortly before implementation.
The current situation
Currently there is a distinction between the funding of care provided in a residential setting, and care which is provided in a domestic or domiciliary setting. The main difference is whether the house is assessed as a resource of value. It is not assessed as a resource of value if the care is delivered in a domiciliary setting. The rules also make a distinction between capital wealth (savings, investments and properties) and income.
The basic rule is that if an individual moves into a care facility on a permanent basis, and if they have capital assets worth more than £23,250, they are expected to use their capital to fund the full cost of their care. When their capital resources drop to £23,250, a sliding scale of contribution is made by the local authority towards the costs of the care. When the capital assets have dropped to £14,250, the local authority assumes full responsibility for paying for care. By the time assets fall to £23,250, an income assessment is also introduced and all of the person’s income is expected to be used to pay for care, subject to a weekly allowance (which is currently stands at £24.90) which is an allowance for personal needs such as soaps, clothing, chiropody, hairdressing etc.
So potentially the majority of a person’s capital assets (including the value of the family home, which is of particular concern) may need to be used to pay for care. Currently, the average annual cost in the UK of a care home placement is £35,000. In practice, in many areas a year’s care costs more than £60,000.
There are a complex set of rules governing which capital assets can and cannot be assessed at any stage. There are similarly complex rules over certain types of income which are not assessed as being available to pay for care.
The purpose of the rule changes is to impose a limit on the amount of capital contribution that an individual needs to make towards the cost of care they may receive.
From October 2023 it is proposed that a person would only contribute towards the cost of their care if their capital assets are greater than £20,000 (up from £14,250). Between £20,000 and £100,000 of capital assets, there is a sliding scale of contributions (this compares with the current sliding scale band of between £14,250 and £23,250).
In addition, the total amount anybody would have to contribute towards the cost of their care (in a care facility or in domiciliary care) would be £86,000.
That sounds much better – but it is not that simple.
- The £86,000 cap only covers the cost of a care home that the local authority would be willing to pay in relation to the individual’s care.
A formal assessment would need to be made and the local authority would decide whether the person actually needed to be in a care home, and which type of care home would be suitable. Having made this assessment, the local authority would then set a budget according to the level of care needs identified.
This is alarming, given the wide variety of types of care home and care provision available. Many care homes which cater mainly for local authority placements have much lower fees, but many people would not wish to choose one of these for themselves or their beloved parent. If a more expensive home is chosen, the cap (the maximum contribution of £86,000) would only count towards the costs associated with a local authority placement, not necessarily the cost of a more expensive home.
- If an individual is receiving care support at home, the care cap will still apply. However, it will only count the cost of the care which the local authority believes the individual requires. Many local authorities currently believe that a need for 24-hour support at home can be satisfied by three visits a day from care providers. If family decide a higher level of care is needed, for safety or quality of life, the additional cost will not count towards the cap of £86,000.
- The greatest concern is associated with what element of the cost of a care facility would count towards the care cost. Most care home fees are a blend of the cost of providing somewhere for the person to live (sometimes referred to as “hotel costs”) and the cost of the support provided by those employed by the care home.
This may include help getting dressed, washing, eating, dealing with dressings for injuries and other active care provision activities. But it is only the care provision costs that will count towards the cap and the proposed change requires care homes to distinguish between the two types of cost. Historically, no more than one third of the cost of a care facility represents care provision, the rest of the fee is attributed to hotel costs.
So, the cap of £86,000 on payments towards care costs is very different from £86,000 worth of care fees paid.
There are a range of other more complex issues that have yet to be covered in the proposals. For example, there is talk of a charge against a family home being an option. How this would operate, when and whether interest would be payable, is not clear.
A final area of concern surrounds the need for everyone’s care arrangements to be made through the local authority, to ensure that the system works, and all receive the ‘best deal’.
This will avoid the double standard in terms of care fees since many care homes will accept a lower fee from local authority placements than from privately-arranged placements.
But it is not clear if, to benefit from the costs cap, you would have to go through the local authority in terms of the placement and so lose your ability to choose? If you chose to go direct to the care facility, would you not be entitled to claim the costs under the cap? Local authorities are also often overworked and very slow at responding to requests.
It is early days. Details of how the system will operate and be implemented have yet to be published. It is good news that the issue is being tackled but the detailed proposals may be less generous than the headlines suggest.