What Does the Social Care Cap mean for most people?
Eleven years, five Green Papers, and two U-turns since the Dilnot Commission recommended the introduction of a social care costs cap, the Government announced that that the long awaited care cap figure would be £86,000 from October 2023.
This was followed by news that the social care reforms will be funded by the Health and Social Care Levy, involving an increase of 1.25% in national insurance contributions. The Government conceded that over the first three years of the reforms, adult social care will receive less than half of the £12bn raised through the levy.
Ministers pushed the amendment through despite a Tory MP rebellion about a north /south property value divide. The media concentrated on the fact that only self-funded care payments would count towards the cap, not payments made by social services. Dilnot had recommended the latter to ensure a more level playing field between the haves and have nots.
Will people only pay £86,000 for lifetime care costs?
In a nutshell, no. The cap will only apply to the elements of a person’s care package that the local authority considers to be “personal care”. The person’s daily living costs, which will be set at a national rate of £200 per week, will not count towards the cap. All care home residents will have to pay £200 per week living costs throughout their stay in a care home – including after they reach the £86,000 cap.
Furthermore, the person’s progress to the £86,000 cap will be based on a weekly personal budget figure set by the local authority, and not the actual market costs that the person is paying.
At present, self-funders pay 42% more for the same care in the same care home as local authority funded residents.
The Government say that the new rules will require care homes to accept the lower local authority rate for private paying residents, but it is not clear how they intend to achieve this.
For example, if a person has a personal budget of £600 per week, but their care home placement costs £800 per week, plus £200 per week for living costs, their total will be £1000 per week. £600 will count towards the care cap and £400 will be excluded from the care cap. This means it will take 2.75 years for them to reach the £86,000 care costs cap. By then they would have spent £143,200.
At that stage the local authority will start paying £600 per week. If the care home don’t then agree to drop their fees to the local authority rate, this will leave the care home resident to find £400 per week or almost £21,000 per year for the rest of their time in the care home. This may mean they need to borrow against their home to pay the extra, or need a relative to pay a third party top up. This is not much different to the current system.
Will anyone be better off?
The main difference for people of modest means with long term support needs in a care home setting is that they will be able to keep the last £20,000 of their capital. Under the current rules, they can only keep the last £14,250 of their capital. So people will be just £5,750 better off. But this is where the capital thresholds would have got to if the Government had not frozen them under austerity measures in 2010.
Where someone has assets between £20,000 and £100,000, they are expected to use this to pay towards care costs on a tapered scale of 20% per year. So they may end up with more than £20,000 inheritance to leave to their family if they do not outlive their limited savings.
However, someone who starts the care journey, whether at home or in a care home, with assets significantly above £100,000 will be considerably better off under the new means tested care fee cap rules.
Under the current rules, a care home resident with £500,000 in assessable assets has to self-fund their placement for almost 8 years before the local authority step in; and will have only £23,250 to leave as inheritance. The new rules allow this person to save £31,000 per year from their assets after they reach the cap.
Will the social care reforms help anyone?
In 2020/21, there were 841,000 people in England receiving long term support from social services, and 50% of these are working aged adults. What matters to them is not what they can leave as inheritance, but being able to receive sufficient basic hours per week of good quality care and avoiding further cuts to their support package.
The reality is that the proposed care cap reforms will make little difference to most people with long term care and support needs; and most people will continue to pay much more than £86,000 in their lifetime.
The White Paper promises “choice, control and support to live independent lives”, together with “outstanding quality and tailored care and support”. These are impressive ideals, but they will never become a reality unless local authorities are properly resourced in order to implement them.
It is hard to see how the Government’s reform, which is focused on limiting the amount that the wealthiest in society pay towards their care costs, will address the key issue of inequality in social care.
If you need advice about planning or paying for care for yourself or a loved one, eligibility for state funding, or cuts to support packages, please contact us to speak to our expert Community Care Law team on 01273 609911, or email email@example.com.