In a statement made by Boris Johnson on 7th September 2021, plans were announced within the policy paper ‘Build Back Better’ that will make our social care system more generous.
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The change that seems to have stolen the spotlight and grabbed the headlines is the new Care Cap but, before we look into the detail of that, the change that is actually likely to affect and benefit more people is that from October 2023, the upper capital limit for care home funding will be increasing from £23,250 (in England and NI) to £100,000.
On the face of it, a quadrupling of this threshold seems incredibly generous. Can you sense a ‘but’ coming?
The ‘but’ is that you would still be expected to contribute most of your income towards anything that the Local Authority would pay, once this threshold is reached, and you would be expected to pay something called ‘tariff income’ from those remaining savings.
Unfortunately, the formula that is used to work out the tariff income contribution means that most people will see their capital continue to erode at quite a rate and they won’t get any meaningful financial assistance for some time.
The lower capital limit, currently £14,250 will increase at the same time to £20,000. This is the point at which tariff income no longer has to be paid towards a person’s care, but they will still have to contribute the majority of their income – as is the case currently.
Also in the September announcement was the headline grabbing statement "from October 2023, no eligible person starting adult social care will have to pay more than £86,000 for personal care over their lifetime”. It will be implemented using legislation already in place under the 2014 Care Act.
The simple answer is ‘no’. Any money that you spend on your care before that date will not count towards the Cap. This new system is not going to be retrospective.
Firstly, you will have to be assessed by your Local Authority as having eligible care and support needs. In February 2020, Age UK reported that 23% of formal requests for care and support were found not to meet the eligibility criteria.
If you are deemed to have eligible needs, the Local Authority will set up a care account for you. If you are arranging your own care, they must provide you with an independent personal budget (IPB). This sets out what it would have cost the Local Authority to meet your needs (if you were not a ‘self-funder’). According to the LaingBuisson calculator tool published in May 2020, English councils paid on average only £596 per week for residential care and £764 per week for nursing care.
It is only going to be your IPB that will count towards the Cap and so if this figure is less than you are paying your chosen Care Home, the difference won’t count. These will be labelled as ‘top-up payments’.
Furthermore, under the new system, everyone will remain responsible for their daily living costs (DLCs) and these won’t count towards the Cap either. Care Homes won’t have to calculate and disclose what proportion of their fee is for DCLs as these will be set as a national, notional amount of £200 per week.
When you reach the Cap (and the example below shows you how long this might take in practice) the Local Authority becomes responsible for meeting your eligible care and support needs. Alternatively, if you have arranged your care to date without their involvement, you can choose to receive a direct payment from the Local Authority and carry on this arrangement.
Once the Cap is reached, you continue to remain responsible for paying the DLCs and all top-up payments required by the Care Home.
The rest of the system as detailed in this article remains unchanged, so:
The Care Cap calculation
Our SOLLA Accredited Care Funding specialists here at the Eldercare Group are delighted to support Lottie’s Care Experts and they can put you in touch with us if you need any further advice and guidance about paying for care.