Earlier this year, the Government announced that it would drastically reform care funding to remove the uncertainty and fear caused by unlimited care costs and ensure that individuals receive the care and support they need as soon as they need it.
WHY ARE THESE PROPOSALS BEING MADE?
There is concern that the fear of unlimited care costs and the uncertainty over eligibility for financial support means that individuals defer making decisions regarding their care needs until their health has deteriorated to such an extent they need more complex and expensive care. It is hoped that the implementation of a clear system of funding will allow individuals to seek local authority services earlier, make informed decisions about their care and plan how they will to pay for it in advance.
WHAT ARE THE PROPOSALS?
1. Increase in allowable capital limits for financial support
Currently, only individuals with assets worth less than £23,250 are eligible for local authority financial support towards their personal care and basic household needs ("eligible needs").The proposed legislation increases the allowable level of assets from 1 April 2016 that an individual can have and still receive financial support:
| Group | Individual's Assets | Contributions & level of financial support |
| A | Less than £17,000 |
Only contribute towards their eligible needs from their income with the local authority meeting the remaining costs. |
| B | Assets of £17,000-£27,000 (where the person's property is excluded from their financial assessment) |
Qualify for some financial support. Contributes all income (minus amount for personal expenses) as well as a contribution from their assets above £17,000 (contribution set by a fixed formula). Local authority meets remaining costs. |
| C | Assets above £17,000-£118,000 (where the person's property is included in their assessment) |
Qualify for the same level of financial support as those in Group B. |
| D | Assets above £27,000 (if property value excluded) or above £118,000 (if property value included) |
Will have to meet full costs of their care. |
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A person's property will be excluded from their assessment if it is occupied by their partner, a relative who is 60 or over or incapacitated or a child under the age of 16. |
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It should be noted that while receiving residential care, daily living costs such as those relating to food, accommodation and utilities will continue to be the responsibility of the individual as these are the kinds of costs that an individual would expect to pay when still in their own home.
2. The care costs cap
From 1 April 2016, there will be a cap on care costs of £72,000 for individuals of state pension age. Costs incurred before 1 April 2016, will not count towards the cap, but costs relating to eligible needs after this date will be included. Everyone will benefit from the protection of the cap regardless of their level of wealth. This is a major change from the current position where individuals with modest wealth can face losing all of their savings and their home to pay for care costs.
The cap takes account of the individual's as well as the local authority's contributions towards their care needs. Therefore, where individuals are eligible to receive financial support from the local authority i.e. those individuals in Groups A, B and C above, their contributions towards the cap will be both those from the individuals themselves and the local authority. As a result, it is predicted that around two thirds of people will not themselves be contributing the full £72,000 to reach the cap.
The Government have produced the following table in their consultation entitled 'Caring for our future' to illustrate the potential change in an individual's contributions to their care costs before and after the cap is introduced:
| Initial Assets | £250,000 | £200,000 | £150,000 | £100,000 | £70,000 | £50,000 | £40,000 | £17,000 or less |
| Current contributions without cap | £177,000 | £173,000 | £127,000 | £79,000 | £50,000 | £31,000 | £21,000 | £0 |
| Contributions with £72,000 cap | £72,000 | £72,000 | £67,000 | £45,000 | £30,000 | £17,000 | £12,000 | £0 |
| N.B Department of Health analysis based on assumed residential care costs of around £625 per week with contribution o daily living costs of around £230 per week. The individual has income to cover daily living costs and contributes from their assets towards their care costs. | ||||||||
3. Deferred Payment Agreements
The proposals would require all local authorities to offer deferred payment agreements to qualifying individuals. The local authorities would meet the residential care and accommodation costs at the time of need and the individual would then repay these costs at a later date, usually from their estate or sale of their home after death.
To qualify, an individual would need to be a person who had been assessed by the local authority as someone who would benefit from residential care, have less than £23,250 in assets (excluding the value of the home) and whose home was not occupied by a spouse or dependent relative. The Government also intends to allow local authorities some discretion to agree deferred payment plans with individuals who do not quite meet the criteria.
WHAT NEXT?
The Government consultation is seeking the views of local authorities and third party care providers on how the proposals can be implemented effectively. The Consultation closes on 25 October 2013.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
