Social Care Funding- What is changing?
The government’s adult social care proposals, announced in September 2021, are a good step towards the much needed reform of how care is funded. This is a quick guide to how the social care system works now and how the government’s new plan may change it.
What is social care?
Social Care covers a wide range of scenarios, from help with washing and dressing at home or long-term care in a nursing home. Unlike NHS care, most social care is not free. The burden on families is enormous and the demand for help has risen.
More than half of residents in elderly care homes pay all or some of their fees and 82% of places are provided by for-profit operators.
If you have significant health needs, the NHS will pay for the care under NHS Continuing Healthcare, regardless of your financial position. However, this is becoming increasingly difficult to obtain.
How does the social care system currently work?
Currently, before an individual can receive publicly funded care they will be assessed to make sure their needs are high enough and that they can not “afford” to pay for their own care.
This means that most people have to pay for their care from their assets – their home and savings.
If an individual is assessed as needing care in a care home, they will have to pay for it themselves if they have assets worth more than £23,250.
If they have assets below £23,250 but above £14,250 they will be charged a proportion of the costs of their care.
If an individual has assets above the £23,250 threshold, there is no limit to how much they might have to pay over their remaining lifetime.
The average cost of a care home in England is around £700 per week and some people spend many years in care. So, it is quite possible to end up paying ‘catastrophic costs’ of £100,000 or more. In 2011, the Dilnot Commission estimated that 1 in 10 people might pay more than £100,000.
How the government’s proposals would change the social care system
The government’s proposals would make the means test more generous.
They propose that, from October 2023, an individual would only pay for all their care if their assets were more than £100,000 and people would only start to contribute towards their care if their assets were more than £20,000.
People with assets of between £100,000 and £20,000 would contribute towards the costs of their care on a sliding scale.
The proposals would also set a ‘cap’ on the amount an individual would pay for care in their lifetime. This cap will be set at £86,000. Once an individual has spent that amount, the government would take over paying their care costs.
What’s the catch?
The cap would only cover the cost of a care home that an individual’s local authority was willing to pay for (not, for example, a more expensive one, even if it would be more convenient). Or if an individual receives home care, it would only cover the number of hours their local authority thinks they need at the price it is willing to pay.
It’s not yet clear exactly what costs will be included in the cap, but the government says that this will only apply to ‘personal care’ costs. This means that people receiving care may still face significant additional costs – such as food and accommodation costs. These extra costs, sometimes called the “hotel element” are estimated to cost between £10,000 to £12,000 a year, won’t count towards the £86,000 cap.
Disappointingly for thousands of families already struggling with crippling care costs, the new means test and the cap on care costs will only apply for those starting in care from October 2023. This means that those already paying for care – or starting that process before 2023 – will get little help from the new measures.
Will it happen?
The problems with the existing system have been well-known for a long time – nearly a quarter of a century has passed since Tony Blair announced that a royal commission would consider how to reform social care funding – but successive governments have struggled to address them because of the public and media backlash that has greeted any proposals.
A cap on care costs was recommended 10 years ago by Sir Andrew Dilnot, who advocated a £35,000 lifetime cap. It was subsequently put into law in 2014 under the Conservative-Liberal Democrat coalition but delayed and then eventually abandoned under David Cameron.
I’m sure we all remember the “dementia tax” proposed by the government in 2017. A proposal that was quickly dropped after backlash from the public.
The government plan to fund the current changes by rising national insurance. Employees, employers and the self-employed will all pay 1.25p more in the pound for National Insurance (NI) from April 2022.
There has been criticism - including from within the Conservative Party - that it will be unfair on younger people and the lower paid.
History tells us that the funding of social care is a divisive issue and may attempts to change the way social care is funded have ended in disaster.
What the future holds for the current proposals is yet to be seen. The Government should be publishing a white paper on adult social care later in 2021, focusing on wider system reform.
Do I need to do anything?
Anyone reading the current proposals may think that the government has waved a magic wand and that they no longer need to worry about selling their property to fund future care needs. However, successive governments have tried and failed to implement social care funding changes.
We expect that the proposals in their current form will be changed or watered down. In any event, the current proposals are flawed and private care home owners are likely to increase the “hotel” costs in ensure they continue to receive a profit.
There is no harm in being prepared, for couples, the easiest way to do this is to use a Property Protection Will. You can learn more about how you can protect your home from care fees here- https://www.alvechurchlegal.co.uk/property-protection-will