Care Fees – Social Care Reform
Changes to how care in England will be charged from October 2023.
I am hesitant to write this article as many of you will know that we have been here before, advised that the rules on charging for care are going to change but then, after a number of postponements, the promised changes never materialised. Most professionals working in later life planning saw it coming: we simply could not afford them.
We are now informed that changes are coming and the date we have been given is October 2023. The government advises it will raise £36bn over the next three years from the National Insurance hike; however, the bulk of this will be used to help the NHS recover from the pandemic, leaving only £5.4bn to be invested in adult social care over three years. This raises serious doubts as to whether this extra funding will be enough to help local authorities provide more and better care for those who need it.
With that above caveat in mind, the question is, as a result of these changes would any of my advice to clients regarding planning for their future care change?
The short answer is absolutely NOT but I will first lay out the changes, explore the impact, and then set out what my advice would be.
What are the latest changes?
From October 2023:
- There will be an £86,000 cap on care costs across an individual’s lifetime.
- Anyone with less than £20,000 of assets will not have to pay anything towards their care from their assets (although they will contribute from their income).
- People with between £20,000 and £100,000 of assets will be eligible for some means-tested financial support on a sliding scale.
- There is to be more emphasis on self-funders being able to ask local authorities to arrange care on their behalf as they contract with care homes at a lower rate than private payers.
Given that the new upper limit of £100,000 is more than four times the current limit of £23,250, we expect more people to be eligible for some state support than before.
How will the cap on care work?
The maximum that anyone should pay for care in their lifetime will be £86,000 and once that cap has been reached the local authority will be responsible for paying for your care. However, what does not count towards the £86,000 are any top-up fees paid towards your care, any funds that have been contributed by the local authority, and any part of your care fees that are deemed to be the daily living costs element. That being the cost of food and utilities etc that you have to pay for if you were living independently. For simplicity, these costs will be set at a national, notional amount of £200 per week.
This means that people receiving care may still face significant additional costs. What we do not know is how those additional costs will increase in proportion to the care element of costs.
If you are assessed as needing social care before October 2023, the current system will apply. If your assets are above £23,250, your local council will not help with care costs.
In some circumstances, The NHS has a responsibility to cover the costs of care through a scheme called NHS Continuing Healthcare, but this is only for those with complex health needs, and it is difficult to qualify. If you think your loved one does have complex health needs, always ask for an assessment and check that you agree with the outcome and if not, do not be afraid to appeal their decision.
What is my advice?
Planning for later life does not need to wait until you reach your golden years. I don’t want to put an age on it as we are all unique and I understand that we have different priorities at various stages of our lives, but if we wait until we actually need care and then start making gifts or changing our investments to a death benefit attached to it, we may well be caught by our local authority’s ‘deprivation of asset’ rules, which I will not go into here as that is an article all in itself!
As a minimum, put in place lasting powers of attorney so that if a time comes when you do need care and support, your attorneys can step in and act on your behalf. However, make sure that your attorneys fully understand their role. If you already have attorneys, advise them to take advice on their role from a trusted Solicitor should they need to act on your behalf. So often I give advice at a point where it is too late as most of the funds have been used to cover care fees. Getting off to the right start is key.
Make sure you have a financial advisor – preferably one who can advise on later life matters – so that when you are taking advice as your family circumstances change, there is also an eye on how care may impact your finances.
Make sure you have a will and remember to review it so that it fits with your priorities. Whether you need to keep an eye on inheritance tax, or your main priority is the cost of care, there are steps you can take to ensure that at least some of your estate is passed on to the next generation.
If you have a family business or a family farm, make sure you are aware of the consequences of a key person becoming in need of care and the options available to you to prevent the breakup of the business due to care fees.
Should you wish to discuss any of the issues that this article raises, or you think you would benefit from speaking to someone about care fees, please contact Jane Flaherty on 01404 541904 or email firstname.lastname@example.org.