The Government is proposing a new framework for funding social care of elderly people. The plan is due to be phased in over a number of years, with the main proposals due to come into effect in April 2017.
The proposals include a cap on an individual’s financial contribution towards the cost of their care, as well as raising the means tested threshold entitling individuals to financial support from the state towards their care fees. Some of the key questions arising from this proposal are considered below.
What are the key points the government is proposing? What costs are covered in the cap and what isn’t?
An individual’s contribution to care costs will be capped at £75,000. The means tested threshold will rise from £23,250 to £123,000, for those going into a care home, meaning that those with assets worth £123,000 or less will receive some degree of financial support to their care costs. The proposed cap falls short of the Dilnot Commission suggestion of a cap between £30,000 to £61,000.
The cap will only apply to ‘eligible’ care costs, decided by the Local Authority on assessment of care needs, with individuals required to fund general living costs, such as food and accommodation costs.
In residential care, people will have to contribute £1,000 per month to help meet expenses associated with accommodation. The rationale being that an individual would face these costs whether or not they were in a care home. It was felt unfair to create a system where an individual would be better off financially being in a residential care home than living at home. However, care home standards and costs vary across the country and the fixed contribution does not take into account these differences.
What do these changes mean in practice?
An individual will need to meet their care costs in full up to the cap of £75,000, unless they have assets of £123,000 or less, or qualify for free care and support due to significantly high health needs, rehabilitation needs or require an ‘after care service’ due to mental health issues.
It is anticipated that the majority of people will have to pay their care fees in full, with less than a fifth of older people likely to have care costs of £75,000 or more. Whether an individual benefits from the changes could depend upon which part of the country they live in and, in particular, house prices in their area.
The cap only includes services that are available at the normal council cost, so an individual will need to top up their package, if they choose to go into a private care home, where services are above the normal council rate.
Social care for the elderly covers medical needs, such as support washing, dressing and eating. To be entitled to state support in England, an individual must satisfy the means and needs test. The Local Authority assess needs against four thresholds: low, moderate, substantial and critical. The majority of local authorities allow access to help only when a person’s needs are deemed substantial or critical.
Will people still have to sell their houses? Will the option to defer payment till after death still be available?
According to the Government’s White Paper “Caring for our future: reforming care and support” July 2012, the deferred payment scheme is set to become universal in 2015. If implemented, this will mean that it is no longer a post code lottery as to whether this service is available.
When will the government’s plan take effect?
A phased plan is envisaged, with the cap and means tested threshold increase due to come into effect from April 2017. In the meantime, the legislation will go through Parliament, and amendments to proposed legislation and timescales are possible.
From April 2015, it is also anticipated that individuals will have clearer entitlements, with a national minimum eligibility, and a legal right to assessment for care.
How are means testing rules changing? Will people be better off overall?
Currently the means testing threshold is set at £23,250. Those with capital between £14,250 and £23,260 are expected to make some contribution from their capital, as well as income. Once capital falls below £14,250, a contribution out of income is usually required. Those with assets above £23,250 receive no support with care fees, unless they qualify for free assistance.
It was felt that this provision is unfair, particularly for those who have worked hard all their lives to pay off their mortgage, save for their future or have something to pass on to their loved ones, only to see their property sold and savings wiped out.
The increased threshold reflects the fact that rising property prices over the years have effectively meant that home owners fall outside the state system.
This news article was provided by the SFE March 2013 newsletter