Proposed Implementation of Cap on Lifetime Care Costs
Care costs are the latest aspect of social care to be put under the spotlight with the publishing of the government’s Health and Social Care Committee report on Adult Social Care in January this year.
The enquiry into care costs was paused in 2020 to enable the Health and Social Care Committee to focus its attention on Covid-19 so this is welcomed progress as the UK tries to work its way out of the grip of the pandemic. The government has considered both Sir Andrew Dilnot’s 2001 report, Commission on Funding of Care and Support, and the Health and Social Care Committee’s 2020 report Social Care: Funding and Workforce.
The committee has recommended the introduction of free personal care and a lifetime cap on care costs at £46,000 – the cost of which is calculated to be in excess of £7 billion. This cap is purely on the cost of care however, and does not include “living costs”. So the cap is not the total amount that a person is expected to pay.
As a result of Covid-19, the government provided local authorities with access to £4.6 billion to address the pressure they are facing due to the pandemic including adult social care and provided a further £1.1 billion to help the care sector take a number of key measures including restricting movement of staff between care homes to help stop the spread of virus in care settings.
The current funding arrangements for people who need care are confusing and the introduction of free personal care would put social care on a more equal footing with the NHS by ensuring all basic care needs are met free at the point of need. Currently there are systems in place which allow people receiving care to enter into deferred payment agreements whereby care is paid for by the local authority and a charge is placed on the person’s property which needs to be repaid after the person receiving care has died.
The Dilnot report proposed extending the means test threshold which is currently £23,250 to £100,000. At the moment your home must be disregarded when calculating your contribution to care fees if the you or your spouse is living in it. The government response does not deal with potential changes. The government expects that over the next 10 years there will be an increase of 1.5 million in the number of people aged over 75. There will also be an increase in the number of people aged under 65 who will have care needs.
Controversially, the introduction of contributions to general living costs may well significantly increase a client’s overall payment and a reduction in their overall assets. The 2011 report looked at a range of between £7,000 and £10,000 per year and stated “all people will need to make a contribution from their income, savings or assets, in addition to their state pension.” The biggest question is: how will these living costs be paid for?
The devil will be in the detail and we await eagerly the actual proposals to see the impact it will have on clients’ finances. Deferred payment agreements will no doubt significantly increase as clients may lack disposable cash assets, savings or investments to pay for the care or living contribution costs. It is an area which, despite all local authorities being required to offer such arrangements under the Care Act 2014, can sometimes be difficult to obtain.
We are always happy to advise clients or their attorneys regarding care costs, deferred payment agreements, or other funding arrangements that can be put in place.
Here to Help
If you need advice about care costs please contact Charles Fraser, Senior Solicitor and Head of the Older and Vulnerable Client team.
Please note the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.