The much heralded new ideas on social care funding were heavily trailed over the weekend and
announced late on Monday. Apparently the delay in making the announcement was due to some last minute wrangling over how the revised scheme would be funded! Government at its joined up best.

The changes are not due to come in to effect fully until 2017, and in the meantime there is likely to be a few tweaks to the way it will work. Until this is finalised we can only advise clients that these are the changes that will be made as it stands at the moment. Our products and services remain the same and are still as valuable as ever to our clients, but having this information will ensure that you are able to give your clients the best service by providing them with up to date information at all times.

We have all seen the following headlines:
•    An increase to the asset threshold from £23,500 to £123,000 above which you have to contribute.
•    A cap on the fees payable of £75,000 during someone’s lifetime.
•    A cap of £12,000 a year on costs associated with room and board, such as food, heating and renting the room etc.
•    From April 2015, no one will have to sell their home during their lifetime to pay for residential care, with those unable to afford the fees given the right to defer paying during their lifetime.

The devil as always is in the detail – sadly the detail doesn’t yet answer all of the questions raised by
the headlines, but the changes so far are detailed below.
The changes

1 – The £123,000 threshold
The government have changed the current social care funding threshold of £23,500 to £123,000. However they have now introduced a sliding scale, which means that people with assets between
£17,500 and £123,000 will be entitled to some contribution towards their care, depending on the client’s assets and needs. Although the details of the sliding scale were not specified in the statement released by the Department of Health, the table below shows the scale the BBC has published. Clients with assets over £123,000 will still have to pay for their own care (subject to the £75,000 cap detailed below).

 

2 – The £75,000 cap
A cap of £75,000 has been introduced so that people will pay a maximum of £75,000 for their care
during their lifetime. This cap applies to care received either in a care home or in their own home, or a combination of the two, and only applies to the basic costs as assessed by the local authority. Any additional fees for a higher level than the level the local authority has suggested won’t be included in calculating when the cap has been reached. More information is detailed below about what is likely to qualify and how it will be calculated. The cap will also not apply to what is sometimes known as
‘hotel costs’, which can cover costs such as renting the room, food and bills etc, which is subject to a separate cap (see below).
3 – The £12,000 a year cap on living expenses
A new cap of £12,000 a year has also been introduced for things such as bed and board, which are charged separately. This means that once £12,000 has been spent, the local authority will pay the rest. However this will of course be subject to what they consider to be the reasonable costs, rather than what the person is actually being charged. The purpose of this is to ensure that clients are not penalised for remaining in their own home rather than going into care, as housing costs and bills would still apply for someone receiving care in their own home.
4 – People won’t have to sell their homes to fund their care
From 2015 people will be supported to make informed choices about the best care for them and how they can pay for it in a way that best suits them. The main difference here is that they will introduce universal deferred payment agreements for people in residential care, so that their properties won’t have to be sold during their life time to pay for their care.
Questions:
1 – How will the £75,000 cap be calculated?
The spending on care and support will be ‘metered’ by the local authorities, who will first assess the person and decide if the needs meet the new national criteria. The Government are currently due to bring in a national needs test in 2015. It is important to note here that although this is not yet clear, it’s possible that only severe or substantial needs will qualify for the meter to start running, and the money spent on care in the meantime will not go towards the £75,000 cap.

The council will decide how much support is required to meet the needs of the person, and then set a budget for them accordingly. This means that the amount that counts towards the cap will be what the local authority estimates they would spend on the person’s care, rather than what is actually being spent. At the moment, in practise the amount estimated is often less than the amount many people are actually being charged by care homes. The family can chose to spend above the amount estimated, which would have to be funded by the individual or their families and wouldn’t count towards the cap.

2 – Who will be affected?
Less than a fifth of people in care face costs in excess of £75,000, so most people will still have to
foot the bill themselves. However people will assets under £123,000 will be entitled to some contribution towards the costs. The costs will be calculated based on what the local authority decides a person’s care requirements and needs are, and therefore it’s likely that the cap will only
affect people with severe or substantial needs, so until that point is reached the fees paid don’t start to go towards the £75,000 cap.
3 – When will it come into force?
Some of the changes will begin to apply or be set out in more detail by 2015, but the main changes will begin to apply from 2017. These have not been confirmed until more information and legislation is provided.
4 – How will the government fund it?
Health Secretary Jeremy Hunt has said that the changes are expected to cost the government an estimated £1 billion a year. Mr Hunt announced that this will be part-funded by freezing the inheritance tax threshold at £325,000 for three years from 2015.