In Autumn 2021, the government set out new plans for adult and social care reform in England. The changes are designed to reduce the financial burden on individuals and families funding essential care support – but what does it mean for you, and how can you plan ahead effectively?

Summary of the proposed changes

At present, there is no limit to the amount an individual can pay for essential social care during their lifetime. As a result, many families have seen their loved ones’ assets ‘swallowed’ by care-home costs, particularly in later life.

With increased funding for the sector planned, partly through increased national insurance contributions, from October 2023, the government will introduce a new £86,000 cost-cap on the personal care costs anyone in England will need to pay over their lifetime.

In addition, the government also plans to lift the upper capital limit (UCL) – the point where people may become eligible for local authority financial support towards care costs – from £23,250 to £100,000. This means that from October 2023, those with less than £100,000 chargeable assets will not contribute more than 20% of those assets per year towards personal care costs. This will apply to universally to everyone across England – regardless of individual care circumstances or settings.

As part of the proposed plans, the lower capital limit (LCL) – the point at where people will not have to pay anything towards their personal care costs from the value of their assets – is also increasing from £14,250 to £20,000.

How will the cap work?

The cap will essentially act as a maximum care contribution over a person’s lifetime for any nursing or care assistance, such as washing, feeding, dressing or managing mental health issues.

As is currently the case, a person’s local authority will assess their care and support needs, and consider how these needs are best met, whether that’s in a care home, through homecare or community based services, for example. The agreed provision of care with the local authority will form the basis of the costs that count towards the cap.

However, it’s important to note that whether someone is receiving care in their own home or in a care home, the costs counting towards the cap do not include daily living costs, such as rent, food or utility bills. For those in care homes, daily living costs will be set at a national, notional amount of £200 per week (21-22 prices) (Source: www.GOV.uk), and this will be excluded from the £86,000 cost cap.

Only once the ‘care’ component of social care costs (eg the total paid excluding daily living costs as above) exceeds £86,000 will a person become eligible for funded social care costs (again, excluding daily living costs).

How can you plan ahead?

Planning ahead is vital to ensure you’re prepared for the true costs likely to be involved should you need care in later life, as well as to consider how these may be covered in a tax efficient way.

Long-term care can often be seen as an ‘unknown’ when it comes to financial planning, as there’s no way to accurately project whether you’ll need care, how long you might need it for, or the type of care you may need. Alongside this, care costs can continue to change over time as a person’s needs and circumstances change.

To help secure your financial future, and consider how you can best plan for care costs, get in touch with a member of our team.

Alternatively, you can book a free introductory consultation directly with one of our specialist advisors here.

 

Disclaimer: Whateley Wealth Management is not responsible for any external site content.

Picture Source: Canva