The news that the government is finally addressing the chronic shortfall in health and social care funding has had a mixed reception. Leaving aside the politics of who is likely to shoulder the principal tax burden, the money that will actually be allocated to help fund social care is relatively small, amounting to £1.8bn per year from an annual total of £12bn.
But the figure that has attracted most debate is the universal cap of £86,000 on personal care costs over an individual's lifetime, which has revealed the level of unawareness generally about how much care costs and who is liable to pay the fees.
The cost of care
Sourcing and paying for care, regardless of whether in your own home or in a residential setting, often comes as a shock. Finding a suitable care home is something that often needs to be done in a hurry, such as when an elderly relative has been admitted to hospital and it becomes apparent that they cannot be discharged without a care package in place. This is the point at which the realisation of how much care is going to cost – and the difficulty of finding the right residential or domiciliary care – sinks in. The price of care in a residential home varies according to location and the level of care required, and can range from £40,000 per year to upwards of £100,000.
The politics of care
Social care funding has been a political hot potato for several prime ministers who have tried to square the circle of funding an increasing need for social care against voters’ disinclination to spend their children’s inheritance. In 2011 the Dilnot Commission recommended a cap on personal care costs of £72,000; although its recommendations were deemed more politically acceptable than other solutions they were never implemented despite the legal framework for doing so being incorporated into the Care Act 2014.
Boris Johnson's promise to end the social care funding crisis ‘for once and for all’ when he was elected in 2019, was derailed by the pandemic which diverted attention away from reform while simultaneously highlighting how critical it was. Finally, in September 2021, the government announced its solution: an increase in national insurance contributions from April 2022, and a health and social care levy from April 2023, which will be used to fund (among other things) a £86,000 cap on personal care costs taking effect from autumn 2023 (it will not be retrospective). This means that no one will have to pay more than £86,000 for their personal care in their lifetime: any costs incurred above this cap will be fully funded by the local authority.
Financial eligibility is widened
In addition to the cap, there is also a change in financial eligibility. Anyone with assets worth less than £20,000 will be fully funded by the local authority, save a contribution from income (such as a pension). People with assets between £20,000 and £100,000 will have to contribute proportionately towards their care costs. This means that many more people than currently will have to be assessed by their local authority for eligibility; indeed, according to the House of Commons library briefing on these proposed reforms, local authorities will have to perform an additional 330,000 assessments a year.
Personal care does not include accommodation
It is easily forgotten that the £86,000 cap refers to personal care only, such as washing and dressing. It does not include accommodation, heating or food, generally referred to as ‘hotel’ costs, on the basis that someone receiving personal care in their own home would be paying these as a matter of course. It has been estimated that ‘hotel’ costs in a care home are in the region of £10,000 – 12,000 per year and these will have to be met out of an individual’s assets, subject to their financial eligibility for local authority funding. It is also worth noting that, depending on the cost of the care home, the cap may not be reached for at least two years. Individuals with specific medical needs can be assessed under the NHS Continuing Healthcare system; if deemed suitable, the NHS will pay for all their associated medical and social care needs including accommodation. However, the assessments are stringent and designed for those with a high level of need.
Cap gives certainty but costs remain
This attempt to grasp the nettle of social care funding is certainly to be welcomed, but no one should be in any doubt that, as we live longer but not necessarily healthier lives, more of us will face the prospect of having to pay care home fees or pay for care at home. Although the £86,000 cap will give more certainty about how much we may end up spending on our care, the chances of having to dip deeply into our savings remain high. Given the major increase in the number of assessments local authorities will have to make, and the likelihood of errors being made under pressure, it will become more important than ever to seek independent, professional advice to ensure such assessments are fair and accurate.
We have considerable experience of advising on care home funding issues, dealing with decisions made relating to Continuing Healthcare arrangements, and on creating and maintaining trusts for vulnerable people and their families. We would be happy to have an initial discussion with you to see if we can help.