Is there a cap on care home fees in the UK?

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This cap was designed to limit the financial burden of personal care costs, aiming to provide individuals and families with greater financial security when it comes to long-term care. However, as the implementation date for these changes was postponed to 2025, it's crucial to understand how the new cap will work and its potential impact.

Key Changes in the Social Care Proposal

The government's social care proposal encompasses two fundamental adjustments:

  1. The introduction of an £86,000 cap on the total personal care costs an individual must bear throughout their lifetime.

  2. An increase in the upper and lower capital thresholds for means-tested social care funding, raising them to £20,000 and £100,000, respectively.

Currently, in England, the upper limit for social care stands at £23,250, while the lower limit is set at £14,250. When an individual's assets exceed the upper threshold and they do not qualify for NHS support, they are obligated to cover the entire cost of their care fees.

Understanding the Social Care Cap:

At first glance, the social care cap seems promising, suggesting that once an individual has expended £86,000 on their personal care, their local authority will step in to cover the remaining expenses. However, a closer examination reveals that not all expenditures are counted toward this cap.

Excluded Costs from the Social Care Cap:

The cap applies exclusively to expenses related to personal care, including daily activities such as bathing, feeding, medication management, and dressing, both in a home setting and in residential care.

The Significance of These Changes:

The aim of these modifications is to alleviate the financial burden associated with social care, thereby reducing the need for individuals to sell their homes to fund their care.

Current Social Care System:

Currently, there is no maximum limit on the amount an individual can spend on social care during their lifetime, often resulting in families depleting their assets to cover care-home costs. State-funded social care is means-tested, with individuals possessing assets under £23,250 qualifying for financial support from their local authority.

Impact of the Proposed Social Care Cap:

Even if the social care cap is put into effect, it will not eliminate the financial responsibility for most individuals who do not qualify for local authority support due to assets exceeding the thresholds. Self-funders will bear the cost of their care until they reach the £86,000 cap. Additionally, they will still need to finance the 'hotel costs' associated with ongoing social care.

It's essential to note that local authorities typically set rates lower than those paid by self-funders. Therefore, if the chosen care home charges more than the local authority's rate, individuals will be required to cover the difference, and this additional expense will not count toward the cap.

Reaching the Cap as a Self-Funder:

Upon reaching the £86,000 care cap, the local authority is likely to cover an individual's personal care costs. However, they will still be responsible for the 'hotel costs' and any top-up fees if the selected care home surpasses the local authority's rate.

Even for self-funders, arranging a Local Authority means test is advisable when social care is needed. This action establishes a record of an individual's ability to pay for care and the amounts contributed. If the cap is reached, the individual's financial responsibility will significantly decrease.

Many limitations and conditions are associated with the proposal, making it prudent to plan as if the proposal may not come to fruition. Regardless of future changes, proactive planning for later-life care is essential for individuals to shape the future they envision, no matter where life may take them in their later years.

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