OCT 2021: How do new care home cap rules affect you?

Under the existing system, care home fees for people living in England have been entirely covered if you have savings or capital assets worth £14,250 or less. If you have between £14,250 and £23,250, you are likely to receive some financial support, and if you have more than £23,250, then unless that money is wrapped up in a house in which a partner or relative over 60 is still living, you are liable for full care costs. These thresholds have been in place since 2011, which means their value has, in real terms, decreased over time.

There are two key changes that come with the new policy. A change in the levels described above, and an £86,000 cap on care liabilities. That £86,000 cap is somewhat confusing, though. We’ll come to that shortly. First, let’s look at the simple parts of the change, due to come into effect from October 2023.

Capital limits for care funding

The new thresholds are:

Savings and assets below £20,000: state funded, with no money taken from assets or savings. However, contributions from income (pensions etc) may be required to put towards care costs – there are no further details at this point on how this might work.

Savings and assets between £20,000 and £100,000: potential contributions from state funding, subject to an assessment, which create an ‘independent personal budget’ and which would then be reviewed annually. The spending on care is tracked in a ‘care account’. The individual contributes up to a limit of 20% of their assets per year towards care costs.

Savings and assets of £100,000 and above: care to be entirely self-funded until assets drop below £100,000 or they reach the £86,000 care cap.

Any personal contributions made towards care by the individual are tracked in their ‘care account’. However, these contributions will only be tracked from October 2023 – any contributions made before that time will not be counted.

The care cap – and what it really means

The government’s statement is that from October 2023 nobody will pay more than £86,000 across their lifetime towards their care.

The key word here is ‘care’. Residential care home or nursing home fees are not entirely made up of ‘care’ costs. They also include the accommodation, food and additional services – daily living costs. These do not count within the care cap. These living costs will still need to be paid by the individual, from their assets or by a relative or other third party, until the individual’s assets drop below £20,000 – or whatever the threshold might be at when that time comes.

It is still good news for those moving into care homes from autumn 2023, though; it seems likely that the state will make a greater contribution for many people and the overall costs for people requiring care for a number of years will come down.

October 2023 is still two years away at the time of writing, of course, and we will doubtless see more details emerge over time. Since it’s good to be prepared, to take stock of your financial situation and your options for the future, consulting an independent financial adviser and planning for the years ahead is a positive early step.

For advice on moving into a Baycroft care home in the coming months, or to have a tour of one of our homes, please do get in touch with the relevant care home manager.