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Social Care…here we go again!
In the month that Abba – writers of the hit Mama Mia – released new songs, Boris Johnson has released details of a new system to tackle the problem of social care costs, with that problem plaguing UK Governments for almost as long as it has been since Abba were first in the charts. So what is the problem, and is the new system going to fix it?
At present, unless very limited exceptions apply where the NHS might be responsible for care home costs, if a resident of a care home has assessable assets of more than £23,250, then he or she will need to fund his or her care costs in full. A care home resident with assessable assets of more than £14,250 but less than £23,250 will receive some help with funding care costs from the Local Authority, and those with assessable assets of less than £14,250 will receive the maximum financial assistance the Local Authority can give (but this does not necessarily mean that the Local Authority will fund the care costs in full). Assessable assets include the value of the care home resident’s property unless a limited exception applies (such as his or her spouse continuing to live in the property).
So, what has Boris suggested as an alternative to the current system? From October 2023, the lower capital threshold of £14,250 will rise to £20,000; the upper capital threshold of £23,250 will rise to £100,000; and those “starting care”, being the words used by Boris in his address to MPs, will not have to pay more than £86,000 towards the cost of “care” during their lifetime.
This “new” system was in fact originally touted with the introduction of The Care Act 2014, and due to be implemented in April 2016, but was in fact scrapped in December 2017, and so it remains to be seen if this time it will come into force.
Even if the cap does come into force as planned, the definition of “care costs” will need to be considered carefully as it could very well create some significant problems with the new system. The best way of illustrating this is by way of example:
- It is October 2023, and Mrs Smith has been in a care home for just over a year (58 weeks), at a cost of £1,500 per week, to give a total cost to her of £87,000.
- Mrs Smith’s husband Mr Smith asks the Local Authority to assess Mrs Smith so that she can enter the “capped cost system”. The Local Authority accept that Mrs Smith falls within the eligibility criteria, and Mr Smith looks forward to his wife receiving financial assistance immediately given her total spending is in excess of the “cap”.
- However, the Local Authority say that the £87,000 spent prior to October 2023 will not be taken into account. The Local Authority also say that £250 per week is deemed to be a contribution to “accommodation costs” (rather than care costs) and so will not be taken into account towards the cap. Of the remaining £1,250 per week which Mrs Smith is paying towards her “care costs”, the Local Authority say that they will only take into account, say, £850 per week towards the cap because they could provide Mrs Smith’s care at this cost (instead of the private rate that she is paying).
- It will therefore be almost a further two years (101 weeks) before the £86,000 cap is reached. By that time, Mrs Smith will have spent a total of £238,500 on her care! If Mr Smith were to require care himself, then similar charges may arise for him also.
As is clear from the above, careful planning to protect assets from the potential liability of care home fees remains appropriate.