What the cap on care costs means for you

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The proposed cap on care costs: what you should know

What is the care cost cap and when does it take effect?

The Government’s 2021 Vision for Adult Social Care means that from October 2023, they will introduce a new £86,000 cap on the amount anyone in England will need to spend on their personal care.
 
This means that even where someone has significant assets, and is self-funding their care plan, they will not need to spend more than £86,000 on their personal care over their lifetime. The cap also applies to domiciliary care.

Personal care means the residential care, nursing care and support needed, whether it’s with washing, dressing, mealtime assistance or managing health problems.
 
There are several aspects of the care home service that are not classed as personal care – this includes accommodation, food, energy bills, lifestyle and wellbeing and consumables.

There is limited information at this time and the contents of this page uses the available Government guidance.

What else is changing? 

Capital limits for care funding are changing to raise the threshold as to when residents must pay for their care. 

Savings and assets below £20,000: residents will be state funded, with no money taken from assets or savings. However, contributions from income may be required to put towards care costs 

Savings and assets between £20,000 and £100,000: potential contributions from state funding, which will be means-tested. Residents will have an ‘independent personal budget,’ and which would be reviewed annually and the spend on care tracked. Individuals will contribute up to a limit of 20% of their assets per year towards care costs.

Assets of £100,000 and above: care will be self-funded until assets drop below £100,000 or the £86,000 care cap is reached.

It’s important to understand that any other care-related costs – such as accommodation, food, entertainment, utility bills and consumables, do not count towards the £86,000 cap so residents or their families will continue to cover these costs

Personal contributions made towards care by the individual will be tracked from October 2023. Any contributions made before that time will not be counted.

Two examples of the care cost cap in action

Year 1

  • Jim pays £60,000 for his care home. 
  • £24,000 is tracked as the personal care cost. 
  • £36,000 is for accommodation and other non-qualifying costs.

Year 2 and Year 3

  • Jim once again pays £60,000 for his care home each year. 
  • £24,000 is tracked as the personal care cost (£72,000 cumulative total by Year 3).
  • £36,000 is for accommodation and other non-qualifying costs.

Year 4

  • Jim pays £50,000 for his care home (£14,000 + £36,000*). 
  • He spends £14,000 on personal care and hits the £86,000 cap (Year 3 cumulative total £72,000 + £14,000).
  • His Local Authority (LA) funds the remaining £10,000 personal care cost. 
  • *He continues to pay £36,000 for other non-qualifying care costs as his assets remain above the Upper Capital Limit of £100,000.

Year 1

  • Polly pays £38,000 for her care home. 
  • Starting the year with assets below the Upper Capital Limit of £100,000, Polly pays £14,000 towards the £18,000 personal care cost for her placement with the LA funding the remainder. 
  • (She pays £14,000 which is 20% of her assets above the Lower Capital Limit of £20,000, or 20% x £70,000).
  • She pays £24,000 for the accommodation and other non-qualifying costs.

Year 2

  • Polly pays £38,000 for her care home. 
  • Polly pays £6,400 towards the £18,000 personal care cost for her placement with the LA funding the remainder. 
  • (She starts the year with assets of £52,000 after spending £38,000 of her initial £90,000 savings in year 1. She pays £6,400 which is 20% of her assets above the Lower Capital Limit of £20,000, or 20% x £32,000). 
  • She pays £24,000 for the accommodation and other non-qualifying costs.

Year 3

  • Polly pays £1,600 for her care home. 
  • Polly starts the year with assets of £21,600 having spent £68,400 of her initial £90,000 savings in years 1 and 2. (£38,000 + £30,400).
  • She falls beneath the Lower Capital Limit of £20,000 after spending £1,600. 
  • Polly then qualifies for full state-funding.

What does it really mean for residents and their families?

Everyone will now have the cost of their personal care calculated up to the limit of £86,000, after which point the Government will cover personal care costs. 

Any other care-related costs – such as room, food, entertainment, and utility bills – do not count towards the £86,000 cap, so residents or their families will continue to cover these costs. 

Whilst it might take some time to reach the £86,000 threshold, the state will make a greater contribution for some people; and for those people requiring care over many years, costs will come down.

October 2023 is still some time away, but we understand that this is an important new consideration for many in planning for residential care. For more advice on moving into a Care UK care home please do contact your local care home manager.

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