Care Funding – Is the new £86,000 cap as good as it seems?
Care funding and its impact on a person’s assets is a source of concern for many. Recent government proposals that a person will contribute no more than £86,000 towards their care came as welcome news, but is it as straightforward as it appears?
What is changing?
The Government is proposing to introduce a cap on the total amount a person will contribute towards their care, set at £86,000.
There will also be more generous means testing. Currently, a person will self-fund if their assets exceed £23,250 and they will stop self-funding when their assets drop to £14,250. These limits are set to increase so that a person will self-fund if their assets exceed £100,000 and they will be allowed to keep assets up to the value of £20,000. For every £250 above the lower limit, a person will contribute £1 per week towards their care.
When does it start?
The new cap will be introduced from October 2023 and only care fees paid from this date count towards the cap.
Unfortunately, any fees paid prior to October 2023 are disregarded, which may leave many families in a position where significant funds have already been used towards care and up to a further £86,000 will still need to be contributed before care becomes funded by the local authority.
What is included towards the cap?
Not all costs will count towards the cap. Generally, only costs paid towards personal care will be included towards the cap. This includes costs to cover care such as washing or dressing. Living costs up to £200 per week will not be included. This means that costs for food and utility bills, as well as housing costs, will not count towards the cap.
Other points to note
The Government was under great pressure to help families to preserve the family home. Whilst the cap reduces the amount each person will have to contribute to fund their care, in some circumstances, the family home will still need to be sold.
“Top up” fees for privately funded care will also still need to be paid even once the cap is reached. Top up fees are paid when a person is in privately funded care which is more expensive than that funded by the local authority. If the person prefers to remain in the same accommodation once the cap has been reached then additional fees may still be payable.
As the cap is a fixed amount it is not calculated in proportion to the individual’s assets. This means that the more wealth you have, the more wealth you will be able to keep.
Considering these proposed changes, it’s important for families to look ahead and plan for the future. Lifetime estate planning or changes to a Will can be a useful way to plan for care funding.
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