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Capital Thresholds

AGE UK

http://www.ageuk.org.uk/home-and-care/social-care-funding---the-lowdown/

On Monday 11 February, the Government provided some important detailsabout how they will implement the recommendations of the Dilnot Commissionwhich reported in July 2011 with a solution to the problem of how to fund long term social care. 

They then announced some further amendments as part of the March 2013 Budget

There are three main changes to social care funding:  

1. Introducing a lifetime cap on care costs set at £72,000

The Government have said that they will limit the amount anyone has to pay for care to £72,000 (‘the £72,000 cap’) during their lifetime.

This cap will apply to the cost of care that people receive either in their own home or living in a care home.

It does not include someone's ‘hotel costs’ (i.e. bed and board) if they are living in a care home, these would still be charged separately even after reaching the cap. However hotel costs will be capped as well (see below).

2. Increase the upper level of the means test for people entering residential care to £118,500

The Government have said they would make the means-test (that decides if you are entitled to financial support from your council to help pay your residential care costs) more generous than it is now.

At the moment, your capital and savings below £14,250 are disregarded in the means test. If you have between £14,250 and £23,250 in capital and savings and your need for care reaches the threshold set by your local authority then the council will subsidise your care costs according to a sliding scale.

If you have capital and savings above £23,250 you will have to fund all of your own social care. Your income is also taken into account in the means test, for example pensions and welfare benefits. The lower capital and savings limit of £14,250 will be retained under the new scheme.

Now the Government has announced that it will raise the £23,250 upper limit to £118,500, so in future anyone with assets of between £14,250 and £118,500 whose need for care reaches the appropriate threshold – see more below – will be entitled to some financial support according to a sliding scale.

To put it another way, anyone with less than £118,500 in savings will in future be entitled to at least some financial support to help pay their care costs if they need to enter a care home.

3. Capping hotel costs in care homes

The third important change the Government announced relates to those ‘hotel costs’, referred to above. In future, they say they will limit these costs to £12,000 a year for everyone.

There is one other important change to note. Last year the Government announced it would introduce a national needs test by 2015. 

At the moment local councils set their own thresholds of seriousness of care needs so there are big variations between different areas – ‘a postcode lottery’.

In future, as part of these changes the Government will set out national ‘eligibility criteria’ that will apply to everyone, wherever they live.

Age UK is pressing the Government to set these criteria so that as many people as possible can be helped – not just those in the greatest need such as those, for example, who cannot get out of bed or to the toilet without help. The Government hasn’t yet made this crucial decision.

How will my contributions towards the cap be calculated?

Spending on care and support will be ‘metered’ by your local authority. To be eligible for your meter to start you must first be assessed by your council as having needs that meet the new national criteria.

The council will decide how much support you require to meet your needs and set a budget for the cost of this support. It's this figure that will be used to meter spending. 

So the amount that counts towards your cap will be based on what the local authority estimates it would spend on your care, rather than the actual amount you spend out of your pocket.

If you spend more than this figure on care the additional spending will not count towards your cap.

It’s important to note that the amount a local authority would be prepared to pay towards the cost of your care is often less than the amount many people are actually charged by care homes.

What about hotel costs?

It's only the care costs that will be taken into account as part of your cap. This means that even if you reach the level of the cap - so your local authority begins paying for your care - you will still have to pay your hotel costs. 

The aim is to ensure that people living in their own home are not unfairly penalised because they are still responsible for paying their housing costs and bills. The Government has announced it will cap hotel costs at £12,000 a year. 

How likely is it that these changes will affect me?

It is important to remember that every person’s circumstances are different and how these changes affect you will depend on what kind of care you need, how long you need care for and on your individual financial circumstances.

However, about three quarters of us will need some care as we get older, but while about half of us can expect to pay out about £20,000, 1 in 10 people will spend over £100,000.

This can run to hundreds of thousands of pounds for an unlucky few. There is no way to predict in advance which of us that will be.

£72,000 seems like a lot of money. How many people do these proposals really help?

The Government estimates that when all these changes come in, about 1 in 6 of all the older people who need care, or about 100,000 individuals, will benefit to at least some extent from them by 2025.

But as you can see, most older people will still have to pay something towards their care, and many will still have to pay quite a lot. Only those people with less than £14,250 in savings and really serious care needs will get care free.

Why should I pay up to £72,000 for something that I've already paid for through my national insurance stamp?

Unlike health care provided by the NHS, social care has never been free. Your National Insurance stamp contributes to your State Pension and all the taxes you pay contribute to the NHS.

However, unless you meet the means-test and the threshold of severity of care needs – explained above – you will have to pay at least something towards the social care you need. 

When will these changes take place?

The Government said these changes will begin to apply from April 2016. This probably means that someone’s need for care – as formally assessed by reference to the new national eligibility criteria the Government will set – will start to count towards the £72,000 lifetime cap from this date.

Exactly how the new scheme will work hasn’t yet been announced. 

If I don’t go into a care home will this help me?

Once someone has been assessed as having needs that meet the eligibility criteria they will begin to build up contributions towards their cap. So the cap will apply to both care in your own home and in a care home.

It's a single cap as well. This means that if you have already received care at home when you need to move into a care home, what you have spent already will be taken into account. 

However in all likelihood the £72,000 cap will be of most help to those who need residential care, and only a minority of these people too, since most people will not be in residential care long enough to spend up to the £72,000 total.

However, everyone will at least know that they are no longer at risk of spending more than £72,000 on care – subject to the qualifications explained above - during their lives

Know your rights

To learn more about your rights and responsibilities in the current social care system, download one of our factsheets or information guides below. 

Factsheets

opens link in new windowPaying for permanent residential care

opens link in new windowTreatment of property in the means test for permanent care home provision

opens link in new windowPaying for care in a care home if you have a partner

opens link in new windowDeprivation of assets in the means test for care home provision

opens link in new windowPaying for temporary care in a care home

opens link in new windowChoice of accommodation - care homes

opens link in new windowPaying for care and support at home

When a local authority assesses the person you're looking after (to establish whether they must contribute to the cost of their residential care) it will look at both their income and savings (also known as capital).

The local authority can only consider the income and capital of the person receiving care. If the person receiving care is in a couple, the local authority may take into account income or savings to which the person receiving care has a legal entitlement, such as a share in a bank account. This can apply even if the income and savings are not in their own name.

This may mean that the local authority will ask for information about the finances of the partner of the person you're looking after. If the person receiving care at home wants to dispute their partner's  income or savings being taken into account they can use the complaints procedure.

Capital

The upper capital limit is £23,250 and the lower limit is £14,250. If capital is above the upper limit, the care home resident won't normally receive any assistance with the fees. If capital is between £14,250 and £23,250, £1 a week for every £250 is taken into account as income. For example, if a resident has £15,250 in capital they'll be treated as if they had an extra £4 of income a week.

Most forms of capital are taken into account but some can be disregarded. For example:

  • the value of personal possessions,
  • payments from charities, and
  • payments from personal injury trust funds.

If savings are held in a joint account they are presumed to be owned in equal shares by each partner of a married couple or civil partnership.

Property

The value of the property of the person you care for will be disregarded for the first 12 weeks of their stay in a care home.

After that, the way the value of a property is treated depends on whether the person is a temporary or permanent resident of a care home, or whether there's still someone else living in the property after they go into residential care.

If the stay is temporary, or turns out to be temporary even if that was not at first intended, the value of the property is disregarded. If a temporary stay becomes permanent, the 12-week period for which property is disregarded starts from the date it is decided that their care is permanent.

The value of the property will also be disregarded if it's occupied by the resident’s partner. This also applies if the property is occupied by a relative of the resident who is aged 60 or over, or incapacitated, or a child of the resident who is under 18.

Social services can use its discretion to disregard the value of a property in which a third party continues to live.

If the resident owns a property jointly with someone else, they won't be asked to sell the property to pay for their fees. The resident will be assessed as owning a share of the property, but the market value of their share is likely to be low or nil as the property would be shared with someone else.

Example

Simon cared for his mother and lived in her property until she went into residential care. Simon is 48 and has physical health problems so can only work part time. He was financially supported by his mother before she went into a care home.

Simon can say that the value of the property in which he continues to live should be disregarded because of his incapacity. He can ask the local authority to use its discretion in this case.

Income

Most income is taken into account but amounts of certain benefits can be disregarded. For example:

Personal expenses allowance

A care home resident is entitled to a personal expenses allowance. This is an amount intended to ensure residents have some money to buy, for example, personal toiletries and small presents. It is currently £23.90 a week. It is taken into account when income is calculated.

A local authority has discretion to allow a larger personal expenses allowance. This is relevant if the care home resident has a dependant child or is a temporary resident and needs to meet the costs of their own property. If the person you're looking after would experience hardship if the allowance was not increased, they should complain to social services.