What parts are in force and what has been postponed?
There was a sudden spike of interest in social care, and in particular the funding of care, during the 2017 general election campaign. But for all the impassioned debate, where do things actually stand now that the election is over and the dust has settled?
To answer this question properly we really need to track where things are with respect to the key piece of care legislation that we have seen in recent years, The Care Act 2014.
The Care Act 2014 represents the single largest change to health and social care policy for a generation. It brings together all existing legislation and national policy on adult social care services into a single legal framework.
So far only Part 1 has come into force, on 1 April 2015. The second part was due to come into effect in April 2016, but the Government announced in July 2015 that it will be delayed until 2020. Part 2 was set to introduce financial reforms to the care system, such as a cap on care costs, care accounts, and an extension of means tested support as well as a new appeals system.
However, it’s difficult to say whether the changes envisaged in Part 2 will actually come to pass as planned.
This bulletin only relates to the provision of adult social care in England. Separate regulations apply to other areas of the United Kingdom.
Some Key Area of Part 1 already implemented.
Assessment of Financial Resources
- These requirements ensure that local authorities assess the financial resources of those needing care to determine the level of support that should be provided.
- They specify what ‘income’ and ‘capital’ should be taken into account in the assessment.
- They confirm an upper capital limit at £23,250. This is the maximum amount of ‘eligible’ capital a person can own in order for a local authority to contribute towards the cost of their care.
- A weekly notional income from capital is set at £1 for every £250 (or part thereof) of capital.
This is the amount that an individual will be expected to contribute towards the cost of their care from their capital, above £14,250 if the total value of their eligible capital is over £14,250 but under £23,250. This is in addition to any eligible income they receive also being used to fund their care.
Universal Deferred Payment Arrangements
- This allows people to defer the payment of care fees, with the balance of the care fees and any outstanding interest being repaid to the local authority when their property is sold either before or after their death.
- In order to be eligible for the scheme, an individual must be receiving care in a care home, own a home (or have an interest in one), and have other assets worth less than £23,250.
- The arrangement will require the home to be valued and an equity limit will be applied to determine the amount that can be deferred (to protect local authorities against a drop in property prices).
- Adequate security over the property will be needed, for example a legal charge.
- Interest, administration and legal fees can be charged, but local authorities are required broadly to run the scheme on a basis that doesn’t generate additional costs.
- Interest rates must not be more than 0.15% above the published Office for Budget Reponsibility yield and must be reviewed every six months. The current rate (covering 1 July 2017 to 31 December 2017) is 1.65%.
Postponed Changes (Part 2 of the Act)
Means Tested Financial Assessment Upper and Lower Threshold Levels
- Higher capital limits were proposed for assessing whether individuals are to be eligible for local authority support towards the cost of care.
- Instead of the current £23,250 and £14,250 limits, these would have become:
- Upper: £118,000 (with or without property)
- £27,000 (if property is owned but disregarded)
- Lower: £17,000
Cap on Care Costs
- It’s intended to cap the amount an individual spends on their ‘eligible care needs’ over the course of their lifetime, from the date the cap is implemented.
- This was initially due to be set at £72,000, but was expected to increase each year in line with the movement in general earnings.
- The cap is not reached when you have spent £72,000. The cap represents the amount of care you could buy at the rate your local authority would pay and will accrue from the date of the cap being implemented.
- Similarly, ‘hotel costs’, such as accommodation, food and heating costs, are not considered ‘eligible care costs’. Spending on these would not be measured against the Care Cap, and individuals would need to continue funding these once the cap had been reached (unless they would qualify for means tested support) where these costs would be met by the local authority. For those in residential care homes, a fixed amount of £230 per week (£12,000 pa) still needs to be met by the individual.
- Only those eligible costs incurred after the introduction of the cap will count towards it.
An Uncertain Future- Will the postponed changes even come into being?
- The government is expected to publish a consultation on proposals to improve social care.
- The move was outlined in the Queen’s Speech at the opening of parliament in June 2017. There was no more detail about what the proposals in the consultation would include.
- Without a majority government, the Conservative Party appears to have backed away from controversial proposals for reforming the way social care is funded, which critics dubbed a ‘dementia tax’, as detailed in the party’s 2017 election manifesto.
- Under the proposals, people requiring residential or home care would pay the full costs of their care until their assets (including the value of their main residence) fell to £100,000. The government later announced there would be a cap on the amount people would have to pay, but did not specify what amount.
- It will be interesting to see the outcome of the consultation. By originally proposing the abandonment of the planned £72,000 cap in their manifesto we’ve already seen the Conservatives outline a very different direction of travel from that scheduled under Part 2 of the Care Act.
- The consultation may lead to very little change in practice. Equally it could be pivotal.
What does this mean for those seeking care right now?
- Whilst elements of the Care Act are in limbo, nothing has changed yet. The funding of a person’s adult social care continues to be subject to means testing, and remains the responsibility of the individual. This is likely to be the case for the foreseeable future. It’s likely to take considerable time for the consultation process to complete, legislation to be passed and for clients to accrue care costs up to any ‘cap’ that is implemented.
- This means that many people currently in need of long term care are unlikely to see the benefit of any change. On the other hand, clients needing care may feel paralysed and unwilling to make a financial decision until full details of the new regime are confirmed.
Options to consider
- Universal Deferred Payment Arrangement
- Equity Release
- Immediate Needs Annuity
- Pension Funds
To discuss these options, please do contact us and one of our Long-Term Care specialists will be delighted to have a conversation with you.
