So, in simple terms, my understanding is if a local authority would pay £700 a week to meet an individual’s needs in a care home, £500 a week paid by the individual will count towards the cap. If an individual chooses a more expensive facility charging £1,000 a week, then again it is £500 a week that counts towards the cap. The £300 top-up as well as the £200 a week deemed as daily living costs must continue to be paid after the cap is reached.
Local authorities will create a care account and personal budget for those needing care and will provide updates on progress towards the cap.
Means-tested support
Another key change is to the means-tested thresholds. Currently in England, individuals have to pay their full care costs until their assets have dropped below £23,250. The government then offers some means-tested support.
It is only once assets fall to £14,250 that individuals are no longer asked to contribute from assets. These limits are being increased significantly to £100,000 (upper capital limit) and £20,000 (lower capital limit) and will be uprated at ministers’ discretion, perhaps in line with price inflation.
This will mean many more individuals will start receiving some government support sooner. Once your assets are below the upper capital limit, you will be asked to pay a means-tested tariff. This will be calculated as £1 a week for every £250 of remaining capital between the lower and upper limits.
If you have not reached the cap before your assets fall below the upper capital limit (or indeed even the lower limit), you may still be asked to contribute additionally "what you can afford from income". You no longer need to contribute to eligible care costs from income once you have reached the cap.
Where the government is providing means-tested support and paying part of an individual’s care costs, it is only what the individual contributes, not the means-tested support, which count towards the cap. The House of Lords challenged this but without success.
For those receiving residential care, the means-testing approach will continue to include the value of the individual’s home. But this will be excluded if the individual is still living there, rather than in a residential care home. Care home residents can, as currently, defer selling their home until their death, repaying outstanding contributions then.
Advice opportunities
Under the current regime, it is extremely difficult to help clients plan ahead for possible future care costs. One option currently available is to buy a care annuity at the point when an individual needs care. But planning further ahead for all eventualities has been almost impossible because with uncapped personal contributions, an individual who built up more wealth was just expected to pay longer for their care.
