The Government has announced more details of the social care reforms planned for October 2023, revealing what people in residential care will be expected to pay per week for daily living costs to cover food, accommodation and utility bills.
In September, Boris Johnson unveiled his new plan for adult social care reform in England, including a £86,000 lifetime cap on the amount anyone in England will need to spend on their personal care from October 2023, alongside a more generous means-test for local authority financial support.
Now the government has published further details on the new reforms, including the standard level at which ‘daily living costs’ will be set.
The Department of Health and Social Care said that for individuals who receive financial support for their care costs from their local authority, it is the amount that the individual personally contributes that will count towards the cap.
It has also said the upper limit at which point people become eligible to receive some financial support will rise to £100,000 from the current £23,250. The new threshold means people with less than £100,000 chargeable assets will not contribute more than 20% of these assets per year.
Meanwhile, the lower capital limit – the threshold below which people will not have to pay anything for their fare from their assets – will increase to £20,000 from £14,250.
The Government said the new lifetime cap will not cover daily living costs for people in care homes and people will remain responsible for their living costs including after they reach the cap. It has set a notional amount of £200 per week.
Aegon pensions director Steven Cameron welcomed the greater clarity. “The Government previously announced that individuals would from October 2023 not be asked to pay more than £86,000 towards the costs of social care. This was a very welcome decision which will avoid individuals potentially finding their lifetime savings are wiped out if they need care over many years.
“However, those in residential care homes pay not just for care but for room and board. It was always the plan that these extra costs would have to be met by the individual in addition to the £86,000 cap. The Government has now proposed a national notional charge for room and board, or Daily Living Costs of £200 per week. This gives more clarity around this element of possible future costs.”
As an example, Aegon said an individual paying a total of £700 per week to a care home will have £200 of that amount deemed as daily living costs while the remaining £500 will count towards the £86,000 care cap.
Cameron said: “£200 per week for room and board may look proportionately low and some might have expected it to be set higher. But by setting it low, the Government is counting more as care which will mean individuals reach the £86,000 cap and stop paying for care sooner.
“This proposal applies only in England as other parts of the UK have their own rules. It’s an important step taking us closer to helping people plan ahead for possible care costs in later life. Many may wish to seek financial advice on their options. If an individual has a pension of £200 per week or more, including their state pension, this could be used to finance the ongoing room and board costs. Making sure they have other assets of £86,000 could then cover the care element and give individuals the comfort that any remaining savings can be passed on as an inheritance.”
However, Stephen Lowe, group communications director at Just Group, called on the Government for finer details.
Lowe said: “The average self-funder in a care home that costs £776 a week will have to pay the whole amount for more than four years before they get any help from the State. If they need care for six years, they will pay more than £200,000.
“The government has promised a consultation in January and we will be looking forward to seeing more of the finer details in order to fully understand the settlement on offer.”
Just Group detailed a case study in which it said that for a self-funder in a residential home costing £776, initially the self-funder would pay all the costs and £396 a week (£596 minus the government’s £200 daily living costs) of that spending would be assessed as counting towards the £86,000 cap on personal care costs.
The resident’s total spending on personal care reaches the cap after 217 weeks at which point the local authority starts to pay the £396 personal care costs. As a result, the person remains responsible for paying the remaining £380 a week costs, which includes the £200 daily living costs.