The cap on social care – how will it work?
On 30 March the Department of Health completed a consultation on the cap on care costs; how the appeals system will work; and how the tapering care cap will operate for working age adults who become severely disabled. For the first time, all the information IFAs need is gathered together in one place. In summary here is how the new system will work.
From 1 April 2016, anyone assessed by a local authority as having eligible care and support needs will begin to progress towards the cap. The cap will be £72,000. So at first sight it would appear that the maximum amount anyone will have to pay for care to meet their eligible care and support needs from April 2016 onwards will be £72,000. However it is not as simple as that.
To make it all happen the local authority in whose area the person is ordinarily resident, will start a care account which will monitor their progress towards the cap. Anyone who is assessed by the local authority as having eligible needs after 1 April 2016 will begin progressing towards the cap from the date they requested an assessment or the local authority identified that they might need one. Costs accrued before 1 April 2016 will not count towards the cap.
For each person with eligible needs, the local authority must provide either a personal budget, where the local authority is going to meet the person’s needs, or an independent personal budget (IPB), where the person is meeting their own eligible needs. These will set out the cost of meeting the person’s eligible needs that will count towards the cap. So, in practice the progress to the cap will vary from area to area. The local authority will provide each person with an annual care account statement setting out their progress towards the cap.
The good news is that those receiving help with their care costs from the local authority will not pay the full amount themselves, but the total cost of meeting their eligible needs will accrue towards the cap. But there are also some downsides from the point of view of how quickly someone will reach the cap. In particular not everything that is spent goes towards the cap. First, we have living expenses. For these, the Government has set a notional amount of £230 per week and people will remain responsible for their daily living costs throughout their care journey, including after they reach the cap. Second, costs incurred before 1 April 2016 will not count. Third, the costs of non-eligible needs will not count even if the local authority has agreed to meet them. This is a very important distinction, particularly for people who move say from non-eligible residential care to a care home when their condition has deteriorated. Fourth, top-up payments that a person chooses to make for more expensive accommodation. I suspect this is going to force care homes and local authorities to make their charging structures much more transparent. It is difficult to see how the current position of private and state funded residents getting the same facilities but for different charges can be sustained. Fifth, services not included in the personal budget such as help towards reablement. Sixth, interest or fees on deferred payment agreements – which come into effect this year – an important consideration for current clients making choices on how to support their current care needs.
It remains to be seen the extent to which insurance will enable people to meet their expenses before they reach the cap.
Written by Richard Walsh. First published in Cover Magazine, March 2015