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The care home cap – what does it mean for you?

With the social care legislation back, we look at what the changes might mean to you.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Social care affects over ten million people in England, with nearly 2 in 3 accessing long-term support being over 65 years old.

On average, care homes cost over a whopping £33,000 per year in the UK (over £42,000 including nursing care), although this can depend on where you live.

While social care might seem like a topic for the future, the costs that come with it mean it’s important that we plan for it sooner rather than later. The earlier you plan for it, the more likely you’ll be able to afford the care you want for yourself or your loved ones.

To plan for later life, it’s important to understand the basics around adult social care. The government’s newly proposed social care cap is a good place to start.

This article isn’t personal advice. If you’re not sure if something is right for you, ask for financial advice.

What’s been proposed?

In September 2021, the government announced the return of a previously scrapped adult social care legislation. Boris Johnson said the cap would help “protect people against the catastrophic fear of losing everything to pay for the cost of their care”.

Here’s what’s changing:

  • A cap on an individual’s lifetime contribution to care of £86,000.
  • Those with assets valued at less than £20,000 won’t be expected to contribute towards their social care costs.
  • Those with assets valued between £20,000 and £100,000 will receive some contribution towards their care costs from the Local Authority.

On the surface these seem like giant steps to help serve our aging population, but there are some finer details to be aware of.

Firstly, the cap on an individual’s lifetime contribution to care of £86,000 won’t include everything. Daily living costs, like accommodation, food and utilities, as well as luxuries, aren’t covered by the cap.

Those with assets valued at less than £20,000 won’t be expected to contribute towards their social care costs from what they own. But they might still need to contribute from their income.

Whereas those with assets valued between £20,000 and £100,000 will receive a contribution towards their care costs from the local authority, but this will be means-tested. They’ll be charged no more than 20% of their chargeable assets a year. This implies that they’ll retain the current system, where people are charged £1 in ‘tariff income’ a week for every £250 in assets they earn within the threshold.  

What does the £86,000 go towards?

Like we mentioned, this doesn’t include daily living costs or luxuries.

Care in your home will also come with a cap. Individuals will only be given the number of hours the local authority thinks are needed. The problem is, this doesn’t always match up with what’s needed, leaving a shortfall where additional paid for care is needed. And like care homes, when you need care in the home, it comes with a needs and financial assessment. So while you might meet the ‘needs’ criteria, you could fall short when it comes to being financially assessed.

The final point lies around which choice of care home is available to you. Is there a care home close to you, one that you would consider if you or a loved one ever needed support? Well, it might not be covered in full. The cap will only cover the cost of a care home that an individual’s local authority is willing to pay for. So, not a more expensive or convenient one.  

There’s lots to think about when it comes to care and we think it’s important to explore your options today, so you can be financially ready for the future.

To explore the options available to you and start planning for long-term care, you can download our ‘How to fund long-term care’ guide.

Download our long-term care guide

If you don’t know where to start, we can help you.

If you think you could benefit from financial advice, start the conversation with our advisory helpdesk. While they won't give advice, they can take you through the process and charges to help you decide if financial advice could be right for you.

Book a call back now

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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