The social care cap explained
Our current social care system is seen as widely unfair. One in ten people aged 65 and over spend £100,000 or more over their lifetime. Often leading to many people spending their assets and selling their houses to afford to pay for their care.
On the 7th September 2021 the government released a new plan for adult social care reform, with the social care cap being the heart of it. From October 2023 there will be an £86,000 cap on personal care payments for all adults of any age without exemption.
However, it was announced in November this year, during Hunt’s autumn statement, that there would be a two-year delay on the cap on care costs.
What is the social care cap?
The social care cap is an upper limit, like a ceiling, on the amount of money any individual will be asked to pay towards their social care costs. Once a person has paid enough to reach this limit, state support kicks in to cover their care costs.
Why has the cap on care costs been delayed?
Despite many people waiting and relying upon the introduction of the social care cap, Hunt has stated that it will be delayed and the allocated funding will be granted to local authorities to provide more care packages.
Hunt, stated in his autumn statement that whilst the care cap will be delayed for two years instead of retaining the funding allocated for the reforms in the Treasury, it would still go to councils. Hunt explained how £1.3 billion will be made available in 2023-2024 and another £1.9 billion in 2024-2025.
It is hoped that the additional funding will help the social care system free up the occupied hospital beds by those who should and can be cared for at home.
It is estimated that the increased funding will help provide care for an extra 200,000 people.
What has the reaction been to the social care cap delay?
Despite funding for care services increasing during the delay, there have been mixed reactions to this decision.
Sir Andrew Dilnot, the economist who developed the blueprint for the care cap, stated that:
“ It is completely unacceptable… families have already been budgeting on the assumption they could rely on the cap.”
Others have agreed and Steven Cameron, the Pensions Director at Aegon UK has said
“It will mean many simply won’t live to see the benefit, It could easily cost those paying towards their care an additional £26,000 for every year of delay.”
Alternatively with this being the biggest social care funding rise in history there have been many arguments that are for this decision.
The County Councils Network for example have argued that:
“it was a brave decision but completely the right one.”
There has been increasing concerns that following through and implementing the social care cap now would have significantly added to the ongoing financial and workforce pressures the care industry have already been suffering from.
Councillor James Jamieson explains that:
“ The government need to use the delay announced to ensure that funding and support is in place for councils and providers so it can be implemented successfully.”
Even though there has been some disappointment with the delay it is clear both the additional funding and the care cap will be beneficial to the care industry.
In the meantime local councils will be able to deliver more care packages due to the additional funding and come 2025 there will be more benefits for your local residents. What is important is that despite these changes, everyone needs to be aware of what the social care cap is, how it will work, and most importantly how it will affect you.
Social care cap - What do we know?
One benefit from the upcoming reforms is that both the upper and lower capital limits will be increased. The upper capital limit will be increased from £23,250 to £100,000, and the lower capital limit will be increased from £14,250 to £20,000. Under the new social cap anyone who falls below the upper capital limit will be able to qualify for means-tested support and anyone who falls below the lower capital limit will not have to contribute.
This more generous means-testing also will allow further help to people with lower assets. The government have stated that people with less than £100,000 will never contribute more than 20% of their assets per year.
What are the impacts of the social care cap?
There will be a variety of impacts as a result of the care cap. Some people will be eligible to fully funded social care before their cap is reached. Others may experience being below the upper limit and only their contributions will count towards the cap.
The responsibilities of the Local Authority under the social care cap
An increase in communication with the Local Authority is clear as the government have declared that self-funders can ask the Local Authority to arrange their care for them. The government also have made clear that the Local Authority should not treat self-funders differently like commissioning care at a higher rate.
It will also be the Local Authority’s responsibility to identify who currently meets their eligible needs as well as provide a profile for each person to keep track of their contributions, and notify people when they reach their social care cap.
The government intends to change regulations to allow everyone to receive Local Authority financial support, if needed. These top-up payments provided on top of a person’s personal budget or independent budget will not count towards the care cap, but will still be available once the care cap is reached. It will be the Local Authority’s responsibility to provide both the personal budgets and the independent personal budgets.
What is not included in the social care cap?
- Any costs accrued before October 2023
- Any living costs that are not directly linked to care i.e. rent, food, utility bills
- Any financial contribution from Local Authority
- Any top – up payments the person or a third-party chooses to make on a preferred accommodation
Cost of the care cap
The government have stated that the new social cap will be funded by both national insurance contributions and dividend tax rate increase. The national insurance increase of April 2022 will count towards the funding of the cap. Only those who are working above the state-pension age levy qualify to contribute. The dividend tax rate will increase by 1.25 percentage points. The government have declared this increase will allow Wales, Scotland and Northern Ireland to benefit around 15% more than is generated from their residents.
Reactions to the care cap proposal
Since the announcement of the cap many experts have had differing opinions. ADASS (directors of adult social services) have stated urgent clarification is needed, as the cap did not meet or present the many pitfalls the care system is currently experiencing. Like why conditions like dementia are widely seen as a social care issue instead of being heavily means tested when its impact can be as distressing as cancer.
A study by the Institute for Fiscal Studies have stated that the cap is not just important for those who will have large care costs, it is useful for everyone as it provides people the opportunity to plan.
Hopefully with the two year delay that has recently been announced, these questions will be answered so the cap on care costs can be implemented successfully allowing everyone to benefit.
Tools to help manage the social care cap
Local authorities’ adult social care departments are already challenged by market shaping and the care cap changes will complicate matters further.
Being prepared for future demands when the social care cap will be implemented is crucial. It will determine that everyone needing care will get the provisions they require and will be appropriately means tested without any discrimination.
Caring for those who are vulnerable is a top priority for local authorities. Our social care finance software helps manage cases for those who need care in your local area to help reduce admin time and spend more time supporting people who need it. Our software can reduce admin time as much as 80% and helps make budgeting easier to steamline your payments and billings.
Local authorities across the UK are making it easier to work with data to better understand their care markets. Even groups of local authorities, such as ADASS East can forecast for specific needs and help shape their care markets to best meet those needs.
At The Access Group we want to make sure you have all the information and guidance you need when implementing the care cap. Watch our social care cap webinar today where we explain in more detail everything you need to know.
To understand more about how market shaping is changing, and which local authorities are adapting best download the latest guide: ‘Market Shaping: Why it’s important and how technology can help.’
