Care Act Factsheet 6. Reforming how people pay for their care and support

“For the first time, individual liabilities will be limited, protecting people against the worst aspects of the current care lottery. The increase in the upper threshold for means-tested support…is also a boost for those with modest resources who are most heavily penalised under the current system. The combined effect of the cap and a higher means test threshold will see more people receive public funding.”

“The King’s Fund

This factsheet describes how the cap on care costs system and the extension to means-tested financial support for care costs will work from April 2020. These reforms aim to end the unfairness and fear caused by unlimited care costs and provide more people with financial support from the State towards the costs of their care and support.

Why are we changing the law?

Unlike health, care and support is not free at the point of use. Everyone has to contribute something towards their care costs, and this will continue in the future.

Currently, only people with assets of less than £23,250 and low incomes receive any help from the State with their care and support costs. People who develop long-term, severe care and support needs can therefore face substantial costs before they can get financial support from the State. We know that 1 in 8 of us will face the highest costs but no-one knows which of us that will be.

What are the funding reforms?

These reforms aim to give everyone the peace of mind that they will be protected from catastrophic care costs by means of a cap on care costs. The cap will limit the amount people have to pay towards the cost of their eligible care and support over their lifetime. An extension to means-tested financial support will work in conjunction with the cap so that people retain more of their assets, and that more people will receive help with the costs of their care from the State.

What do the Act and Regulations do?

The Care Act established the legal framework for the reforms. Regulations made under the Act will come into effect in April 2020 to implement the funding reforms outlined in this factsheet.

Cap on care costs

From April 2020,there will be a cap limiting the amount people will have to pay for their care and support. The level of the cap will be set out in regulations.

How the cap on care costs works

a) Progressing towards the cap

Progress will be based on the cost to the local authority of meeting a person’s eligible care and support needs.

For people in a care home a contribution to daily living costs (see below) will be deducted from that cost. The costs will be set out in a person’s personal budget if they are receiving local authority support or, if they are meeting the costs themselves, their independent personal budget (IPB).

An IPB reflects the amount it would cost the local authority to meet a person’s eligible care and support needs if it was required to do so.

b) Daily living costs

Wherever we live, we face the same basic costs for things such as rent, food and utilities, irrespective of whether we have a care and support need. As such, these costs will not count towards the cap.

To ensure fairness between people receiving care in different settings, a person in a care home will continue to contribute towards these costs. As it is often difficult to separate the costs of care and support costs and daily living costs for a person in a care home, a notional amount for daily living costs will be set in the regulations.

c) Keeping track

Everyone with eligible needs will have a Care Account that will record their progress towards the cap. This will be held by the local authority and will set out the rate at which a person is progressing and how much they have accrued towards the total. Local authorities will send statements at least annually.

d) Reaching the cap

When a person reaches the cap the local authority will have to meet the person’s eligible care and support needs. Everyone will continue to be responsible for paying their daily living costs after they reach the cap. Anyone paying a top-up fee will continue to be responsible for making these payments after they reach the cap.

Extension to means-tested financial support

The amount that the State will pay towards someone’s care and support costs will continue to be means tested dependent on the person’s assets and income.

The intention is that from April 2020, the upper and lower capital limits for means tested support will be increased so that more people will become eligible for local authority financial support.

Extending choice of accommodation

People who receive local authority financial support and whose care and support needs have been determined to be best met in a care home may choose more expensive accommodation than the amount set in their personal budget.

The additional costs associated with such choices (known as ‘top-up’ payments) must be met by the person themselves (‘first party top ups’) or a third party such as a family member or friend, under a written agreement with the local authority. Currently, there are restrictions on the circumstances in which people can make first party top-up payments.

In order to facilitate choice, the regulations will lift the restrictions on first party top-ups in April 2020. However, the decision to make top-up payments will remain completely optional and will, as now, be subject to the person making the payments being willing and able to do so and a written agreement with the local authority.”

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