The Cost of Long-Term Care
The Government originally proposed that the adult social care charging reforms would be implemented from October 2023. However, at the Autumn Statement 2022, delivered on 17 November 2022, the Chancellor announced that the reforms would be delayed for two years, with the funding allocated “to allow local authorities to provide more care packages.”
What had been proposed?
Under the now-delayed reforms, the Government plans to introduce a new £86,000 cap on the amount anyone in England will have to spend on their personal care over their lifetime. The cap will apply irrespective of a person’s age or income. The legislative framework for a cap is already provided by the Care Act 2014, but the relevant provisions are not currently in force.
Only money spent on meeting a person’s personal care needs will count towards the cap. Spending on daily living costs (commonly referred to as “hotel costs” in a care home) is not included. Prior to its announcement delaying the reforms, the Government had said daily living costs would be set at a notional level of £200 per week at 2021/22 prices.
The cap will not apply retrospectively (ie costs accrued before implementation will not count towards the cap).
The Government also proposes to make the means test for accessing local authority funding support more generous. The upper capital limit (the threshold above which somebody is not eligible for local authority support) will increase from £23,250 to £100,000. The lower capital limit (the threshold below which somebody does not have to contribute towards their care costs from their capital) will increase from £14,250 to £20,000.
So what is the current situation?
When assessing how much you will have to contribute towards the cost of your care your local council must calculate the overall cost of your care and, using the means test, determine how much you have to contribute to the overall cost from your financial resources. The council must ensure that the overall cost figure it calculates, called the ‘personal budget’, is high enough to meet the cost of at least one suitable care home.
You will be expected to pay towards the cost from your income included in the financial assessment, for example pensions, however you must be left a Personal Expenses Allowance (PEA) of at least £24.90 per week.
The value of your property may also be included as capital in the means test.
Here’s how the means test for social care will look at your capital and how this will affect how much you pay for your care.
| Your Capital | What you will have to pay |
|---|---|
| Over £23,250 | You must pay full fees (known as being self-funding). |
| Between £14,250 and £23,250 | You contribute from income included in the means test, such as pensions, plus an assumed, or ‘tariff’ income based on your capital between £14,250 and £23,250. The council pay the remaining cost of your care. |
| Less than £14,250 | You no longer pay a ‘tariff’ income based on your capital, but you must continue paying from income included in the means test. The council pay the remaining cost of your care. |
Disposing of assets
Some people think that they can simply give away their assets if they are going to need long-term care in order to avoid having to pay for this. However, any disposal of assets can be looked at by the local authority to determine if it was a deliberate deprivation of assets.
What counts as deprivation of assets?
Deprivation of assets applies when you intentionally reduce your assets, such as money, property or income, so these won’t be included when the council calculates how much you need to pay towards the care you receive.
When your council is deciding whether getting rid of property and money has been a deliberate deprivation of assets, they will consider two things:
- You must have known at the time you got rid of your property or money that you needed or may need care and support.
- Avoiding paying for care must have been a significant reason for giving away your home or reducing your savings.
If the local council thinks that you have deliberately reduced your assets to avoid care fees, they may still include the value of the assets you no longer have when they do the means test.
How is this applied?
As stated above, there are two things the council must consider when deciding if a disposal of your assets is a deliberate deprivation.
- You must have known at the time you got rid of your property or money that you needed or may need care and support.
The timing is important. The council will look at when you reduced your assets and see if, at the time, you could reasonably expect that you would need care and support. The local authority must decide based on all the case facts and clear reasons, which could be challenged.
If you were fit and healthy, and could not have imagined needing care and support at the time, then it may not count as deprivation of assets.
- Avoiding paying for care must have been a significant reason for giving away your home or reducing your savings.
The reason is important. The council will look at the reasons for disposing of an asset, and if avoiding paying for care played a significant role in your decision. The local authority must decide based on all the case facts and clear reasons, which could be challenged.
If there were other significant reasons for disposing of an asset then it may not count as deprivation of assets.
We hope you found this information useful and if you want to arrange a no-obligation home visit to explore your estate planning options, give us a call on 01773 443301.
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