Tackling the Financial Cost of Care

Individuals receiving social care, including elderly people at home or in residential settings, are to be offered greater choice and financial protection under reforms unveiled by government.

The reforms have been set out in documents including the government’s recently-published 10-year ‘vision’ to improve adult social care; promptly followed by publication of its policy paper Build Back Better: Our Plan for Health and Social Care this month (January 2022).

Importantly for elderly clients and their lawyers, the government says the reforms “will mean nobody is forced to sell their homes in their lifetime”. No one, it promises, will face unpredictable or unlimited care costs once the reforms come into effect

The intention is to discourage people from relying on residential care and enable them to be cared for at home and in the community.

The reforms worth £1 billion (funded through a 1.25% health and social care levy) will set a limit of £86,000 to the cost of care for everyone in the adult social care system, effective from October 2023. It will apply to both those in residential homes and those cared for at home. However, it seems the cap will apply only to part of the services paid for within a person’s ‘care costs’ and not, for instance, their daily living costs.

The government says the additional funding and a wider range of options for care will help local authorities offer people greater choice with, for instance, more investment in new supported housing. There will also be a new ‘repair service’ to make ‘minor’ repairs to peoples’ homes to help them remain safe at home.

What does this mean for elderly clients?

For most people, care of the elderly begins at home. But when that becomes impossible or impracticable, a move to a care or residential home may be the next best step to support their needs.

The financial implications for clients are, understandably, often the most important factor for them -not just because of the impact on their own income and assets but on their family. Importantly, it has now been confirmed that the capital limits for the purpose of financial assessments for care will also change, providing greater financial protection.

From October 2023:

  • The upper capital limit will increase to £100,000 (up from the current £23,250). Individuals with capital assets below this amount will qualify for help with their financial costs of care.
  • If an individual’s assets are above the upper limit, they will pay the full cost as a ‘self-funder’.
  • The lower limit will go up to £20,000 (currently £14,250), below which individuals will only be required to contribute towards their care costs out of their income
  • Individuals owning assets between the lower and upper capital limit will be entitled to some financial support. There will be a means-tested ‘tariff’ contribution from the person’s assets: £1 payable towards their care costs for every £250 of capital owned.

Practitioners need to understand the implications of these forthcoming changes for their clients, particularly those who are elderly; or clients who are seeking advice in relation to elderly clients who require additional care at home or in a residential setting – imminently or in the foreseeable future.

The changes in the capital limits may mean clients need to consider additional wealth planning, such as changing their wills or setting up trusts – while being mindful of potential risks around deprivation of assets.


Posted on 14.01.22