The Big News On Social Care Reform Announced 7th September 2021 – But What Does It Mean For Everyday People?
Putting all the noise and hullabaloo we have heard today about the rise in National Insurance Contributions to pay for Health and Social Care Reform, to one side, what does the news mean for everyday people needing good quality care?
Whilst no one doubts that health and social care needs reforming, it is worrying that it has taken until today to make such modest announcements, yet our entire population is possibly but one illness or accident away from needing to rely on the care system!
Will It Be Easier To Qualify for Local Authority Care?
Under the current system, the Local Authority only pays for social care if we have care needs that meet the legal criteria set out in the Care Act 2014.
There is no mention in today's news of whether the Social Care Needs Assessment process itself is going to be changed.
A snap survey by the Association of Directors of Adult Social Services, taken at the end of August, found that in three months it is estimated the number of people waiting for an assessment to decide what help they need and whether their local authority will pay for it has risen from 55,000 to more than 70,000.
- Only around 43% of people who approach their local authority for adult social care support receive some form of service, and a further 27% receive advice or signposting (source: The Kings Fund 2/7/21).
- We are worried that the Social Care threshold for Local Authority support won’t be lowered, so more people will have to fend for themselves, for longer, before qualifying.
- Qualifying for Local Authority social care support may, in the future, be very difficult.
- There may be a greater deal of scope for challenging the decisions made in Care Needs Assessments, but a lot of people will be sorely disappointed by the wait to get their assessment completed and any appeal heard.
When Does the Local Authority Step-In?
Under the current system, the Local Authority steps in and makes a significant contribution to the cost of care if you have assets less than £23,250.
They then make a larger contribution if you have assets less than £14,250.
But what is often overlooked is that your income is taken into account in setting the level of contribution they make.
The new proposal is that from October 2023 the thresholds of £14,250 and £23,250 will go, with a new bottom level of £20,000 put in place – so those with less than £20,000 in assets will have their care paid for by the Local Authority instead of at £14,250.
Also proposed is that there will be a means test for people owning between £20,000 and £100,000 in assets to receive a contribution, so the £23,250 is effectively replaced by the £100,000 threshold.
- No explanation has been given of whether your income will be taken into account as it is at present.
- The government said the means test will be worked out later, so we have no idea what contribution anyone will be making from October 2023, or how they are expected to fund it.
The Big Number - What is Being Proposed?
Under the current care system, anyone with assets over £23,350 pays for their care in full, the government estimates around one in seven people now paying over £100,000 for their care.
Actually, only about 10% of people pay anything like that much, it is estimated around 50% of us pay £20,000 towards the cost of care in our lifetime.
From October 2023, anyone starting care in England will not be forced to spend more than £86,000 over their lifetime - this maximum contribution applies only to the cost of care and not to other costs, such as food and accommodation.
- There will be no changes to the social care system until October 2023, so no quick changes and plenty of time for things announced today to disappear!
- The “cost of care” isn’t defined today, but may well be restricted to the more significant care needs being met by professional care homes, as opposed to domestic care which can be given in our own homes. So overall it is hard to see that everyday people are any better off from today’s “reform”!
- People needing to find the cash to pay up to £86,000 on what qualifies as care needs will still need financial advice on the choices available, so for example individuals could face £1,000 monthly bills even after they hit the cap.
- There hasn’t been any announcement on Local Authority Deferred Payment Agreements, which could mean most people having to sell their homes much sooner to fund their care.
- The £86,000 limit is for care currently contracted with care homes by the Local Authority; if you prefer a standard of care higher than a Local Authority contract, you may well need to self-fund or have third-party contributions – neither of these is affected by today’s announcement, at all.
- The £86,000 limit only applies to care, not food and accommodation; so, the concern is that the £86,000 threshold is going to take a good few years to reach, whilst finding the money to pay for food and accommodation, month in and month out will continue to be a struggle for many.
- If an individual's costs say £24,000 count towards the total cap, it would take more than three and a half years to hit it and at that rate, not many old people would live long enough to reach the total cap - half of those in care homes die in little over a year, with three-quarters not making it past three years.
So Where Now?
The summary provided here is my observation from today's announcement by the Government.
There's a lot to take onboard but most importantly an awful lot of detail is missing and it is important to ignore the issue of National Insurance Contributions - the focus has to be on the promised changes to the care system.
There's no mention of those already in the care system - how any of today's announcements will apply to them. So for now we can only focus on the current rules and help explain where & when any changes will affect the millions of care users currently in the "care system"
We have no idea when the Government will provide more details, but at least you have the latest news and views!
As ever, please give us a call or send an email if we can help.
How Much Do We Charge?
We offer a free, no-obligation initial telephone consultation for new clients to answer some initial questions and help you with some first steps.
You might have a complicated problem or want an answer in a hurry – just call us and see if we can help.
If you would like to use our services after our initial telephone call then we charge an hourly fee of £150, including travel time.
We can also agree on a fixed fee depending on what you need.
You get the answers to your questions from a specialist professional, far quicker and more reliably than searching on Google!
What Can We Do?
For any self-funding clients in need of a recommendation relating to the best way or combination of ways to pay for their care, our role at Chestnut Financial Services is to provide a recommendation regarding the best way to pay for care.
More than just care fees planning, we give broad advice to make sure our clients feel in complete control and have planned their finances with absolute confidence.
No matter how seemingly silly or difficult, our aim is to answer your questions and give you confidence about our professional work.
What It Means To Be SOLLA Accredited
We have been advising clients on long term care solutions for several years now, backed up not just by professional qualifications but also by the membership of various professional bodies, most notably the Society of Later Life Advisers (SOLLA).
Clients requiring financial planning in their later life benefit from advice that is clear and concise.
Such advice comes from an adviser that is suitably qualified and experienced to advise them and manage their financial planning.
We also find that attorneys require additional support when making financial decisions about someone else’s finances – usually a relative or close friend - whether under a Lasting Power of Attorney or a Deputyship from the Court of Protection.
We are proud that Ian Francis is an Accredited adviser with SOLLA.
Care fee plans do not guarantee to cover the full costs of the client’s care, care costs are subject to inflation and care needs may increase.
If the cost of care exceeds the income from the plan you will be responsible for paying the difference yourself.
Plans cannot be cancelled or cashed in at any time after the first 30 days.
If the income is paid directly to a registered care provider, the plan benefits from a favourable tax treatment.
Should this tax treatment be changed by HMRC or income be paid to a party other than a registered care provider, some of the income may be subject to tax.
Please note not all care fee advice is regulated by the Financial Conduct Authority.
Please Get In Touch
2a Sadler Court, Lincoln, LN6 3RG
The guidance and/or advice contained within this website is subject to the UK regulatory regime. It is therefore targeted at consumers based in the UK. Chestnut Financial Services Limited. Registered in England no 9918363, 2a Sadler Court, Lincoln, LN6 3RG. Authorised and regulated by the Financial Conduct Authority.