What are the Government’s care cap plans and how will I be affected?

The Government has proposed an £86,000 lifetime cap, but critics say recent changes will disproportionately affect poorer care recipients.

Care home resident
Care home resident

The Government is planning a “seismic” shake-up of the way social care is funded after years of calls for reform.

Here is a look at what the Government is proposing and how it would affect the millions of people who receive social care in England.

– Why is the Government reforming social care?

The problem of how to sustainably fund social care has remained unsolved by successive governments, and the coronavirus pandemic has heaped pressure on an already challenged sector.

Boris Johnson pledged to “fix the crisis in social care” in his first speech after being elected in July 2019, announcing plans more than two years later this September.

The Government wants to protect people from “unpredictable and potentially catastrophic care costs”, bring the health and care systems closer together and strengthen the workforce.

– What do people currently pay for social care?

At the moment a means-tested system operates, but for those who are not eligible, there is no limit on how much they could have to pay for social care.

A significant minority will experience catastrophic costs that mean they have to use up their savings and sell their home to pay for their care.

– What did the Government propose in September?

The Government announced key reforms, including an £86,000 lifetime cap from October 2023, to be funded through a health and social care levy based on tax contributions.

This is a system of pooling risk for the proportion that would face substantial care costs, and means nobody will need to pay more than this amount in their lifetime.

It also announced a more generous means-tested system.

People with assets up to £20,000 will not have to contribute anything to their care (up from £14,250), while those with assets to £100,000 will be eligible to receive some local authority support (up from £23,250).

Once the cap is reached, the Government will take over paying for the person’s care.

– What is the new change that everyone is talking about?

Last week the Government said that only people’s individual payments will go towards the cap, with means-tested funding not counting.

This is to ensure that people “do not reach the cap at an artificially faster rate than what they contribute”.

In order to do this, the Government plans to amend the Care Act, subject to parliamentary approval.

– What does this mean practically?

The overall aim remains the same – nobody will pay more than £86,000 towards their care, regardless of their level of personal wealth.

However, the new change means that if poorer people need prolonged care, this cost will eat up a greater proportion of their assets, and for longer.

For example, a person with £106,000 in assets will pay the full £86,000 – about 81% of their wealth.

A person with five times this amount in assets will pay exactly the same amount, but this will account for only 16% of their wealth.

People with between £20,000 and £100,000 worth of assets will not pay the full amount of their care each week because they receive support, and will therefore take longer to reach the cap.

– What’s the problem?

Critics say this differs from the cap originally proposed, with poorer households due to receive “far less protection than expected”.

They say this change will disproportionately affect poorer pensioners who have prolonged care costs, including those living in the North and in areas with lower house prices.

The Resolution Foundation said there is a “strong geographical dimension”, with those in North East, North West and Yorkshire most at risk of having their wealth wiped out.

The Prime Minister has been warned that some Conservative MPs will not support the new policy.

– How do the proposals compare to the existing system?

More people will receive financial help from their local authority as a result of the more generous means test, which has been welcomed.

With regards to the cap, everybody who is currently at risk of catastrophic care costs will now be protected from paying more than £86,000.

People who pay for all or part of their care will spend less than they would have done if they end up with prolonged care needs, but the richest would see a greater share of their assets protected.

The less well-off could still be forced to sell their home or run down the majority of their savings to pay for care.

Despite this, the Resolution Foundation said the proposals are a “significant improvement” on the current system.

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