Changing the way care is funded

The local authority is responsible for the assessment of both your care needs and your ability to fund your own care, irrespective of whether the care is delivered in a care home or in your own home.

At present, whether a person is required to contribute and how much is defined by an assets test, with those holding assets of more than £23,250 currently required to fully self-fund until their assets fall below this threshold.

The person’s home is not taken into account if they or a dependent are living in it. For those receiving in-home care this means it will be usually be discounted, but for those in a residential home it will be counted and most home owners will typically end up as self-funders.

The cost of a residential home is typically £500 to £600 a week depending on location, says Stephen Lowe, group external affairs and customer insight director of Just Retirement, and more for higher quality accommodation or for those requiring extra services.

Residential care today typically costs £28,964 a year, according to Frances Ross, product manager at Partnership, and domiciliary care is charged on an hourly basis.

The funding system for social care is in the process of being reformed, Mr Lowes adds, and it is intended that the cap will be £72,000 when it is implemented in April 2016.

Only spending on care will count towards the cap, not spending on food and accommodation costs or personal spending. This means the amount an individual will spend will far exceed the cap and only about one in eight people are expected to benefit, Mr Lowe says.

The system will not change the method of assessing whether a person is required to pay or not, which will still be determined by an asset test. The levels applied are changing, however, and from next April those with up to £118,000 will be eligible for some financial support.

Phased approach

The first section of the Care Bill came into force at the start of April 2015 and Ms Ross says it provided a more standardised approach to not only who should pay for care but also how much they would need to pay.

The first step in determining who will pay for care is for a local authority to ascertain a person’s level of need using the health and social care assessment, which Ms Ross says provides an activities of daily living (ADL) measurement.

In order to be considered for state support Ms Ross says the person would need to have ‘severe’ or ‘critical’ needs.

Then if a person has assets above £23,250 then they are likely to need to pay for their care. If they own a home but their husband/wife lives in it then this is not counted towards the total.

If they have assets of less than this level then Ms Ross says they may still need to make a financial contribution to their care. For example, Ms Ross says they may need to pay £4 towards care for each £1,000 they have.

But from April 2016, this will change as the second part of the Care Bill comes into force. After this people will be eligible for some local authority financial support if they have assets of less than £118,000.

The level of support they can expect depends on the amount of assets and as before for each £1,000 they will need to pay £4.

Under the new £72,000 capm, which as stated does not include hotel costs [i.e. room and board] or any charges above what the local authority deems a fair cost, Ms Ross says she has worked out that someone in England might pay on average £177,500 over more than six years before hit this cap.

To add to the complexity, Ms Ross says Scotland and Wales also operate slightly different systems so how much someone pays and whether they receive state support very much depends on their location.