From October 2023, the Government will be introducing a new cap on the amount anyone in England will need to spend on their personal care over their lifetime.
The £86,000 limit is designed to put an end to unpredictable and unlimited care costs and ensure that self-funders access better value care. But the reforms are not quite as straightforward as they seem. Here, we answer some of your questions about the new rules:
Is £86,000 the most I will pay for my care under the new ‘care cap’ reforms?
Not exactly. The care cap only applies to the amount you will pay over your lifetime based on time spent delivering care associated with your needs. It doesn’t include your daily living costs including food, utilities and any non-nursing care, should you move into a care home.
In fact, based on the average period of time an individual stays in care and the difference between care costs and daily living costs, most care residents will never hit the £86,000 cap. So whilst an individual may not pay more than £86,000 towards their care, this doesn’t mean they will not pay more than £86,000 for their stay in a care home as a whole, when you factor in daily living costs.
Are my living costs included in the care cap?
Unfortunately, no. The cap only applies to the cost of your care. Your daily living costs, such as food, energy bills and accommodation, don’t count towards it.
For example, an individual who is living with dementia in a care home may be paying care fees of £3,000 per month. However, when you look at the break-down of those fees, it may be the case that only £1,000 of that invoice relates to the delivery of care and the other £2,000 is associated with daily living costs.
That means only £1,000 is applied towards the care cap. The other £2,000 will never count towards it.
Will I have to sell my house?
You may recall the Government announcing that “nobody needing care should be forced to sell their home to pay for it.” This is only partly true. The rules as currently drafted mean that no-one will have to sell their home to pay for care in their lifetime.
If you do not have adequate funds to pay for your care, and you do not qualify for funding through the National Health Service or the Local Authority, you will not need to sell your home immediately. However, you may have to agree to give part of the proceeds of a future sale of your property to the Local Authority to fund your care (see What is a DPA?).
What is a DPA?
DPA stands for Deferred Payment Agreement and it’s essentially a loan agreement with a Local Authority who agree to pay your care costs upfront for you. The Local Authority will put a charge on your property for the costs they incur, and in the event of your death (or when your home is sold) they will recover their funds from the proceeds of sale.
Can anyone get a DPA to pay for their care?
The Government has stated that they will make sure every individual will be able to access the Deferred Payment Agreement. However, the decision as to whether a DPA is granted currently rests with the Local Authority. They will only agree to a DPA where they are satisfied that the property is appropriately registered with the Land Registry and provides adequate security for the loan – i.e. they want to ensure they get their money back in full.
Is it more costly to fund my care using a DPA?
A DPA is generally subject to interest and administration charges. If you are considering a DPA, you should take advice to make sure you understand the total costs associated with the arrangement.
How soon does a DPA need to repaid after my death?
A time limit for the sale of a property following a person’s death is often imposed in the DPA terms and conditions. This is something that the Executors in your Will should be made aware of.
I wanted to leave my house to my family. Will I still be able to do this if I have to go into a care home?
If you have agreed to a DPA with your Local Authority, your beneficiaries will need to settle up the bill for your care in the event of your death. This will likely mean that the house will have to be sold to pay back the Local Authority unless the beneficiaries under your Will have the means to settle the debt with the Local Authority and retain the property.
What should I do if I think I am being asked to pay for care, which the Local Authority should be funding?
If an individual thinks they are being asked to pay for care incorrectly then they should take legal advice as soon as possible. Consideration will need to be given to both the care assessment and financial means assessment, in order to understand the circumstances of the matter and the options available.