Reforms to Social Care Costs – Protecting Your Assets
27 Sep 2021
The Government have announced plans to introduce a new social care system which will dramatically change the amount that private clients may have to pay for home or residential care.
The new rules will mean that, in England, no one will have to pay more than £86,000 in care costs, regardless of how much money they have, how old they are, or what their condition is requiring care. The Prime Minister, Boris Johnson, said the measure will “end the cruel lottery around social care costs”.
Currently, anyone with more than £23,250 in savings and assets, which includes the family home, are expected to meet the costs of later life care in full. People with less than £14,250 will receive full financial support. For those between there is a sliding scale of how much support is available. This means that around one in seven of us are likely to face care costs of more than £100,000.
Under the new plans, from October 2023, the threshold figure will be raised. If someone seeking care has combined assets of:
• More than £100,000
They are likely to have to pay their own care fees in full. But the maximum they will have to pay over their lifetime will be capped at £86,000. Once that cap is reached, the local authority will pay. However, note that any additional fees paid for a more expensive service than standard will not count towards the cap.
• Between £20,000 and £100,000
They may be eligible for some means-tested support from the local authority. They will be expected to contribute some of your income towards the cost of care. However, the proposals say that this contribution should be no more than 20% of their chargeable assets per year.
• Less than £20,000
They won’t have to pay anything for their care from their assets but may need to contribute from their income.
In addition, the Government have said, “The overall system will be made fairer, to ensure those who fund their own care do not pay more than state-funded individuals for the equivalent standard of care.”
It appears these proposals will help give people certainty about the likely personal cost of any social care they may need in the future. It will allow them to plan for what they deserve in later life and hopefully allow them to retain assets to pass on to their loved ones.
Whilst many will welcome any commitment to tackling social care funding, it will be worth looking at the detail of the Government’s plans as they emerge over the next couple of years. In theory couples could still end up paying £172,000 if both needed care. For many families this would still mean the vast majority of their estate being lost to care home fees. So, no doubt other estate planning options that assist with protecting against care costs will still be a top priority to get advice on.
What should I do now?
The private client department at Gard and Co offers free advice sessions for anyone interested in receiving guidance in protecting assets for their families.
If you would like further information or advice please contact Jane, Glenn or Bethany on 01752 668246 or send an email by clicking here.
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