Revival of Cap on Care Costs

In a startling U turn on government policy, four years after abandoning their cap on care costs, the Prime Minister has announced “from October 2023 no one starting care will pay more than £86,000 over their lifetime, and no one with assets of less than £20,000 will have to make any contribution from their savings or housing wealth – up from £14,000 today.  Meanwhile anyone with assets between £20,000 and £100,000 will be eligible for some means-tested support.  This new upper capital limit of £100,000 is more than four times the current limit, helping many more people with modest assets.”

The proposals are part of the recommendations from the 2021 Dilnot Commission which were set up under the coalition Government of the day.  When the Commission reported they proposed the cap to be £72,000.

The current lower capital threshold of £14,250 and upper capital threshold of £23,250 have been in place since 2010/11 so the increase of these limits is certainly very welcome. However, the increase to the lower capital limit is only really inflationary (based on statistics from the Office of National Statistics).

The Minimum Income Guarantee (MIG) for homecare users is also due to be increased from its current level which was set in 2015. The MIG is the amount that someone can keep from their income, with the remainder being paid to the local authority to go towards their care.

The £86,000 cap is something of a red-herring, however, as reference to this cap is in relation to the payment for care.  It excludes payments for food and accommodation which therefore means that many people receiving care will be unaffected by the new limit.

The other major factor is that the cap will only apply to those who start receiving care from 2023 onwards, and all those currently receiving care will not have any cap on their costs.

It is likely that the biggest “savings” will be for those clients who have between £20,000 and £100,000 and one suspects that the tariff income (which is the charge at £1 per week for every £250 in capital they have between the lower and upper thresholds) will remain in place.

The devil, will of course, be in the detail and hopefully all stakeholders will have the opportunity to comment on any consultation on proposals.

During the intervening period, it will still be important to obtain advice as to possible options based on the current rules, as nothing is definite until the legislation and regulations are actually in force.

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Please note the contents of this article are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.