Proposed Cap on Care Costs: What does this mean?

In September 2021 the Government set out its plans to limit the amount a person spends on their personal care to a maximum of £86,000 via reform to the Care Act 2014. It was originally expected to come into effect in October 2023, but is now expected to be introduced in October 2025 where the government will introduce a new cap on the amount anyone in England will need to spend on their personal care over their lifetime.

What is the current position?

Currently the point at which a Local Authority will consider contributing towards an individual’s personal care is where capital falls below an Upper Capital Limit (“UCL”) of £23,250. Only when your capital falls below the Lower Capital Limit (“LCL”) threshold of £14,250 will your personal care be fully funded by the Local Authority. For anyone with capital between the UCL and LCL, for every £250 of capital an income of £1 a week is assumed for contribution towards the personal care costs.

What is going to change?

The Government’s new proposal will drastically increase the UCL from the current £23,250 to £100,000. This will mean that only individuals with more than £100,000 in capital will be expected to fully self-fund their personal care costs (subject to the cap of £86,000).

The LCL will also be increasing from the current £14,250 to £20,000 so that anyone with capital below this threshold will not have to pay anything towards their personal care costs.

In the same way as before, for anyone with assets between the UCL and LCL the amount they are expected to contribute is means tested. For every £250 of capital above the LCL and up to the UCL an income of £1 is assumed to be contributed towards the personal care costs.

The cap will not cover the daily living costs (DLCs) for people in care homes, and people will remain responsible for their DLCs throughout their care journey, including after they reach the cap. DLCs are a notional amount which reflect the proportion of residential care fees which are not directly linked to personal care, like rent, food, and utilities. These are expenses which an individual would incur wherever that person lives.

What does this mean?

With the introduction of the £86,000 cap on personal care, regardless of whether your assets are always above the £100,000 threshold you will never pay more than £86,000 on your personal care during your lifetime but will continue to contribute towards DLCs.

This proposed reform to care fees is a more generous package of support than previously provided and is likely to be welcomed by those with reduced assets who are currently expected to fund all, or at least the majority, of their personal care costs.

The implementation of this cap is likely to result in more individuals approaching their local authorities for funding support, provided they fall within the thresholds. The ONS have reported that around 63% of UK care-home residents are state-funded. This figure does not include the large numbers of people receiving personal care at home and is surely to rise following the increased UCL and LCLs proposed.

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