Care Funding Advice in Cambridge

For the best care planning advice in Cambridge provided by a SOLLA Accredited Adviser, talk to us because we can help you or a family member take control over the most significant decisions you’ll need to make.

Funding care in later life involves planning for the costs of specific needs unique to older and, often, vulnerable people.

22 years after the 1999 Royal Commission, in a Policy Paper entitled Build Back Better: Our Plan for Health and Social Care, the Government has finally announced its new plan for the reform of Social Care. De facto, a new health and social care tax will be introduced across the UK to pay for reforms to the care sector and NHS funding in England.

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Additional money will be spent of social care and the NHS

Additional money will be spent of social care and the NHS funded by a 2.50 percentage point rise in National Insurance from April 2022 (1.25 paid by both employers and employees), and will then become a separate tax on earned income from 2023 – calculated in the same way as National Insurance and appearing on an employee’s payslip.

This will be paid by all working adults, including older workers over State Retirement Age who currently do not pay NICS, and the government says it will be hypothecated to go only towards health and social care costs. Income from share dividends will also see a 1.25 percentage point tax increase.

The essence of the plan is to introduce a cap on care costs in England from October 2023 of £86,000 over a person’s lifetime. All people with assets worth less than £20,000 will then have their care fully covered by the state, and those who have between £20,000 and £100,000 in assets will see their care costs subsidised.

The UK-wide tax will be focused on funding health and social care in England, but Scotland, Wales and Northern Ireland, who have their own health systems, will also receive an additional £2.2bn to spend on their services.

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You will still need to be eligible for care to benefit from the cap

But the cap only solves one part of the problem – protecting people’s assets when they face catastrophic costs. You will still need to be eligible for care to benefit from the cap. Access is rationed so only the frailest qualify – currently half of requests for help are turned down. Councils say the money will do little to help them tackle this. There was no mention of it in the 33-page Policy paper, but the government has since confirmed that the accommodation-related costs of care – those associated with daily living, such as food, energy bills and the physical building – would not count towards the cap – only the costs associated with the actual care provided.

Previous incarnations of the cap – the coalition government first considered it – suggested people’s contribution to these accommodation costs should be fixed at £12,000 a year. That would cover a third of the total annual costs of an average care home – £36,000 – but mean individuals could face £1,000 monthly bills even after they hit the cap. But if only £24,000 a year of an individual’s costs count towards the total cap, it would take more than three and a half years to hit it and at that rate not many old people would live long enough to reach the total cap. Half of those in care homes die in little over a year, with three-quarters not making it past three years. Care you receive in your own home would count towards the cap, but this tends to cost much less and therefore people would normally need to be in receipt of that care for many years to hit the cap.

How much will you have to pay for care?

Care fees will vary depending on the area that you live in, the individual care home itself and your personal financial circumstances. Costs range from around £500 a week for a care home place and £2,000 a week for a place in a nursing home.

Your local council will calculate the cost of your care and how much you have to contribute from your resources. This figure must be realistic and allow you to access an appropriate level of care in a local care home. If all your eligible income is taken into account in your ‘means test’ (how much you can afford), you must be left with an income of at least £24.90 per week. This is known as your ‘Personal Expenses Allowance’.

If you have health care need the NHS may also contribute towards the cost of your care. If you’re eligible for NHS continuing healthcare, your care home placement may be free.

How could my finances and property affect my fees?

If your local council carries out a care needs assessment and finds you need a care home place, they will do a means test. This may take into account the value of your property, if you own one, as well as your income and savings.

Currently and before the new plans come into effect, here’s how the means test for social care will look at your capital (your savings and property) and how this will affect your care home fees.

Your capital
What you will have to pay
Over £23,250
You must pay full fees (known as being self-funding).
Between £14,250 and £23,250
The local council will fund some of your care and you’ll contribute to the rest.
Less than £14,250
This will be ignored and won’t be included in the means test – the local council will pay for your care. However, they will still take your eligible income into account.

Certain types of income, including certain disability benefits and pensions, may not be counted in the means test. This is the same for certain types of capital, including insurance bonds. All other income and capital can be taken into account.