Would a cap on care fees, such as that to be introduced in England in October 2023 be as good as we thought?
Last September, the Prime Minister announced a National Insurance increase of 1.25% in an aim to help fund health and social care. For England only they announced that, from October 2023, there would be a lifetime cap of £86,000, meaning people would not have to fund their own care after paying this amount. But is this as good as it sounds or is this misleading information?
Although this care cap does not apply in Scotland, (Scotland has no cap on the monies the local authority will claim from someone in care if they have assets above £29,750 including your home) we thought it would be interesting to share the correct information with you, as some of us believe that this would be a good thing if Scotland were ever to introduce it.
Since this announcement, Downing Street has confirmed that only the cost of the care itself will count towards the cap of £86,000 and an individuals ‘hotel costs’, such as the cost of accommodation, energy bills and meals will not be included. The fees for the specific care home will not be met either and instead the local authority will calculate an amount which they believe is an appropriate fee (a ‘personal budget’) which could be significantly lower than the actual cost. If someone chooses a care home in Scotland that charges above the average, the extra will not count towards the cap.
Unfortunately, the headline figure of £86,000 is misleading as it doesn’t include all the costs incurred in a person’s care. Due to the way the care-fees cap is calculated, many people will still pay tens or even hundreds of thousands of pounds more for their care.
Key Takeaways:
- The £86,000 care cap in England only applies to personal care costs, not accommodation, meals, or utility bills.
- Local authorities calculate a “personal budget” for care costs, which may be significantly lower than what care homes actually charge.
- Any amount paid above the local authority’s budget, including hotel costs, does not count toward the cap.
- Many people will never reach the £86,000 cap, as the average life expectancy in care is around two years, and just one year in nursing care.
- Scotland currently has no care cap, and if one were introduced in the future, it’s important to understand how such policies actually work and what they exclude.
Think the £86,000 Care Cap Covers Everything? Think Again.
From October 2023, England is set to introduce a lifetime cap of £86,000 on personal care costs. Sounds like a relief, right?
But here’s what they’re not telling you:
This cap only applies to care itself, not your hotel costs like meals, accommodation, or energy bills. Even more concerning, the government won’t count what you actually pay, but what your local authority estimates care should often cost far less than the real price.
Let’s break it down.
If you pay £750/week for a care home, but your council sets the personal budget at £600/week, and £230 of that is hotel costs, only £370/week counts towards the cap. You’d need to be in care for 4.5 years to reach the cap by then, you may have spent £175,000, not £86,000.
And here’s the catch: the average life expectancy in care is just two years, one in nursing care. That means most people will never reach the cap and will still foot the full bill.
So, is the care cap all it’s cracked up to be?
Scotland doesn’t have this cap, but many believe it could be a model to follow. Still, it’s vital to understand the full story.
Before you rely on that headline figure of £86,000, get the facts straight. Because when it comes to care costs, what you don’t know can cost you.
Example:
Care Homes and Nursing Homes can cost up to £1,500 per week but let us assume that we have one costing someone about £750 a week. Their local authority may have calculated that the ‘personal budget’ for a care home is only £600 per week. From that figure, they will not pay the ‘hotel costs’ which could be around £230 a week. That means the only amount the government would take into account is £370 a week – even though the person is actually spending more than double that [£750 a week].
Based on those average figures, it would take 232 weeks [about 4.5 years] for you to reach the cap. During that time, you’ve paid, on average, about £175,000.’
There is a misunderstanding that if you ‘simply’ keep £86,000 aside you have your care covered. Even if the government did take into consideration the full sum of £750 (in the above example), it would still take about 115 weeks to reach the cap – which is over 2 years. Without these extra costs being considered, there are fears that many people may not even reach the cap and will receive no help, as the average life expectancy for somebody going into care is two years – one year if they’re going into nursing care.
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