18th November 2021
general
This places a lifetime limit of £86,000 on nursing care costs for all individuals in the UK. The measures will be paid for by the planned increase to dividend tax and National Insurance contributions.
But are the plans as generous as they seem, and will you be any better off under the new regime?
What Are the Costs of Long Term Care?
The cost of care can vary, and will depend not only on your level of need, but also, where you are in the UK. Broadly, a place in a care home costs around £600 per week, while a bed in a nursing home can be expected to cost over £800 per week1. Historically, care fees have increased ahead of inflation.
If you require care at home, the costs can vary more widely, particularly if family members can help out for part of the time. This can range from a support worker visiting for a few hours a day, to round the clock care involving a dedicated team of people.
What Support is Available?
Some of the costs may be covered by the NHS or local authority, depending on your level of need.
Continuing Healthcare could be available if care is required because of an illness, accident, or disability. This means that the costs will be covered in full by the NHS. The decision to offer Continuing Healthcare is complex, and is made on a case by case basis. You can find out more here.
If you don’t qualify for the full Continuing Healthcare package, the NHS may still pay a contribution towards the cost of your care, based solely on need rather than any financial factors.
The weekly rates are a maximum of:
In Scotland, the system is different, and means that you may be eligible for up to £280.60 per week towards your care costs, paid by the local authority. £193.50 of this is designated to provide ‘personal care’ rather than medically necessary nursing care.
How Does Means Testing Work?
Your income and assets will be taken into account when deciding how much you need to contribute towards your care costs, after taking into account any contributions from the NHS or local authority.
If you receive an income, for example from a pension or some types of investment, you will need to contribute towards the cost of your care. If your income doesn’t cover the cost in full, you will need to contribute all of it, with the exception of a small allowance to cover personal expenses. This is currently £24.90 per week.
Some types of disability benefits are excluded from means testing.
In terms of assets, these are treated as follows:
Your home is included in the means test (and may need to be sold), unless you, or your spouse, continue to live there. Other exemptions are available if a relative or child who is disabled, over 60, or under 18 will continue to live in the property.
Certain types of investment bond are excluded from the means test as they include an element of life assurance.
You can’t simply give assets away (or invest in bonds) to avoid care home costs. This is considered to be ‘deliberate deprivation,’ and will result in the amounts given away being added back into the means testing calculation.
Of course, sensible planning, such as making gifts or setting up trusts to reduce Inheritance Tax, are not considered to be deliberate deprivation. It’s important to obtain advice if you are considering gifting large sums.
How Will the New Social Care Cap be Applied?
The new social care cap applies a lifetime limit of £86,000 on nursing costs.
Means testing will continue to apply, although the thresholds will increase as follows:
The cap will only apply to nursing costs required for a medical need. Accommodation costs, such as food, housekeeping, and bills, need to be paid for separately, and are uncapped.
Care at home is counted towards the cap, but many people requiring these services have less complex needs. It could take many years for the cap to be reached.
The sad reality is that the majority of residents who require nursing care are unlikely to live long enough to benefit from the cap.
Additionally, any costs already paid before October 2023 will not count towards the lifetime limit. This means that the majority of people already receiving care will not derive any benefit.
The new social care cap might make a splashy headline and appeal to some voters, but in reality, it’s unlikely to make a real difference to the majority of families.
However, the increase in means testing thresholds is likely to make more of an impact, allowing people to keep, or pass on, more of their money.
If you are worried about care costs, either for yourself, or a relative, a financial adviser qualified in this area can help you make sense of the options. You can also find out more at Age UK.
1 Paying for permanent residential care | Paying for a care home | Age UK
