Social Care Reform Proposals Announced
The Government has announced an intention to “cap” the amount of individuals must pay toward their Social Care at £75,000, effective from 2017. They have also said that they propose that the amount of capital that an individual may have and still receive some help toward their Social Care is to increase significantly.
The exact details of the proposed scheme have not been released yet. We do know that the amount of money that an individual will be able to leave free of Inheritance Tax is to be frozen at the current rate of £325,000 until at least 2019 in order to provide some of the funding for the proposed changes in the Social Care regime.
In addition, it is unclear at present how many people will actually be helped by the new proposed arrangements. The Government has suggested that about 100,000 people will have benefited by 2025, but they have not released any details of the modelling that they have used in arriving at these figures.
The key points of the new proposals are: –
There will be a new national “eligibility criteria” which will prescribe the level of need that will cause the cap to kick in. At present each Local Authority sets its own standard. This change had been announced previously and is due to come into effect in 2015.
Once an individual has met the prescribed level of need the Local Authority will determine how much it believes will need to be spent providing necessary care. It is this figure that will be used to calculate how much has been spent on care rather than the actual cost. The maximum that an individual will be required to “spend” will be £75,000. If the amount actually being spent exceeds the Local Authority’s calculation the excess will not be covered by the cap.
Anyone with savings up to £14,250 will continue to receive care funded by the Local Authority.
For those with savings between £14,250 and £123,000 there will be help towards Social Care costs on a sliding scale.
The “hotel” costs i.e. the cost of board and lodgings for those in residential care are excluded from the amount to be taken into account in calculating the £75,000. This is intended to ensure that those who continue to receive care in their own homes (and to pay the cost of maintaining those homes) are not disadvantaged. The Government has said that it will limit the amount of such “hotel costs” to £12,000 per annum.
As we mentioned above the full details of how the proposals will work remained to be seen. In addition, of course, we are to have a General Election before their proposed introduction date. It does however seem clear that the cost of Social Care will remain high for many and these proposals are far from the all-encompassing resolution to the difficult issue of funding such care, particularly for the elderly.