The latest talking point in the care industry is the social care reform in England, announced by Prime Minister, Boris Johnson, on the 7th of September 2021.
To help you digest the flurry of information and to understand what the reform means for us all, we have highlighted the main points within this article.
Summary of key points:
- From October 2023, no one will have to pay over £86,000 in care costs throughout their life
- From October 2023, anyone who has below £20,000 in assets will not have to pay anything towards their care fees
- From October 2023, individuals with £20,000 - £100,000 in assets will be eligible for some funding support from their local authority.
- From April 2020, National Insurance contributions and dividend taxes will increase by 1.25% across the UK.
- The government has proposed that they will be investing £5.4 billion into social care over the next 3 years
What does the Social Care Reform mean?
There will be a cap of £86,000 on the amount of money an individual pays towards their care costs throughout their lifetime from October 2023
As of October 2023, a cap will be put in place on the amount of money any individual in England contributes towards their own care costs. No one will pay more than £86,000 towards their care costs throughout their lifetime. This change will be implemented using legislation that is already in place under the 2014 Care Act. One aim of the social care reform is to prevent private-funded care home residents from being forced to sell their homes in order to cover their care costs.
It is very important to understand that the cap of £86,000 only applies to care costs and does not include accommodation costs. Care homes will split their costs into care/accommodation. The care cost will remain relatively low (e.g. £200 per week) while the accommodation cost will make up the rest of the weekly fee (e.g. £1,000 per week). Realistically, people are unlikely to reach a care cost cap of £86,000 when they are only spending £200 a week on care costs (this would take 8.2 years!).
The thresholds for local authority funding will be changing from October 2023
Current funding thresholds:
|Under £14,250||Full funding|
|£14,250 - £23,250||Partial funding|
|Above £23,250||No funding support|
New funding thresholds (coming into affect Oct 2023):
|Under £20,000||Full funding|
|£20,000 - £100,000||Partial funding|
|Above £100,000||No funding support until you have paid £86,000 towards your care|
National Insurance contributions will rise to 1.25% as of April 2022
The government will implement a UK-wide 1.25% rise in National Insurance contributions to help fund the investment in Health and Social Care. The NICs were also raised in 2003 and 2011 to help fund the NHS and other national priorities. France, Germany and Japan have already implemented the same practice of increasing social security contributions to help fund social care needs.
The levy will apply to Class 1 (Employee, Employer) and Class 4 (Self-Employed, including partners) National Insurance from April 2022 followed by those above state pension age and still working from April 2023.
"My mum is currently self-funding her care home fees and has already contributed over £86,000 towards her social care costs. We are concerned that we may have to sell her home at some point. Does the reform mean that my mum won't have to pay for her care from October 2023?"
As stated by Michael Buchanan, BBC's social affairs correspondent, anyone who is already receiving care will not benefit from the social care changes being introduced in October 2023 because they will not be backdated.
Unfortunately, for those already receiving social care, this means that they may still be required to sell the family home if their savings run out and there isn't anyone else living at the property.
On a more positive note, the government hopes to extend the use of Deferred Payment Agreements (DPAs), loans that cover care costs upfront. The loan is repaid once the person passes away and the sale of their home is used to pay it back. In most cases, the loan will need to be paid back with interest and there may be other costs such as admin fees.
"Will individuals residing in Scotland, Wales & Northern Ireland be affected?"
The £86,000 cap on the amount an individual pays towards their care in their lifetime will only apply to people living in England, with the funding thresholds remaining the same across Scotland, Wales and Northern Ireland unless announced otherwise.
However, the health and social care levy will apply to all areas of the UK including Scotland, Wales & Northern Ireland. This involves all eligible UK citizens seeing a 1.25% rise in their National Insurance Contributions (NICs).
"How will the changes be funded?"
The changes announced in the social care reform will be funded by the health and social care levy which involves all eligible residents of the UK seeing an increase of 1.25% to their National Insurance Contributions.
"Why is the social care reform happening now?"
- There has been a rise in individuals whose care requirements are not being met
- Workforce issues including a desperate need for care staff, fuelled by inadequate pay and employment conditions
- Those who are not eligible for local authority funding to help cover their care fees are facing costs rising above £100,000, in some cases, meaning that they may be left with no option but to sell their home.
- The impact on healthcare services such as delayed hospital discharge and unnecessary trips to A&E