How much do I have to pay towards my care?
Boris Johnson has announced a cap on care costs of £86,000 which will come into force in October 2023, implemented under the Care Act 2014. This means that £86,000 will be the maximum an individual will pay towards their care during their lifetime after October 2023 and any amount exceeding the cap limit will be paid for by the government.
A means test is a financial assessment carried out by your local council to determine how much you should pay towards your care. Currently, if a person’s assets are above £23,250 they will be liable to pay for all their own care in full however the government is set to increase this amount to £100,000. Additionally, they are also increasing when people will start contributing towards their care, at the moment people will contribute towards their care if their assets are worth more than £14,250 however this is to increase to £20,000. This means that people whose assets are between £20,000 and £100,000 would contribute towards their care on a sliding scale.
Some people with health conditions may not have to pay towards care if they qualify under the NHS continuing healthcare scheme. This means that the NHS will fund your care costs.
Is the government’s new proposal as good as it seems?
Not all care costs are included under the cap, for example living costs such as energy bills, food and accommodation are not included within the cap but still need to be paid for. On average, a person spends £36,000 a year to be in a care home with £12,000 being spent on living costs. Based on this average, it would take 3 and a half years for the cap to be reached.
Will I need to sell my house to pay for care?
If someone has a house worth over £100,000 and very little savings then they may have to sell their home to cover the cost of their care, however there are other options in place to avoid selling the property.
Local authorities offer deferred-payment agreements (DPAs) which is a loan people can take out to pay for their care fees. This loan is to be repaid, at a fixed interest rate, when they die so the amount due is payable from the estate. The local authority would normally put a charge on the property to ensure this money will be repaid.
Others try to gift their property to their children so the value of their property won’t be included in the means test however this can be seen as a deliberate deprivation of assets to the local authority meaning that the local authority could still consider your house as your asset even though it is no longer in your name. Care also needs to be given to who will assist you with these decisions should you no longer be able to make decisions for yourself. This is where a Lasting Power of Attorney or a Court of Protection Deputyship Order may be utilised.
If you would like to discuss more about the consequences of gifting, Lasting Powers of Attorney, Deputyship Applications (when someone no longer has the capacity to appoint an Attorney) then please do not hesitate to contact our Private Client department.