Legal

MIND THE CAP

Sean McCabe, Chartered Financial Planner, Mogers Drewett

The £86,000 cap on care liabilities is the centrepiece of the government’s long-awaited reform of adult social care funding in England, due to come into force in October 2023.

This cap looks generous; however, it is not as simple as it looks, and a lot of people now incorrectly believe that they will not pay more than £86,000 for their later life care.

The cap only relates to ‘personal care’ costs and not costs for ‘hotel’ costs such as accommodation and meals. In addition, the care costs relate to the costs based on what the local authority believes is an appropriate fee, meaning if anyone selects a care home that charges above the average, then the extra costs will not count towards the cap.

What does this mean? For example, someone in care paying £800 per week, where the ‘hotel’ costs amount to £250 and in this case the local authority has deemed the appropriate weekly fee to be £600, the amount that counts towards the care cap is £350.

How is this calculated? The actual figure used against the care cap would be the local authority care budget figure – in this case £600, less hotel cost – in this case £250, which would mean that only £350 per week will count towards the care cap. Based on the figure of £350 per week this means that the care cap would be reached in 245 weeks or 4.7 years.

Using the example above, someone paying £800 per week for care who does remain in care and reaches the care cap, the person in care will have contributed approximately £196,000 to their care to reach the cap.

So, in summary, while the care cap may reduce the amount you pay in the long-term it is important to understand that there will still be costs associated with a relative’s care that they and/or their family will need to fund.

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