Care Act 2014

With just over 12 months until the “cap on care costs” comes into effect will it actually have any impact upon the funding issues surrounding long term care?

Whilst there has been much publicity regarding the introduction of a cap on contributions other changes have also been introduced by the Care Act 2014 which have not been so well publicised, some of which take effect from this April.

The care cap will take effect from April 2016 when contributions exceed £72,000 however this does not include what are being called “hotel costs” which includes the cost of providing accommodation and the food rather than the social care element. Clearly the costs of these aspects are going to be significant. It will also be interesting to see how the division of costs is made as each aspect will need to be clearly identify so that a resident can keep track of the amount they have paid towards “the Cap”. In reality a resident will pay more than £72,000.00 before the cap kicks in because of these additional “hotel costs”.

Once the care cap is reached the Local Authority will then take up the bill however, they will only pay a set amount and if you are in a more expensive home than that permitted by your local authority a top up will still need to be paid.

Currently local authorities will not provide any assistance if you have assets with a value of over £23,250 and you will be assessed as “self-funding”. Also from April next year we will see this increase to £118,000 which should mean fewer people will be assessed as self-funding.

From April 2015, deferred payment schemes will be available from all councils across England. Previously these were at the discretion of the individual Council and not often discussed as an option. A deferred payment agreement is an arrangement with the council that will enable people to use the value of their home to help pay care home costs. If eligible the council will help to pay your care home fees on your behalf without the need to sell the property. Instead a charge will be placed against the property which will be repaid as and when the property is sold which may be after death. Such an option may be preferable particularly as the property could be rented out to generate an income which could go towards the cost of care.

The council can charge interest on the amount owed to them while they are helping to pay your care home bills. The maximum interest rate they can charge is currently 2.65%.

The area of funding long term care is complex and although the changes seem to be a step in the right direction, they in no way provide an adequate solution to the funding issue. Careful planning of your affairs is therefore still important.

If you wish to discuss any aspect of the changes or need advice regarding care home funding issues then please contact Lindsey Bohanna on 0121 634 2065 or by email Lindsey.Bohanna@coleyandtilley.co.uk