Social Care Reform: How your Local Authority can Prepare for the Changes
On 22 November 2021 MPs backed Government plans to reform the way Social Care is paid for in England. Most of the changes will come into effect from October 2023 and are being funded from an increase in National Insurance. In this article, Jan Hinks, our Social Care and Financial Assessment expert, writes about the changes and how local authorities can prepare.
1) A Lifetime Cap on Personal Care Costs of £86,000
Controversially, this has been amended to only include the amount that the Service User pays towards their care, less any daily living costs. This will have the effect of protecting those with more wealth. Someone with a relatively modest home could lose over 80% of their assets compared to 10% for a wealthier individual. The Elderly Social Care Insurance Bill is currently at Committee stage in the House of Lords. The more cynical among us might see this as a vehicle for the wealthy to protect 100% of their assets.
ALL service users will need to be assessed by Local Authorities to agree what their Personal Budget will be. This will be beneficial to Local Authorities as we will have a clear overview of the market, but I fear we will be inundated with requests for Care Needs Assessments.
There’s also the question of how we account for the spend. Will we require receipts as proof? Or just use the personal budget amount even though the Service User might then not spend their personal budget? Residents currently paying £1,400 per week will be shocked when we assess their care needs to be around £400 per week (£600 average cost less Daily Living Costs). It would take 4 years to reach the Cap in this case and the service user will have spent £292,100!
Most Local Authority funded service users receiving non-residential services will NEVER reach their care cap. I expect many self-funders will also NEVER reach the cap, but they will all now request a Care Needs Assessment and an agreed personal budget. I fear that many families who supply care themselves will now look for a paid for solution to reach the cap and get free care sometime in the future.
With the average length of care in a care home being 18 months – the typical Care Home resident will also NEVER reach their Care Cap.
Care Caps will not be backdated. This will lead to some confusion for Service Users who have already reduced their assets to the current thresholds or those with Deferred Payments. We will also have service users selling a property in September 2023 who will be left with £23,250 and a month later the limits will change.
How Local Authorities can prepare for the lifetime cap and personal care costs
- Review for all service users accounting for the new threshold limits. This will mean reviews being completed April 2022 (revised PEA and MIG – see below), October 2023 – revised Thresholds (including the increased number of service users), and then again April 2024 – PEA and MIG increasing by inflation.
- Ensure they have adequately trained resources in place in the run up to the changes. Systems will also need to cope with pre-reform assessments as there will likely still be assessments outstanding for some time after the reforms.
- Carefully consider keeping the Service User on their records as a self-funder rather than sending them on their way.
- Consider the affect this will have on the service user’s PIP, DLA or AA claim. In the past we did not need to consider those self-funding in the community. In future, will we need to be concerned with those in the community who have filled their care Cap and no longer paying anything towards their care?
- Be able to have multiple cap levels for those whose care journey will take many years. The Cap for new entrants will be increased each year but will remain static for those already on their journey
- Have a system in place to transfer Care Accounts
2) First Party Top-ups
While the information about this is relatively sparse, the Government plans to allow more people to pay a top-up for a “premium room or furnishings”. These costs will not be included in the Care Cap and will not affect the Means Test. I struggle to see how this might be sustainable!
3) Daily Living Costs
It has been proposed that the first £200 per week for any Care Home placement should be classed as daily living costs. With many of our service users being asset rich but income poor (and with an extended PEA) I expect the Local Authority will have to contribute to around 20% of service user’s daily living costs. Another cost I am not sure has been factored in.
4) The Extended Means Test - A Change to the Threshold Limits
This will be changing from an upper threshold of £23,250 and a lower threshold of £14,250 to a more generous upper threshold of £100,000 and a lower threshold of £20,000.
Tariff income will be required for every £250 between £20,000 and £100,000 – A total of £320 per week. But I fear that Government have not really considered the effect of diminishing capital. A person with a property worth £100k but limited income, will be required to reduce their capital by £320 per week. Under the current system the drain is much slower so has a much smaller impact.
I expect this will increase the initial workload for Assessment Teams by around 30%. Under the old rules, whereby ALL costs were included in the Cap, I expected an equal number of service users to “drop off” once they hit the care cap. As this is no longer the case, I expect a further increase of Service Users once the average person starts hitting their Care Cap. As many will be asset rich but income poor and will still need a means test to calculate their contribution to the Daily Living Costs.
5) MIG and PEA to be increased by inflation each year – Starting April 2022
Having frozen the rates for many years, the Government has proposed to increase the MIG and PEA rate in 2022 (Detail promised for January 2022). This initial rise is not due to reflect the inflationary increases since they have been frozen, but the Government has promised to keep rises in line with inflation in future. As working age benefits rarely rise in line with inflation we could be in a position where an annual review sees a net reduction in a service user’s contribution further reducing the amount, they pay towards their care cap.
So, in summary:
- Local Authorities will need to significantly increase their resources to manage the new scheme
- Most people will not reach their Care Cap in their lifetime
- Many people will pay more than the Cap due to top-ups and daily living costs
- Many families will still need to sell the family home to pay for care once the Service User has passed away
- Many people on low incomes i.e. an assessed charge of less than £200 per week will continue to pay what they are currently paying
- The increase MIG and PEA may result in a net loss to the Local Authority for Working Age service users
- Staff training is going to be essential
A small number of volunteer authorities will be piloting the changes and I wish them the very best of luck!
I will keep you all updated as and when I hear more.