The introduction of a cap on eligible care costs from October 2023 will, for the first time limit the amount people will have to pay towards meeting their eligible care and support needs in their lifetime. The cap will be set at £86,000 in October 2023. The £86,000 cap will be the amount anyone will need to spend on their personal care over their lifetime. The Upper Capital Limit – the point at which people become eligible to receive some financial support from their local authority will rise from the current £23,250 to £100,000. People with less than £100,000 of chargeable assets will never contribute more than 20% of these assets per year. The £100,000 Upper Capital Limit will apply universally regardless of the circumstances or setting in which an individual receives care. The Lower Capital Limit – the threshold below which people will not have to pay anything for their care from their assets will increase from £14,250 to £20,000.
The full cost is applicable for anyone above the Upper Capital Limit (£100,000 from October 2023) and the individual is a self-funder. Anyone between the capital limits pays what they can afford from their income plus a means tested tariff contribution from assets. The tariff is for every £250 of capital between the lower and upper limit, an income of £1 a week is assumed, and this will be payable towards the cost of care. Anyone below the Lower Capital Limit (£20,000 from October 2023) no longer contributes from their assets and only what they can afford from their income.
In applying the means test, people must be left with a certain amount of income, called the Social Care Allowances, the value of which differs depending on the care setting. The Minimum Income Guarantee is the income a person receiving care outside a care home is left with after charges as well as Personal Expenses Allowance which is the income a person receiving care in a care home is left with after charge, will increase in line with inflation from April 2022.
Any costs accrued before October will not count towards the cap. To enable this, the local authority in whose area the person is ordinarily resident will start a care account, which is personalised to the individual and will monitor their progress towards the cap. For each person with eligible needs, the local authority must provide either a personal budget, where the local authority is going to meet the person’s needs, or an independent personal budget where the individual arranges their own care. The personal budget will set out the cost to the local authority of the care they have arranged, whereas the independent personal budget sets out what it would have cost the local authority to meet the person’s needs. The person’s personal budget or independent personal budget will be used to calculate the amount that will count towards the cap.
For people who receive financial support for their care costs from their local authority, it is the amount that the individual contributes towards these costs that will count towards the cap, subject to parliamentary approval. Everyone will have a care account which will be maintained by the local authority and will keep track of their progress towards the cap. Under the capped system, everyone will remain responsible for their daily living costs for food, rent and utility bills, whether the person is in care or in their own home.
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