The Care Act: capping costs
The Community Care Team at 39 Essex Street examine the likely impact of the cap on care costs contained in the Care Act 2014.
Approximately 25,000 people per year are forced to sell their homes in order to fund their social care costs. In 2011, the “Report of the Commission on Funding of Care and Support” (the Dilnot Report) recommended the introduction of a cap on the amount any individual should have to pay for their care over the course of their lifetime.
The Care Act 2014 duly introduces a lifetime cap of £72,000 on self-funded costs, after which the local authority is required to assume responsibility in all cases. This has the aim of ensuring an individual’s savings, which they intended to pass on to their family, are not wiped out by the cost of care.
In order to calculate when the cap is reached, local authorities will keep an account of all care costs incurred by the self-funder. The self-funder need simply have their needs assessed by the local authority, and then either allow the local authority to commission their care (the cost of which the self-funder will then reimburse), or implement for themselves a care and support plan developed by the local authority (the cost of which the self-funder will pay directly). Once the cap is reached, the local authority will become responsible for the payments.
This reform clearly has a worthy aim and has been welcomed by many in the third sector, albeit with a concern being expressed by some that the cap is too high, as well as concern as to whether the benefits will justify the increased administrative burden created.
The administrative burden of managing the accounts is likely to be very significant. One likely result of this change is that more self-funders are likely to request assessments, with the Government predicting there will be an additional 230,000 assessments when the cap comes into force in 2016-17. The care cost cap makes it more important that individuals and their representatives request reassessments whenever needs change, as if needs have increased, it is important that the account of funds spent up to the cap is accumulating at the appropriate rate. Given the increased assessment burden in other areas of social care, notably in the new carers assessments, the new Education, Health and Care Plans, and the increased assessment burden in the field of mental capacity resulting from Cheshire West, this significant increase in the assessment burden on local authorities is a matter of real concern.
Also, important issues in the administration of the cap have not been determined. The way local authorities account for care costs up to the £72,000 is crucial, as it will determine how soon self-funders can require the State to cover the cost of their care. For example, a local authority might specify a rate of £12 per hour for a support worker, whilst the self-funder might claim the real cost is £15 and that his account should therefore accumulate more quickly.
A further potential problem area created by the Dilnot reforms is that self-funders will have the option of asking their local authority to commission their care. The bargaining power of local authorities means that they are generally able to pay lower rates for placements in care homes than privately paying residents are able to attain; indeed, the business model of many care homes is such that privately paying residents cross-subsidise the local authority residents. The Dilnot reforms may mean either that self-funders are able to obtain the lower local authority rate, or that rates are driven up for everybody. Either way they are likely to distort an already fragile care homes market.
This article was written by the Community Care Team at 39 Essex Street comprising Jonathan Auburn, Tom Amraoui and Benjamin Tankel.
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