Changes to care fees mean testing, as suggested by the Dilnot report (2011) and subsequent Care Act 2014, have been resurrected and will come into force in October 2023.
To understand how care fees funding will work in 2023, you must understand the three elements of care funding:
3 Elements of Care Fees Funding
1. Nursing Fees
Your medical care, medicines, administering those medicines and care in respect of specific medical conditions are paid for by the NHS.
2. Personal Care Fee
These are care elements that are personal to you such as help with washing, bathing, dressing, help in and out of bed. They are part of your personal care and are means tested. This is the area with the biggest element of change. Fees are means tested with a new cap for personal care fees of £86,000 paid by you in your lifetime. Once you have paid £86,000 overall for your personal care, you pay no more, irrespective of how much wealth you have, and the local authority will take over these costs. The £86,000 limit only starts in October 2023, any personal care fees already paid before this do not count towards the £86,000 limit and are ignored.
3. Daily Living Costs
Think of these as your ‘hotel costs’. Accommodation, food and utilities bills such as water, gas, electricity. These are means tested and paid for by you with limits. The government has issued, as a guide only, that care homes should allocate no more that £200 per week for ‘Hotel Costs’. Once your assets fall to £20,000, you will no longer pay for Daily Living Costs and the local authority will take over.
New Care Fees Capital Limits
A. Upper Capital Limit (UCL) - Over £100,000 (old limit £23,500)
You will still pay for all your Personal Care Fees (up to the £86,000 lifetime cap) and all your Daily Living Costs (no cap) from both your income and capital.
B. Middle Band Capital £20,000 to £100,000
You make contributions to your Personal Care Fees based upon your income as well as capital that have with an assumed income of £1 per week for every £250 capital you have above £20,000.
You still pay for your Daily Living Costs (hotel costs).
C. Lower Capital Limit (UCL) - Below £20,000 (old limit £14,250)
Your capital will no longer be considered, but your income will still be assessed for paying for both personal care and daily living (hotel) costs subject to you still subject you keeping a minimum personal expenses allowance (PEA) income of currently £25.65 per week (England). The local authority will pay for all your care requirements above this.