The Compass Continuing Healthcare team explore the “care cap” and whether it is the solution to the cost of care issues.
At Compass CHC we have been recently seen an increase of the number of clients and individuals who contact us for advice who believe that due to the implementation of the Care Act 2014 (The Care Act 2014) they will be protected by a “care cap” that will ensure that there is a limit of £72,000 on the total they will ever be liable to pay for their care costs. Unfortunately this is incorrect and the reality is that the care cap is a cap that doesn’t fit.
What is the care cap?
The cap has been set at a figure of £72,000. Unfortunately the reality is that most individuals will have to spend far in excess of this before the cap is reached, ordinarily in excess of £140,000.
Examples of the care cap in practice
If the cost of care for a nursing home is £720 a week many are under the incorrect impression that after 100 weeks in the home they will have spent £72,000 and therefore will not be liable for further costs.
The true position is that the £72,000 figure is only reached when £72,000 at the rate the Local Authority would pay has been hit. As you may be aware Local Authorities have often agreed far lower rates to pay with care homes than the individual paying on a private basis will have to.
Using the original example that an individual is paying £720 a week privately for their care, the Local Authority will have negotiated a discounted rate in that area. As an example they may only pay £650 a week. As such instead of hitting the £72,000 limit after 100 weeks it would take 111 weeks to reach £72,000 at the Local Authority rate of £620 a week. Therefore the individual paying £720 a week would then have spent £79,920 in 111 weeks.
This scenario is not by any means the worst case scenario. Often the costs of care, especially for high need nursing or EMI homes, can be far in excess of £1,000 a week on a privately paying basis, and the Local Authority are likely to have negotiated a much lower rate than the private rate. As such our example individual will have spent far in excess of the £72,000 limit before the Local Authority rate reaches £72,000.
Therefore it is clear to see that the already the “care cap” isn’t as promising as it first seems, and unfortunately there is worse news to come.
The “Care Cap” only covers care costs.
Even when £72,000 has been spent at the rate the Local Authority pays the cap has not been reached. This is because the cap of £72,000 only relates to care costs paid, not the costs of board and lodging in the home.
The government is expected to cap the board and lodging costs at a maximum of £12,000 a year or £230 a week, but this has not yet been confirmed.
Returning to our example of a rate of £650 that the Local Authority would pay, having removed the anticipated £230 “board and lodging” costs there remains a balance of £420 a week. This is the deemed cost of care paid per week.
It is this figure of £420 a week that would be used to as the deemed “cost of care”. As such it would take 172 weeks, which is three years and 4 months, at £420 a week to reach the cap of £72,000. As the individual will have been paying £720 a week throughout this time they will have spent £123,840.
Even once the cap is reached the individual will still be liable for the ongoing “board and lodging” costs of £12,000 a year, as well as the difference between what the Local Authority pays and what the home charges the individual. Using our example figures, even once the care cap had been reached, the individual would still have to pay £300 a week, or £15,600 a year.
Is the care cap fit for purpose?
The average time an individual spends in a care home is two and half years. The stark reality is that many individuals will pass away before the care cap is ever reached. The Institute of Actuaries estimates that only one in eight women and one in 12 men who go into a care home at the typical age of 85 will benefit from the cap.
The true picture is unfortunately that the care cap does not offer the protection that many believe it will. The figure of £72,000 as a cap is by no means an accurate reflection of the maximum costs an individual would have to pay. In fact the average person will have spent around £150,000 before the £72,000 care cap has been reached and will still be liable for ongoing annual costs of in excess of £15,000 even then.
As such the base position should always be to examine whether the individual’s need for care is a health need, and if so pursue the entitlement to NHS funding for care homes via continuing healthcare funding. If the individual’s need for care is primarily a health need then they should be entitled to this funding via the NHS to meet the cost of their care in full. It should never be considered to be an appropriate course of action to rely upon the care cap as a fall-back position in the belief that a maximum of £72,000 will be spent, as the truth is that a figure of at least twice this will be paid, if indeed the individual in fact lives long enough to reach the cap.
If you have a relative paying privately for care and you believe that their need for care is primarily a health need, contact an expert member of the Compass Continuing healthcare team today for a free, no obligation discussion of your options.