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The Care Act 2014 – a cautious welcome

The Care Act (‘the Act’) received Royal Assent on 14 May 2014 and represents the most significant reform of care and support for the last 60 years.

Care costs are an increasing concern and, while the Act provides a welcome simplification of the current care system, it does little to allay concerns surrounding the cost of care.

The Act introduces two significant reforms to be implemented in April 2016:

  • A cap on care costs of £72,000 has been introduced
  • The upper asset threshold has been increased from £23,250 to £118,000

While both reforms appear fairly generous, there are questions surrounding the impact either reform will have on care costs.

It is estimated that the cap will affect just a minority of those requiring care due to the length of time it will take to reach the cap. It is also important to note that the £72,000 ceiling does not include ‘hotel’ costs such as food and accommodation so even if this cap is reached, some contribution will still be required.

The upper asset threshold includes the value of your home so, at least initially, the majority of people will own capital in excess of the threshold and will therefore have to fully fund their own care. Assets between the lower asset threshold of £17,000 and £118,000 are deemed to generate a ‘tariff income’ of £1 per £250 capital. Therefore, anyone with assets of £118,000 will be deemed to have income of £404 per week, exceeding the weekly contribution some Local Authorities will pay. Consequently, most people are unlikely to receive any Local Authority funding until their assets have been depleted much further than the £118,000 threshold being heralded by the Government.

If you have any concerns or queries about care costs, please do not hesitate to contact a member of the Wills and Estate Planning team.