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A New Funding System for Adult Social Care: A Quick Summary of Government Plans - 2022

Updated: Mar 24

In September last year, the government set out its plan for adult social care reform in England. This included several changes to the way both residential care and care in the community will be funded in the future, whether for elderly people or those living with a disability.


In particular, the upper capital limit (UCL) and lower capital limit (LCL) will be considerably higher, meaning that people who currently have to fund some or all their care will now pay less. In addition, the government is introducing a new £86,000 lifetime cap on the amount anyone will need to pay towards their care.


An elderly man holding a juggling ball, whilst a Care Home Support Worker is holding his wrist.

Changes to Means Testing for Adult Social Care


At the moment, only people with capital of less than £23,250 are eligible to receive funding from their local authority for their care (UCL), while capital needs to be below £14,250 before they're fully funded (LCL). These figures will now rise substantially, to £100,000 and £20,000 respectively.


This means that anyone with capital higher than £100,000 will have to fully self-fund their care, whereas those with below £20,000 will receive the full cost from their local authority. People who fall between these figures will be expected to contribute some funding, in proportion with their capital, with the remainder coming from the local authority.


Calculations for how much funding is required always include one or another of the social care allowances — either the Minimum Income Guarantee (MIG), for anyone receiving care in their own homes, or the Personal Expenses Allowance (PEA), for care home residents. Both have been frozen since 2015, but will now increase annually in line with inflation.


The Cap on Social Care Costs


Besides increasing the capital limits, the big change in the funding of adult social care will be a cap on lifetime costs. This specifies that no-one will be expected to pay more than £86,000 during their lifetime towards their adult social care costs.


Payments counted towards the cap will be based on the costs for essential care services, whether delivered at home or in residential care. This doesn't include normal living costs, such as rent, food or utility bills. For anyone in a residential home, this amount is fixed at a notional rate of £200 per week, subject to inflation.


In addition, any amount the person chooses to pay in order to top up their care or quality of life won't be included. For example, if they decide to pay a higher price to secure a premium room in a care home, only the cost of a standard room will count towards the cap.


Under the new system, the relevant local authority will have the obligation of keeping accounts of the relevant amount each individual has been asked to contribute to their care. When the total is approaching the cap, they must inform the person or their appointed representative and arrange to take over the funding. However, daily living costs and top-up funding will remain the individual's responsibility.


What Happens Now?


These changes will be rolled out nationally from October 2023, and figures for the capital limits and the cap will rise annually in line with the average increase in earnings. Before this, though, the government will be holding implementation tests with a small group of local authorities. The results of these tests won't affect commitment to the reforms, but will merely iron out any potential kinks in their delivery.


Funding isn't the only thing that's changing in this round of government reforms of the care system. The UK Government is also set to invest £150 million to encourage care homes to adopt digital social care records. Get in touch with us to discuss your custom digital care records or other document automation requirements.


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