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Vast majority of people who pay for social care won’t benefit from a cap on costs at level currently proposed, new research finds

Nine in 10 people who pay for their own care in England won’t benefit if the ‘cap’ on care costs, currently set at £72,000, goes ahead. Set at this level, it will take a typical pensioner over 6 years to reach the cap, which is double the average life expectancy for someone in residential or nursing care. However, introducing a cap on costs at £100,000 that includes all costs of care (an ‘all-inclusive cap’) will benefit up to four times as many people and within two to three years. That’s according to new research from Independent Age, the older people’s charity and the Institute and Faculty of Actuaries (IFoA).

The government’s proposed lifetime cap on care costs for adults in England is set at £72,000 and the latest plan was for it to come into force in 2020. The idea of a cap on care costs was first introduced by the Dilnot Commission in 2011, which argued that to guard against “catastrophic” care costs, adults should face a lifetime limit set at £35,000. The cap recommended by the Commission was only ever intended to apply to individuals’ personal care costs. It did not take into account the full costs of care, such as Daily Living Costs, which include food and accommodation, and make up a large part of annual care home costs. This means that many people could continue to pay towards care costs, years after having technically reached the ‘cap’ limit.

The new research examines different scenarios and how over a 10-year period a cap set at £35,000, £72,000 and our proposed ‘all-inclusive cap’ of £100,000 would affect total care costs typical pensioner households have to pay, compared to the current system where there is no ‘cap’.

Key findings include:

  • An ‘all-inclusive cap’ set at £100,000 protects those who live longer than average in residential care and truly caps the full range of care costs for those with high care needs
  • If a £35,000 or £72,000 cap were introduced, a typical older person would end up paying more than £150,000 over six years in residential or nursing care and up to £300,000 over ten years. This is because they would still have to contribute to their daily living costs well after they had reached the cap
  • Nearly 6 in 10 older people with high domiciliary care needs – those who need up to six hours of care a day - could stand to benefit from the ‘all-inclusive cap’ set at £100,000, compared to around a third (35%) under the £72,000 cap
  • The £100,000 all-inclusive cap helps to reduce variation in total care costs between regions in England, as under the £72,000 ‘cap care costs can vary by over £130,000 between the North East and South east by Year 6
  • Improvements to the means test are a crucial part of the Care Act reforms and a more generous means test, or ‘capital floor’, at £100,000 would allow more older people with modest assets to benefit from means tested support

The government dropped and then re-affirmed its commitment to plans for the care cap during the 2017 election campaign.  But following the ‘dementia tax’ row, it said it would look at the idea in more detail in the long awaited Green Paper on social care.

Janet Morrison, Chief Executive of Independent Age, the older people’s charity, said:

“Paying for care can be a huge burden on older people and their families as they try to manage their finances in older age. A cap on care costs is welcome, but it needs to be meaningful and transparent as to what costs the cap will cover. The cap as proposed under the Care Act is neither of those things. Without an ‘all-inclusive cap’, people with the highest care needs will continue to see their costs rise well over £100,000. In the Green Paper on social care, the government must urgently set out plans to introduce a cap on care costs that covers all costs and will realistically be reached within the lifetime of an individual in care. Only then will a cap make a material difference to the lives of older people in care.”

Older people and their relatives need to understand care costs and have peace of mind that they know what they are likely to have to pay for, even with a cap on costs in place. Independent Age and the IFoA recommend that the government introduces a higher cap of £100,000, but that this is inclusive of all care costs. This would reduce complexity in the system, create a clearer cap on costs and mean more older people on moderate incomes are likely to benefit from a cap. The government’s long-promised Green Paper on social care should be published urgently and lead to firm action, with cross-party backing for final proposals.

Marjorie Ngwenya, IFoA President, said:

Reforms around the level and implementation of the social care cap have been subject to much debate. If the government hopes to encourage people to be prepared to meet some of their social care costs in old age, it must provide clarity around the care cap level along with clear, easy-to-follow guidance on what this covers. In our actuarial capacity, we have looked at the numbers, considered the long-term risk and recommend a higher ‘all-inclusive cap’ of £100,000. Our research also reveals that once our proposed cap is reached, it almost eliminates the vast amount of regional variation in the amount people would have to pay towards their care.”


Notes to editors

The report makes the following recommendations:

  1. Government should reframe and re-set the cap on care costs to an ‘all-inclusive cap’ of £100,000. This would make it easier for the public to understand what costs are capped as all costs would be included within the cap.
  2. Government should immediately introduce a more generous means test to widen access to the state-funded system of care and support for pensioner households with modest assets and wealth.
  3. The government’s long-promised Green Paper on social care should be published urgently, with a wide call for evidence. This should provide clarity on future care costs for all adults with social care needs. This consultation must then lead to firm action, with cross-party backing for final proposals.

About Independent Age

We offer regular contact, a strong campaigning voice and free, impartial advice on the issues that matter to older people: care and support, money and benefits, health and mobility. A charity founded over 150 years ago, we are independent so older people can be too.

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About the Institute and Faculty of Actuaries

The Institute and Faculty of Actuaries (IFoA) is a royal chartered, not-for-profit, professional body.

Research undertaken by the IFoA is not commercial.  As a learned society, research helps us to fulfil our royal charter requirements to further actuarial science and serve the public interest. 

Actuaries provide commercial, financial and prudential advice on the management of a business’s assets and liabilities, especially where long term management and planning are critical to the success of any business venture. They also advise individuals, and advise on social and public interest issues.

Members of the IFoA have a statutory role in the supervision of pension funds and life insurance companies. They also have a statutory role to provide actuarial opinions for managing agents at Lloyd’s.

Members are governed by the Institute and Faculty of Actuaries. A rigorous examination system is supported by a programme of continuing professional development and a professional code of conduct supports high standards reflecting the significant role of actuaries in society.


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