Cute piggybank image to reflect the law type Wills, Trusts and Tax Planning

Has the increase in National Insurance "fixed" Social Care?

Financial planning for later life

Wills, Trusts and tax planning

The Government announced a significant hike in National Insurance for employers and employees recently, to pay for extra funding for the NHS and then to “fix” social care.

The problem with social care, and in particular the cost of care home fees, is that unlike the NHS they are not free. If you have assets, above a fairly modest level, and you need to go into a care home then you have needed to pay yourself. It is common to find care home fees in excess of £1000 a week and people have had to sell their own homes to pay for them.

The intention of the new Government policy is to cap the amount that you would have to pay for social care fees to £86,000 over a lifetime.

Based on what has been announced so far it appears that there are some important matters in the detail to be aware of. That cap does not come in until October 2023 and any fees incurred before then do not count towards the cap. So, between now and then people will have a lot of liability for care home fees and potentially £86,000 after that.

Not many people have £86,000 lying around in cash so it may still be necessary to sell one’s home to pay care home fees. It is possible to reach a deferred payment arrangement with the local authority which would delay that but then they would have a charge on your house because the money must ultimately be paid.

It is also important to appreciate that this cap is on personal care fees does not include living costs such as accommodation and food. Obviously care home fees are made up of a number of costs which will be a mixture of care and living costs. The living costs will still be payable by the resident out of their own resources, subject to a not particularly generous means test.

Finally, it appears that the Local Authorities will have to play a big part in this and will have to determine what level of care you need and the cost of it. If they determine that you need a lower level of care than you actually have, or if you want to live in a care home that is more expensive than they want to fund, for example, then you would make up the difference.

All of this means that there is still a very real probability that people with assets are going to have to make significant contributions to care costs in later life, even after 2023.

Financial planning for later life, and managing your assets to do so, is part of what many solicitors specialising in private client and Wills work do. Our site can help you find a solicitor who can advise you on these matters for free, and without providing your personal data. All our solicitors are regulated by the Solicitor’s Regulation Authority (SRA).