Does anyone understand the Cap on Care Costs?

Topics covered: Ridouts professional advice

Proposals regarding the cap on care costs have changed a number of times and it has been hard for everyone to keep up. What has been harder is to work out how everyone is affected by the proposals from care providers to those in need of care. On 7 September 2021, the Government set out its new plan for adult social care reform in England which included a cap on the amount an individual will spend on care in their lifetime. The policy has been hotly debated and has seen wide press coverage. My aim in this article is to attempt to unpick the proposals and unravel what to expect with the forthcoming reforms.


There have been a number of past reform proposals:

  • The 2011 Dilnot Commission in its ‘Fairer Care Funding’ report recommended a lifetime cap on personal care costs of £35,000 for people aged over 65, and a generous social care means test.
  • The Coalition Government accepted the Dilnot Commission’s proposals in principle but made some tweaks, setting the cap at £72,000.
  • The Care Act 2014 provided the legislative framework for a cap on care costs and implementation was set for April 2016. However, implementation was delayed until April 2020 and then indefinitely postponed.
  • The Conservative Party made promises in its 2019 general election manifesto that a prerequisite of any adult social care reform proposals would be that “no one needing care has to sell their home to pay for it”.

Legislation and guidance

The Government recently published its social care White Paper. The White Paper is the latest of a series of documents that together should deliver the Government’s promise of repairing the adult social care sector. The previous documents include the command paper ‘Build Back Better’ and further policy paper, the autumn spending review and the Health and Care Bill. The documents published to date have been written with a high level of generality. However, the devil is in the detail and it seems that not until draft legislation and guidance is produced will it truly be known how the cap will operate. The legislation and guidance is set to be published in spring 2022, using existing legislation under the Care Act 2014 and building on draft guidance published in 2015.

What is the cap?

It is proposed that from October 2023 there will be an £86,000 cap on the amount anyone in England will have to spend on their personal care over their lifetime and the cap will apply irrespective of a person’s age or income. The first step will involve a needs assessment. Once a person has been assessed as having eligible needs, contributions towards the cost of meeting their eligible needs will be clocked until they reach £86,000, and after that point the local authority will meet the full costs of that individual’s eligible needs.

Before the cap is reached, what happens to those who cannot afford the full cost of their care? The answer is through means tested support, whereby the local authority will help with care costs via contributions. There are thresholds that apply to this means test:

  • The upper capital limit will increase from £23,250 to £100,000 – so individuals with assets over £100,000 will not eligible for local authority support toward social care costs. These individuals are also known as ‘self-funders’.
  • The lower capital limit will increase from £14,250 to £20,000 – so individuals with assets under £20,000 will not have to make contributions for their care from their assets (but may have to make contributions from their income).
  • Those in between the upper limit of £100,000 and lower limit of £20,000 will be eligible for some means tested local authority support.

But there is a catch – there are some caveats to the cap. Only money spent on meeting a person’s personal care needs in a care home will count towards the cap, daily living costs do not count. The Government has set a national, notional amount of £200 per week to reflect the proportion of residential care fees not directly linked to personal care, like rent, food and utility bills which would have to be paid wherever some lives. The Government claims this is for simplicity and is intended to create a level playing field between those who receive care in a care home and those receive care in their own homes. On the other hand care providers may argue that the notional amount is far too low, not to mention that this notional amount is £30 less than proposals in 2015. The main stumbling block is how this will work in practice when care providers do not habitually carve up their fees into components for personal care and daily living costs.

Another possible caveat, or at least, area of confusion is ‘personal care’ versus ‘eligible needs’. Based on the command paper the cap is on costs spent on ‘personal care’ rather than ‘eligible needs’. The Care Act framework is based around ‘eligible needs’ which would be the full plethora of a person’s care needs rather than those solely relating to personal care. This is an area to keep watch of in terms of how ‘personal care’ is defined, if, for example it is defined in the same way as the Care Quality Commission definition of the regulated activity of personal care. If so, personal care would be a subset of a person’s eligible care needs and there would need to be some kind of reconciliation between the personal care costs and the eligible care costs (i.e. the costs for meeting a person’s eligible needs either specified in an individual’s personal budget (costs met by the local authority as set out at section 26 of the Care Act 2014), or independent personal budget (costs met by someone other than the Local Authority as set out at section of the 28 Care Act 2014). In essence, there are still a lot of questions about a proposal that was supposed to simplify things.

What’s all the controversy?

In November 2021, the Government announced that it would seek to amend the Care Act 2014 framework so that money paid by a local authority towards meeting a person’s eligible care needs will not count towards the cap. On 18 November 2021, the Government tabled a new clause to the Health and Care Bill which provides for this change to the Care Act 2014. The bill was met with hot debate at the Report Stage in the House of Commons on 22 November 2021, but eventually was approved by 272 votes to 246 and will is making its way to the House of Lords.

The thinking behind this change is that only the amount that the individual contributes will count towards the cap, and that people will not reach the cap at an ‘artificially’ faster rate. This change to the Care Act 2014 will negatively affect those with lower assets who would be eligible for local authority funding support. However, the Government believes that the increase in the upper capital limit for local authority funding support balances things out. The opposition would argue that the Government is giving with one hand and taking with the other, widening the pool of those eligible for help and upping the cap, but at the last minute adding to the small print whereby an individual with just under £100,000 assets would receive substantial support only once their assets fall below £20,000 but nevertheless may take longer than the rest of their lifetime in care to either reach the £86,000 cap or the lower capital limit.

Then there is the impact of these reforms on self-funders. It appears that the cap also applies to those with assets over £100,000. Once those individuals reach the £86,000 cap, the local authority will fund all of their eligible care needs. However, this issue is also confusing, with many equating self-funders to private payers. Self-funders are individuals who most likely have more than £100,000 in assets, have gone through the local authority needs assessment but are paying 100% of the local authority costs to their care. These individuals would be placed in care homes chosen by the local authority or if chosen by themselves and are more expensive, the fees may be topped up by a third-party. Self-funders should not be confused with private payers who do not go through the local authority needs assessment, choose their own care home and independently pay the full fees.  This needs to be clarified because the £86,000 cap does not apply to private payers. Coverage of the cap on care costs has led to criticism of the system because the impression is given that private payers would benefit from the cap when they do not. In order to benefit from the cap, they would need to become self-funders and have a needs assessment. Furthermore, what must be remembered with all of this is that daily living costs is excluded, so no matter what bracket an individual falls within, daily living costs will not be covered by the local authority.

What is scary is how overly complex this will be for local authorities to administer. The local authority will not be clocking costs incurred before October 2023, but as soon as October 2023 hits, local authorities will be expected to assess all in need of support, including self-funders, as they progress towards the cap. They will have to maintain care accounts for individuals, providing regular account statements and notifying individuals as they approach the cap. The local authority will have to do all of this whilst having to calculate the annual adjustment/increase that will be made by the Secretary of State to both the cap and accrued costs in line with average earnings in the UK.


The proposed cap on care costs is proving to be a complex subject. Whilst it is a world apart from NHS continuing healthcare funding, where the NHS is responsible for all costs including accommodation costs for individuals who receive care due to their health needs, the new system has kept alive, the current Government’s promise that people will not be forced to sell their homes, well at least not whilst in receipt of care. What is apparent is that the system is broken and arguably unfair and it does not appear that the latest reform proposals will fix things.

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