Last week we reported on the new Health and Social Care Levy, which will operate from April 2023. From that point, the 1.25% National Insurance hike that will be effective from April 2022 will morph into the new levy. The key difference between the two taxes is that from April 2023, people who work beyond pension age will have to pay the Health and Social Care contributions.
Since the new levy was announced, many people have asked themselves, “How much will I have to pay for care?” With such major changes in the pipeline, it’s only natural to wonder what care will cost – whether it’s for yourself or your loved ones.
To help you get to grips with the new Health and Social Care Plan, we’ve put together this explanatory post.
What is the proposed Health and Social Care Plan for?
The proposed Health and Social Care Plan aims to do a number of things. They include:
- Supporting the NHS and reducing waiting lists
- Reforming social care
- Integrating health and social care more closely
- Protecting people against excessive care costs
You can read the full policy paper here for more detail.
What are the Health and Social Care proposals?
Firstly, from October 2023, no eligible person starting adult social care will have to pay more than £86,000 for their personal care during their lifetime.
From the same time, no-one with assets worth under £20,000 will have to contribute to care costs from their savings or value of their home. The current cap is £23,250. However, people will be expected to make contributions from their income.
People with assets worth between £20,000 and £100,000 will be able to claim means-tested support. If the amount they can contribute out of income is deemed to be insufficient, they may have to contribute up to 20% of their chargeable assets annually. This will stop when the value of their assets drops below £20,000.
Anyone with assets worth over £100,000 will have to pay the full cost of their care. This continues until their remaining assets drop under £100,000, when the means-test kicks in.
What else do I need to know?
The new plan covers personal care costs, but not living costs such as accommodation, food and cleaning.
The government also plans to unfreeze the Minimum Income Guarantee for people who receive care in their own homes. It will do the same for the Personal Expenses Allowance for people who live in care homes. From April 2022, both of these will rise in line with inflation.
Under the new system, you can still opt for a more expensive care service by topping up the difference in cost.
One flaw in the plan is that demand for care is likely to skyrocket after the £86,000 contributions cap is introduced in October 2023. This may lead some care providers – especially smaller ones – struggling until that point.
It’s also worth noting that, even under the new plan, it remains as important as ever to plan for your retirement and for passing on your assets to the next generation. If you would like any help with wills, trusts or legacy planning, do get in touch. We’d be delighted to help you.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.