Forthcoming changes to the social care system have been widely discussed in the media. What should you consider if you need to arrange social care for you or your loved ones?

The government reported that the need for social care affects over ten million people in England at any point in time. This need can be for long or short term care either in a

setting such as a residential care home, or at home.

From October 2023 the amount an individual will pay towards social care costs over their lifetime will be capped at £86,000.

Those with assets over £100,000 will have to pay full fees up to this cap. If assets are between £20,000 and £100,000 an individual’s Local Authority is likely to fund some of their

care. People whose assets do not exceed £20,000 won’t have to pay anything towards their care from their assets but they may still need to make a contribution towards costs

from their income.

However, it’s not as simple as allocating £86,000 for care. What are the considerations from a financial planning perspective?

If care is provided in a care home, fees are broken down into two distinct elements: ‘personal care’ and costs for ‘food and accommodation’. It’s important to note that the £86,000 cap

relates specifically to eligible personal care costs. So funds for accommodation and food need to be budgeted for both before and after the £86,000 cap is reached. Also, if you choose to ‘top up’ for a more expensive service, these fees aren’t included within the cap.

Additionally, the social care reform is funded by an increase in National Insurance contributions, so if the person who requires care is below state pension age, this reduction in income also needs to be accounted for.

This article was written by Culverhouse Financial Planning Ltd.

The article outlines just some of the things you could consider in relation to planning for social care needs. It does not represent financial advice. If you would like personalised financial advice please contact a financial adviser.

Remember that the value of investments can fall as well as rise and past performance is not a guide to future performance.