September 2021 – Social Care Reform
As many will have already heard, the government has announced plans to reform the social care system in England. Currently, to be eligible for assistance with the costs of residential care, a person must meet the threshold for care and have savings and assets - which may include their home - worth less than £23,250.
Below that level, they pay a reducing amount until they have less than £14,250, at which point the council pays for care but a person may still need to contribute some of your income such as pension.
From October 2023 a cap will be introduced on care costs in England of £86,000 over a persons lifetime. All people with assets worth less than £20,000 will have the cost of their care fully covered by the state while those who have between £20,000 and £100,000 in assets will see their care costs subsidised.
This will be paid for by raising National Insurance contributions paid by employers, employees and the self-employed. From April 2022, all will pay 1.25p more in the pound. But from April 2023, National Insurance will return to its current rate, and the extra tax will be collected as a new Health and Social Care Levy. This levy - unlike National Insurance - will also be paid by state pensioners who are still working.
The increase will see an employee on £20,000 a year pay an extra £130 while someone on £50,000 will pay £505 more.
The government says the changes are expected to raise £12 - 14bn a year, which will go initially towards easing pressure on the NHS. A portion of the money - £5.4bn over the next three years - will also go towards funding changes to the social care system.
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