A matter of luck?

The Care Act 2014 came into effect on 6 April 2014, overhauling the provision of local authority care for adults in England for the first time in over 60 years. The act seeks to provide a national standard for both the assessment of a person's care needs, and the financial assessment undertaking in relation to funding those care needs.

However the most publicised element of the Act, the so called £72,000 cap on care fees, is not due to come into effect until April 2016. It is also subject to further review by the new Conservative government, and therefore may be subject to additional changes.

It is also not yet entirely clear how this cap will be funded. What is clear however, is that the cap in its current format is not likely to be retrospective; payments made will only count once a person has undergone a new assessment post April 2016.

In addition, it is also clear that following a new local authority assessment, there will be an element of assessed care needs which will count towards this cap, but will not include what is often referred to as 'bed and breakfast' payments.

Therefore the changes are not as straightforward as people may initially believe. Those in need of care will have to spend a lot more of their money to reach the cap than they may think.

Individual wellbeing

It's not all bad news however; one of the major changes brought about by the Act is the principle of 'individual wellbeing'.

This new principle requires all local authorities to promote individual wellbeing whenever they are carrying out any functions or decisions, in relation to a person and their care and support.

This broad concept includes the emotional, mental and physical health of individuals, as well as a number of other elements.

For the first time, a duty is being placed on the local authority to consider the support needs of carers, and provide them with the appropriate assistance. This is partially to be achieved through a requirement to provide and maintain an information and advice service, designed for people in need of care as well as support for carers.

Charging

A new legal framework sets a single basis for charging by local authorities for care and support services, set out in the Act and associated regulations. The current upper capital limit for the means test remains at £23,250.

A person with capital totalling less than this limit can request a means test, after which charges will be applied proportionally. However the lower capital limit of £14,250 applies, so capital held below this sum is disregarded.

Certain services cannot be charged for by the local authority, which includes immediate care in the first six weeks, community equipment (aids and minor adaptations costing £1,000 or less) or, any service which the NHS is under a duty to provide. The special provisions for people under section 117 of the Mental Health Act 1983, and for those with Creutzfeldt-Jacob disease, are also provided for free of charge under the new Act.

Personal budgets

The Act also introduces the premise of personal budgets for individuals, as the government aims to achieve a person-centred care and support system. Every person whose care and social needs are met by the local authority, has to have a personal budget.

The personal budget sets out the money allocated to meet a person's needs (as identified in the care and support assessment) and plan carried out by the local authority. The annual budget that is funded by the local authority can be managed in one of the following ways:

• local authority managed payments;

• third party managed payments; and

• direct payments.

Direct payments enable an individual to manage their own personal budget. This has historically been found to be more successful than local authority managed payments in promoting an individual's wellbeing.

Direct payments have been in use since the mid 1990s, but for the first time they have been mandated in law. They are designed to provide flexibility to an individual in meeting their care and support needs.

They are subject to regular reviews by the local authority to ensure funds are spent appropriately. Individuals receiving care will take on new responsibilities as employers, as they'll directly pay a carer or assistant who is helping to meet their care needs, which may add an additional burden.

Deferred payments agreement

Another new element of the Act is the new deferred payments agreement. It is designed to provide a bridging loan so that people are not forced to sell their homes during their lifetime, allowing the costs of care to be paid at a later date. This may be achieved either through the sale of assets, or of their former home upon death.

Eligibility for this scheme depends on meeting all three of the following criteria, at the point of applying for the deferred payment agreements:

• anyone whose needs are to be met by the provision of care in a care home;

• anyone who has less than £23,250 in assets excluding the value of their home; and

• anyone whose home is not disregarded.

Therefore a person who breaks any of these conditions, such as having savings exceeding the £23,250 capital limit, will not be eligible. However local authorities have been given the discretion to offer deferred payment agreements to people who do not meet the above criteria, but it is yet to be seen which authorities (if any) will offer more flexibility and under what criteria.

The local authority will need to ensure that anyone applying for the deferred payment scheme can provide adequate security to meet the costs of the care being deferred. There will be a set limit as to the amount that can be deferred, which will be monitored by the local authority.

In addition, in order to obtain security, the local authority will take actions such as securing a charge over a property similar to a mortgage.
Other forms of security such as a third party guarantee, a valuable piece of art or proceeds from a life insurance policy, may also be acceptable.

The deferred payment agreement is a contractual agreement, so there are responsibilities on both the local authority and individuals as a result. All charges incurred as a result of the agreement will be payable by the individual, as part of the agreement to include administration charges and interest. The maximum interest rate will be set by the government and be reviewed on a six-month basis.

Can we afford the Act?

With the Act now in force, local authorities throughout England are quickly getting up to speed with the new requirements.

A sum of £470m was set aside for the implementation of the Act, but it is already thought that this will not be enough to meet the anticipated increase in assessments for carers, as well as individuals requesting early assessment in anticipation of the proposed cap.

As the government continues its austerity drive, it is likely that many local authorities will struggle to meet the increased demands, both in terms of the new assessment process, and the new provisions contained within the act.

With the continual pressure on local authorities to make cuts across the board, it seems likely that some local authorities may not be able to implement all elements of the new Act, and the postcode lottery we have historically seen may still remain. 

Maria Meek is a chartered accountant at Withy King. She specialises in Court of Protection cases and compensation protection trusts

This article formed part of a special focus on the Care Act in the July/August issue of Private Client Adviser