The Institute and Faculty of Actuaries (IFoA) together with Independent Age have produced a joint report on social care funding, Will the Cap Fit? What the government should consider before introducing a cap on social care costs, assessing changes to social care funding policy and the potential implications of those changes.
The report aims to encourage Government to develop, as soon as possible, a social care system that is sustainable in the long-term as the current system is in crisis and is likely to worsen in the face of an ageing population.
IFoA and Independent Age say that a carefully designed care cap could provide a means of social insurance, which previously has not existed, in order for families to plan for later life with certainty. The report assesses the amount individuals would have to contribute towards their own care based on:
- A £35,000 cap based on the Dilnot Report.
- A £72,000 cap contained in the Care Act.
- The report's proposed all-inclusive £100,000 cap.
These scenarios are applied to a range of typical pensioner households, varied by gender, age, region, and level of assets and income on starting to pay for care. This allows the report to demonstrate the impacts and likelihood of individuals benefitting from a cap or means-test based on their specific circumstances.
The report recommends implementing an all-inclusive cap of £100,000. This would cover all cumulative care costs, unlike the caps proposed in the Dilnot Report or in the Care Act. It says that this would provide individuals, who have the means to pay for their own care, clarity on their likely future care costs, with them having to pay for the first £100,000 of costs and anything beyond this being met by the State. This would reduce complexity and make the balance between individual and State provision easier to understand.
Key findings include:
- An ‘all-inclusive cap’ set at £100,000 which protects those who live longer than average in residential care and truly caps the full range of care costs for those with high care needs.
- Unless the cap is all-inclusive, taking into account accommodation and daily living costs, individuals will pay more than £150,000 by the time they have been in care for six years and £300,000 by the time they have been in care for ten years.
- The £100,000 all-inclusive cap reduces variation in total care costs between regions in England. Under the £72,000 cap, care costs can vary by over £130,000 by year six between the North East, where the costs are lowest, and South East, where the costs are highest. The £100,000 all-inclusive cap reduces this variation to just £2,000.
- Only the £35,000 cap proposed by the Dilnot Report, and the all-inclusive £100,000 cap will provide protection to those who live longer than expected in residential care.