The government is changing how the NHS and social care is funded. Rich Cooper looks at what the new proposals mean for financial advisers and their clients, and the impact on retirement advice – including for future care.
You’ll no doubt have seen the news around the government’s new plan for funding the NHS and social care. The new rules will come into force in October 2023 and the headlines are:
- people will no longer pay more than £86,000 in care costs – that is, for actual care, rather than accommodation – over their lifetime.
- once people have reached this cap, ongoing costs for personal care will be paid by local authorities
- those with between £20,000 and £100,000 in assets will get means-tested help towards costs from their local authority
- those who own less than £20,000 will not have to pay towards care costs from their assets but might have to contribute from their income.
The government has also announced how this will be funded and details have been widely shared in the media.
Key changes financial advisers need to know
Care received at home will count towards the cap, but only if clients were assessed as needing it and were deemed eligible by their local authority.
However, if your clients go into a care home, the costs associated with daily living – like food, energy bills and the accommodation – will not count towards the cap.
From October 2023 if someone needs care, local authorities will assess:
- their care needs and which of those needs are eligible to be met by the Local Authority and
- whether they should receive financial support to help with care costs, via a means test assessment.
Spending on care will count towards the cap only for people assessed by their local council as eligible.
Despite the headlines, the detail is not as simple as it may look. Clients might choose to pay for care that exceeds the amount the local authority would fund. However, only the amounts that would be funded count towards the cap.
How to advise clients on long-term planning
To give your clients the best support, you need to:
- understand how the assessments are undertaken and what is assessed
- be very clear on what’s taken into account and what’s disregarded.
With an aging population, a significant number of clients are going to need advice to help them through the maze of regulations and requirements. The introduction of the cap is still two years away, but in that time it’s likely more of your clients – or their families – will need care.
If you understand the new rules and the social care funding system – you will undoubtedly be in demand. And you can add real value by looking at holistic solutions, such as:
- retirement planning
- care funding – both care homes and care in their own home
- equity release and other property options
- saving and investment planning
- tax matters
- estate and wealth planning.
How can you develop your skills and knowledge?
An additional qualification – like the Certificate in Long-term Care and Later Life Planning (CertLTCP) – is a great starting point for advising on care funding and planning.
If you want to advise clients about retirement our Level 6 Financial Planning in Retirement (FPIR) will teach you how to take a more holistic approach to financial planning critically evaluate their client’s retirement options.
More about the Level 6 Financial Planning in Retirement (FPIR)
More about the Certificate in Long-term Care and Later Life Planning (CertLTCP)