Local Authority Funding
Will the Local Authority meet my care fees?
If the Local Authority has completed an assessment of your needs and informed you that you meet their criteria for assistance, they will then carry out a financial assessment to see how much you can contribute towards your care.
Where the financial assessment shows you have assets, including the value of your property, above the upper regional limits which are £23,250 in England and Northern Ireland, £50,000 in Wales or £28,500 in Scotland, then you have to meet the cost of your care yourself.
If you have assets below the lower limits which are: £14,250 in England and Northern Ireland, £50,000 in Wales and £18,000 in Scotland and have been assessed by your Local Authority as needing care, they will pay an amount up to their Standard Rate* for the type of care best suited to your needs.
The term standard rate is often used when assessing the cost of a person’s care and it refers to the amount that the Local Authority will pay towards the cost of your care and this amount could be less than the place will cost in the home that you or your family would like you to receive your care.
Circumstances when the property is disregarded
If you own your own home, the value will not be included as your capital if your partner, civil partner or former partner still occupies the property. This also applies to people in the following categories:- a relative aged over 60, or incapacitated, an estranged or divorced partner who is a lone parent or a child under the age of 16 years who you are liable to maintain. The local authority also has the discretion to ignore the property if a person lives there who gave up their home to be a carer.
Twelve Week Property Disregard
If you are a homeowner with capital less than the upper limits for your area of the UK and have been assessed as needing permanent care, the value of your home must be disregarded by the Local Authority for the first 12 weeks after you move into care. The Local Authority must assist you with payment for your care, however they will only pay up to their standard rate and all of your income apart from a small amount known as the 'personal expenses allowance' must be taken into consideration.
Personal Expenses Allowance
The 'personal expenses allowance' is an amount a person is allowed to keep to pay for everyday expenses. This is currently £24.90 in England, £27.19 in Northern Ireland, £28.75 in Scotland. In Wales it is now referred to as the Minimum Income Amount and is £32.00.
If you have a capital amount between the lower and upper Local Authority lower limits, you will also have to make a tariff income contribution of £1 per week per £250 of capital between these limits. For example, someone in England having capital of £15,250 and the English lower limit being £14,250, would mean them having to pay a tariff income of £4 per week.
If you were receiving Attendance Allowance before going into care, it will stop after 4 weeks, but can restart at the 13th week if you fund your own care or the Local Authority are temporarily funding your care under a 'deferred payments scheme' agreement whilst you sell your property and you can then repay them.
Deferred Payments Scheme
The home will usually be counted as capital 12 weeks after a permanent move into care but, if the property has not been sold and a person has insufficient other assets or income, besides their property, to cover the cost of their care, they can request the local authority put a charge on their property which will be repaid upon their death or earlier sale of the property.
Prior to the Care Act 2014, in circumstances such as these, the Local Authority could at their discretion agree to enter into a 'Deferred Payments Scheme' agreement to create a loan to the person to meet the cost of their care.
This changed under the Care Act 2014 and people will have a legal right to defer paying for care home costs in certain circumstances. If this applies to you, you should be told about this during the 12 week property disregard period.
If you ask for a deferred payment, your local council has to cover the costs incurred for paying your care and reclaim them when the property is sold, either whilst you are in the care home or after your death, so the council must be confident that the loan is secure (and they will get their money back at a later date).
The terms you can ask for a deferred payment are:
- your needs assessment shows that you would benefit from moving into a care home
- you have less than £23,250 in savings (aside from the value of your home)
- there are no dependent relatives living in your home (if there are, the value of your property should be ‘disregarded’ by the council when working out what you should pay towards your care home fees)
The loan is secured by a charge on the person's property and it is important to realise that this is just a deferred loan and this will have to come off the value of their property when it is eventually sold.
However, there are a few points worth noting:
- the above arrangement means that the property could be let out to help with the care costs
- it gives the person's family some flexibility so that they can make the most of the assets for instance: improving the property before selling to enhance its value
- it allows a person to remain in the property market and take part in any increases in property values
If a property is used as security for a deferred payment agreement, the equity limit must be set at the value of the property minus ten percent, plus existing capital minus £14,250 and the amount of any legal claims by another party already secured on it, for example a mortgage. The maximum interest rate changes every six months to track the gilt rate and it is fixed for six-monthly periods.
Apart from providing some leeway to local authorities against changes in the value of the security (such as possible house price fluctuations) this buffer also lessens the risk that they may not be able to recoup the full amount owed. In addition, it also means that people then qualify for local authority support when they have used the equity available in their property as they are within the local authority's funding limits.
Third Party Top-up
In the instances where the rate paid the local authority is insufficient to cover the cost of a resident's care, it is possible for someone other than the resident to make an additional payment known as a 'top-up' to make up the difference to the care home.
There are only two instances when the resident themselves can make a 'top-up' payment themselves and these are:
- when the resident is within the 12 week property disregard period
- or where the resident is a party to a Deferred Payment Agreement.
The Deferred Payment Agreement can be ended at any time and the debt repaid either by the sale of the property or on death. In these circumstances the loan becomes repayable 90 days later.