Local Authority Assessments
The majority of people who receive care services in a residential or nursing home are required to contribute towards the cost of their care. How much they are required to contribute is determined by the extent of their assets, both capital and income.
Social Services will usually arrange for a financial assessment to be completed in order to calculate the correct contributions towards a person’s care. The guidelines for Social Services and what is considered in an assessment to be regarded or disregarded is set out in the Care and Support Statutory Guidance (“The Guidance”).
Basic Calculation (figures as at October 2018)
Local Authority Assessments – Income
Generally, all of a person’s assessable income will be used to contribute towards their care fees, with some exceptions and discounts being applied. Income such as state and private pensions is considered, as well as income from most investments. Some benefit income is also considered and collected in full to contribute towards care funding (such as Attendance Allowance). Other benefit income can and should be disregarded for this purpose (such as the mobility component of DLA or PIP).
Local Authority Assessments – Capital
The shortfall in payment after collection of your income is then made up from capital, where possible.
For people who have assessable capital (savings, cash, some investments etc) in excess of £23,250, they will be required to meet their care costs in full from their capital assets.
For those who have assessable capital of between £23,250 and £14,250, the Local Authority assessment will collect £1 for every £250 a person has in capital over the £14,250 threshold.
For people whose capital lies below the £14,250 threshold, whilst they are still required to contribute their relevant and assessable income, the shortfall (if any) will be met by the Local Authority.
Property and care home fees
Special rules are provided in relation to property owned by those who enter care and a variety of compulsory disregards are available, depending on the circumstances. For example, your home should not be factored into the financial assessment if your spouse remains living there. It is also important to note that Local Authorities do have a discretionary power to disregard property, and other assets, outside of the mandatory disregards set out in the Guidance.
Flexible options are often afforded to people by the Local Authorities where property is concerned. One such option is known as a Deferred Payment Arrangement (“DPA”), which is a contract which effectively allows a Local Authority to place a charge on a person’s property, to be paid off once the property is sold or the person passes away. This allows the opportunity and potential for the property to be rented out in the interim to provide further income to support the person’s payment of care home fees.
DPAs are usually only offered by Local Authorities where there is no prior mortgagee and where the property has been electronically registered at the Land Registry. These agreements can include timescales for payment following a sale and interest clauses and so it is important that you read the terms carefully and seek advice before signing.
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