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Charging for residential accommodation

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Disability Rights UK Factsheet F4

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The Care Quality Commission (CQC) have recently launched their new ‘Tell Us About Your Care’ partnerships with a number of national charities, of which Disability Rights UK is one. This involves Disability Rights UK gathering feedback from disabled people about their experiences of using health and social care services. The CQC would welcome feedback on your experience of using any of the services they regulate. Please click here to do so.

Introduction

The Care Act 2014 introduced a single legal framework for charging for care and support and financial assessments in England. This is a new statutory framework for both non-residential and residential care and support. The Act brings together regulations governing all types of care for the first time. Its first part was implemented from 1 April 2015 and the second part related to the cap on care costs has been delayed until April 2020. This factsheet deals with charging for residential accommodation if you go into residential. For non-residential charges, please see our factsheet no. 3

Entering into care home

Following your eligibility for support from your local authority adult social care department, you could receive help with care home accommodation and fees. If it has been identified in your care and support plan that your needs are best met in a care home, then the local authority must provide for your preferred choice of accommodation which can include supported living and extra care housing settings. You must be given the right to choose between different providers as long as the accommodation suits your needs and the provider is willing to offer that care at the rate agreed and in line with the local authority’s terms and conditions. You are still entitled to have an assessment of your needs even if you are a self-funder (paying your own fees). Your local authority can assist you with the process of the care and support planning giving you advice whether the type of home you plan to go into suits your needs.

Changes to Regulations

From 1st April 2015, the guidance provided by Charging for Residential Accommodation Guidance (CRAG) 2014 and Fairer Charging Policies for Home Care have been replaced by the Care Act. This new legislation aims at making charging fairer and more clearly understood by everyone. If the local authority decides to charge you, then it must follow the regulations of the Care & Support Statutory Guidance.

Charging & Financial Assessment

If your local authority choses to charge you, then they must undertake a financial assessment in order to establish how much you are supposed to contribute towards the cost of providing services to meet your assessed needs. The regulations outlined in the Care Act statutory guidance determine the maximum amount a local authority can charge a person. The amount you have to pay towards the cost of your care in residential depends on the outcome of a financial assessment that is means tested.

Your council must not charge you more than the cost that it incurs in meeting your assessed needs. The local authority should take into account the overarching principle that you should only be required to pay what you can afford and you should be given clear and transparent information on what you will be charged. The charges should be reasonable and your ability to meet your charges must be regularly re-assessed to make sure that they are still affordable and sustainable.

Joint Charging Assessment

The council will assess your assets, income and capital according to the principles of the guidance. The local authority cannot take into account any joint assets, so the assessment can only take any joint assets as 50% of your share, unless it is shown otherwise. Your income (as the income of the cared for person) and capital will be taken into account in the financial assessment. Income is net of any tax or National Insurance contributions. The regulations do not allow a joint charging assessment if you are one of a couple.

Determining your contribution

When determining what you can afford to contribute towards the cost of care, your local authority must adhere to the upper and lower capital limits (after disregards have been taken into account). The upper capital limit for is currently £23,250.00 and the lower capital limit is £14,250.00.

The treatment of capital is explained below :

  • If you possess more capital than the upper capital limit (£23,250) then you are expected to be able to afford the full cost of your care.
  • If you have capital below the lower capital limit (£14,250), then you will not need to contribute to the cost of your care and support from your capital. You may still have to contribute from your income though.
  • If your capital is between the lower and upper capital limit, you will be deemed as able to make a contribution known as “tariff income” from your capital and income. The ‘tariff income’ is £1 per week for every £250 in capital between the two amounts.

Top-ups

You should be given the choice to select the residential accommodation that is affordable within your personal budget. You could choose a more expensive setting if you are willing the additional cost (top-up) – Statutory guidance Annexe A paragraph 20. If a top-up fee is agreed, then this should be set out in a written agreement between the local authority and you as the person paying the top-up (in line with the regulations). Top-ups are a choice, they are not compulsory. The local authority is ultimately responsible for the cost should the top-up not be paid.

Methods of paying for care home fees

You can pay for your care home fees from the below or a combination of the below:

  • Your income (including pension income)
  • Your savings or other assets possess including any contributions from a third party
  • A financial product designed to pay for long-term care
  • A deferred payment agreement which enables you to pay for your care at a later date out of assets (usually your home) – you don’t have to sell your home during your lifetime.

The 12 week Property Disregard

If you enter into a care residential home as a permanent resident, the local authority will ignore the value of your home for the first 12 weeks. The value of your home will also be ignored if a qualifying relative has been living in the property. Local authorities have discretion to ignore the value of your property if anyone else lives there.

The personal expense allowance (PEA)

Once you become a resident in a care home, you must be left with at least your personal expenses allowance (PEA) which is £24.90. The PEA is set annually by ministers. The PEA is a minimum amount of income that you must be left with after charges to enable you to keep enough money to spend on personal items such as clothes and anything that is not related to your care. Neither the local authority nor the care home have the right to dictate on you to spend your PEA in any specific manner.

Deferred Payment Agreement (DPA)

When you enter into residential care, you have the right to enter into a deferred payment agreement if you are eligible for the scheme. Deferring payment can help you to delay the need to sell your home. By taking out a deferred payment agreement, you can ‘defer’ or delay paying your care costs until a later date. The local authority will pay the care costs on your behalf and will recover the money that you owe (plus interest) at a later date. The local authority can pass on administrative charges but the DPA scheme should be run on a cost neutral basis. A deferred payment agreement provides flexibility for when and how you pay for your residential care and support (or supported living costs where appropriate).

It should be noted from the outset that the payment for care costs is deferred and not ‘written off’ – the costs of provision of care and support will have to be repaid by you (or someone acting with legal authority on your behalf) at a later date. A deferral can last until death, however many individuals use a deferred payment agreement as a ‘bridging loan’ to give them time to sell their home when they choose to do so. This is entirely up to you to decide.

The deferred payment scheme is available throughout England from April 2015, and local authorities are required to offer deferred payment agreements to those who meet certain national criteria governing eligibility for the scheme. Local authorities will need to ensure that ‘adequate security’ is in place for the amount being deferred, to be confident of your ability to pay back the amount deferred in the future. Local authorities can also offer the scheme more widely to anyone they feel would benefit who does not fully meet the criteria.

Lacking Capacity

If the individual lacks mental capacity to request a deferred payment, the local authority must find out if the person has a Deputy at the Court of Protection or a person with Lasting Power of Attorney who could request a deferred payment agreement on their behalf. 

Eligibility for Deferred Payment Agreement (DPA)

To be eligible for DPA, you must meet the following three criteria:

  • You should be assessed as having eligible needs which the local authority decides should be met through residential care.
  • You have less than the upper capital limit (currently £23,250) in assets excluding the value of your home.
  • Your home is not occupied by a spouse or dependent relative as defined in regulations on charging for care and support.

Local authorities can be generous and offer a DPA to someone who does not meet the three above criteria. Your local authority has a duty to provide easy to understand information and clear advice related to your care and support (Section 4 of the Care Act) and this applies to DPA. 

Termination of Deferred Payment Agreement (DPA)

The DPA can be terminated in different ways:-

  • You voluntarily repay the full amount due (including care home charges, any interest accrued and any administrative fees charged) during your lifetime.
  • Automatic termination when the DPA’s holder dies.
  • Automatic termination following the sale of your property.

Short-Term Resident & Temporary Resident

There is a recent change made to the Care Act Guidance with regards to charging short-term or temporary resident in a care home.

  • A short-term resident is defined by the Act as someone staying in a care home for a period not exceeding 8 weeks. In this situation, the local authority may choose to assess and charge them according to the rules for care or support arranged other than in a care home.
  • A temporary resident is defined by the Act as someone who stays in a care home for a period of 52 weeks or, in exceptional circumstances, not substantially exceeding 52 weeks. Since a temporary resident is expected to return home, their main or only home is usually disregarded in the assessment of whether and what they can afford to pay.

Where can I get more help or information?

This factsheet is a basic overview. We have other publications concerned with independent living in our shop at https://www.disabilityrightsuk.org/shop

You can also place orders by contacting Disability Rights UK.

For further help and information please contact our Advice Line - 0330 995 0404.

You can get more information about where to get personal advice from our Factsheet F15 - getting advice. All our factsheets are free to download on our website at disabilityrightsuk.org. We have a number of independent living factsheets.

To view the Care Act Statutory Guidance see our Care Act resource page

3 October 2016

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