Local authorities and paying for care
A recent report has uncovered what the authors call a “postcode lottery” around how local authorities across England, Scotland and Wales fund care.
The report has prompted us to take another look at how care is funded by local authorities in England, Scotland, Wales and Northern Ireland. It’s slightly complicated, but here’s what the situation appears to be in February 2019. For more details take a look at the relevant local authority website, plus explanations from organisations such as AgeUK. We found the Which? report particularly helpful. (See the end of the article for more information.)
What is this “postcode lottery”?
The report, “Cracking the Care Code”, from equity release adviser Key has found that just one in three care recipients is fully funded by their local authority.
Currently, over-65s make 1.31 million requests for care and support annually, but must go through a needs and means assessment to determine the level of support and funding they will receive. A Freedom of Information (FOI) request to 205 local authorities found that currently councils provide support for 568,867 over-65s. Of these, 175,256 (31%) are fully-funded and 300,287 (53%) are partially funded while 19 councils were unable to provide information on the level of funding for 93,324 people (16%). (Numbers have been rounded.)
This is what the Key report found:
|AREA||NUMBERS FULLY-FUNDED||NUMBERS PARTIALLY- FUNDED||PERCENTAGE FULLY-FUNDED|
It is interesting to see these numbers, but they do not necessarily tell the whole story. We do not know how far the regional budgets have to stretch and the composition of the population in each area.
What are the care funding rules in England, Scotland and Wales?
England and Northern Ireland
Local authority contributions to care are means-tested, ie the amount will depend on how much the individual in question has in capital and weekly income.
If they need care in order to stay in their own home, the means test won’t include the value of their property.
If they need to move permanently into a care home, the test will usually include the value of their property.
When an individual goes into care, the local authority carries out a financial assessment that takes assets, money in the bank, income and property into account. If, however, a property still has a spouse living in it this will be disregarded from the assessment.
- Anyone with an estate in excess of £23,250 will be expected to pay in full for care home fees. If they have less than this in capital, but a weekly income that is considered high enough to cover the cost of care, they will be expected to pay all their fees.
- For estates worth £14,250 – £23,250, partial contribution will be required. This ‘tariff income’ works out at £1 for every £250 of savings between £14,250 and £23,250.
- Those with estates less than £14,250, can expect maximum support from their local authority. They won’t have to contribute from their capital, but will be expected to contribute from income.
- If all eligible income is taken into account in the means test, a person must be left with an income of £24.90 per week (2018/9). This is known as their Personal Expenses Allowance [PEA) and is for spending on personal items such as toiletries, stationery and haircuts. Local authorities in England have the discretion to increase the PEA in special circumstances, such as property-related expenses or a spouse that needs supporting. Which? advises talking to the local authority about such needs at the time of assessment.
You can find full guidance on the obligations of local authorities, financial assessments and allowances on the government website.
In Scotland, the rules are slightly different. AgeUK Scotland has some excellent fact sheets on funding care at home and living in a care home.
Although the Convention of Scottish Authorities (COSLA) gives guidance to councils on how they should work out charges for care at home, it seems that councils have some discretionary powers to decide what services it will charge for, and they can vary slightly across the country. The council will also assess what they consider a person can afford to pay from their income and savings. The best place to get advice in the first instance is the local council website.
In general, if an individual is planning a permanent move to a care home, a financial assessment looks separately at the level of their capital and the level of their income:
- Anyone with capital above £27,250 will have to pay the cost of care themselves. Even if their capital is less than this, someone with a weekly income considered high enough to cover the cost of care will be expected to do so.
- Anyone with capital between £17,000 and £27,250 will have to make a contribution from capital towards their care costs, but means-tested help is available, depending on income. The council will assess them as having tariff income of £1 per £250 or part of £250 if they have over £17,000.
- Anyone with capital below £17,000 is entitled to maximum support and won’t be expected to contribute from their capital. However, they will still be expected to contribute from their income.
As for England and Northern Ireland, a home owner can expect the value of that home to be taken into consideration unless, for example, a partner still lives there.
In addition, anyone aged 65 years or over who has been assessed as needing care in a care home, can claim personal care payments and possibly also nursing care payments to contribute towards the cost of their care. For 2018–19 these are:
- £174 per week for personal care
- £79 per week for nursing care
- £253 per week for personal and nursing care.
For care at home, the value of a person’s home isn’t taken into consideration. Individuals will be asked to contribute a maximum of £80 a week towards care, and that only if they have:
- A high level of disposable income
- Savings and investments over £24,000, not including the value of their home
For care home fees, if total capital is:
- More than £40,000, they will have to pay the full cost of their care. With less than £40,000 in capital, but a weekly income that is considered to be high enough to cover the cost of the care, they will have to pay all of the fees.
- Less than £40,000, they are entitled to maximum support from the local authority. How much they contribute towards their care is calculated from their eligible income, such as pensions and welfare benefits.
Local authorities must ensure individuals are left with at least £28.50 a week to spend on personal items.
The 12-week rule
Under current care fee rules the value of property can be ignored for a period of time (known as the 12 week rule).
Deferred payment agreements
Going back to Key’s Freedom on Information request, it seems that 6,882 retired homeowners are currently using Deferred Payment Agreements (DPAs) to pay for their care. Under DPAs homeowners use the value of their home to fund residential care and repay the local authority when their house is sold, or they die.
DPAs are most likely to be used in the West Midlands and East of England where each local authority has on average 72 and 71 in place respectively while London (11) and Scotland (16) have the lowest on average.
What’s your own plan?
The report found just 21% of over-55s say they have made any provision for care.
Around 44% say they would use savings and investments to fund some or all their care while 40% believe their pension income will be enough.
Around 19% say they would need to use property wealth, with over-65s currently own unmortgaged property worth £1.1 trillion.
Effect on those living in the family home
If you’re living in the family home when the owner goes into care, your position could be difficult. If you’re over 60 or have an incapacity, your position is clearer as you will probably be able to stay in residence. Otherwise the local authority may claim that the property has to be sold to pay for care. The advice is to let the local authority know in good time if money to pay for care is running low, and to discuss a way forward.This is Money has an excellent article, published in February 2020, on what can happen in this case.
- Which? on financing care
- Financial assessment calculations for residential care from Which?
- AgeUK on paying for care
- Principles of care funding from Financial Advice website
- UK Government Care and Support Act statutory guidance
- Welsh Government Charging for social care (English version)
- Care Information Scotland Paying for care homes
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