Not everyone is eligible for local authority funding but many people will be able to get some kind of financial support. It all depends on the amount of capital (savings and assets) your relative has, as well as their income.
If your relative lives in England or Northern Ireland and has capital less that £14,250 (2014-2015), they will be entitled to maximum support. Anyone receiving full funding will have to contribute all of their income (including benefits, which they must claim) to the local authority, except for the Personal Expenses Allowance.
If your relative has between £14,250 and £23,250 in capital, they have to contribute towards their fees. They will have to pay £1 for every £250 of their savings between £14,250 and £23,250. This is know as ‘tariff income’ and they will also need to contribute all of their income towards the fees except for the Personal Expenses Allowance.
If your relative has capital of more than £23,250 they will need to use that capital to pay the full cost of their care. If your relative has less than £23,250 in capital, but a weekly income high enough to cover their care home fees, they will be liable for all of their care home fees.
WHAT’S IN THE FINANCIAL ASSESSMENT
Below is a list of what is included in the Financial Assessment for Residential Care
- The value of any property that your relative owns, unless their partner or certain others are still living there.
- All income from property rental, investments, pensions and benefits that are in your relative’s name.
- Bank and building society accounts.
- National Savings and Premium Bonds.
- Shares in a family business.
- Regular savings and investments, including ISAs.
WHAT’S NOT IN THE FINANCIAL ASSESSMENT
Below is a list of what is not included in the Financial Assessment for Residential Care
- The value of any property that your relative owns, if their partner or certain others are still living there.
- Personal possessions (as long as they were not purchased to avoid residential care charges).
- Surrender value of life insurance policies/annuities.
- Investment bonds with a life insurance element.
- The mobility component of Disability Living Allowance, or Personal Independence Payment equivalent.
- The War Pension scheme mobility supplement.
- War Widows special allowance (also referred to as War Widows special payments).
- Some charitable payments.
- Certain trust funds, such as compensation for personal injuries.
- In Wales, earnings from employment, including self-employment.
Your relative should seek advice from an independent financial adviser (IFA) if they have complex financial arrangements such as money in trust, certain bonds or compensation payments, or shares in a family business.
RULES FOR COUPLES
A person being assessed for residential care should be treated as an individual. If they are married or living with a partner, the partner’s finances (including the value of their homes ) should not be included in the financial assessment and there is no expectation that the partner should contribute to the cost of the their residential care.
If your relative has a private or occupational pension, which is helping to support a married or civil partner who does not live in the same care home, then 50% of their pension will be disregarded when calculating income.
If your relative shares earnings from rental income, assets or savings with another person ( a married partner, family member or friend), it might be a good idea to split any joint accounts into separate accounts so it is easier to see who has what for the purposes of the financial assessment and paying for care in general. Be warned that there are rules about ‘giving away’ assets.
PERSONAL EXPENSES ALLOWANCES
When calculating income, your relative is allowed to keep a Personal Expenses Allowance (PEA) to cover personal items such as toiletries, stationery and birthday cards and presents. This is £24.55 each week in England, Northern Ireland and Scotland (2014-2015) and £24.50 in Wales (2014-2015 figure to be confirmed)
This amount will NOT be calculated as part of your relative’s income during the financial assessment. For example, if your relative (living in England) had an income of £100 per week, only £74.45 would be taken into account by the local authority when calculating how much your relative should contribute towards their care.
Local authorities have a discretionary power to vary the Personal Expenses Allowance (PEA) above this level in special circumstances (Northern Ireland excepted). If a person has property-related expenses or is still supporting a spouse, for example.
If your relative owns their own the most important difference between the financial assessment for residential care, and the financial assessment for care at the home and other benefits, is that the values of your relative’s home will be taken into account when assessing their capital (Northern Ireland excepted).
12 WEEK PROPERTY DISREGARD
If your relative permanently moves into a local authority funded care home in England or Northern Ireland, has less than £23,250 in savings (2014-2015), low income and owns their own property, the council must ignore the value of the property for the first 12 weeks of their stay.
If they have more than £23,250 in savings (in Wales: 23,750), when their savings run down to less than £23,250, the council must ignore the value of the property for 12 weeks.
Whatever the situation, if your relative sells their property before 12 weeks, the disregard ends. After 12 weeks, the value of their property will be counted as part of their capital.
If your relative owns a property with a partner who still lives there, the property is disregarded until circumstances change. If the partner wants to move to a different property or also decides to move to a care home, your relative can use their share of the sale proceeds to help their partner buy another property or cost of care.
If the partner dies, and the house is sold, your relative’s share of the property would then be taken into account as part of their assets. It is worth checking the local council’s procedures regarding this.