Care home fees may be self-funded or state-funded. In case of self-funded care home costs, the claimant either has income, savings or capital that contribute towards the expense or they may sell or rent out their house to pay for care home bills. 

Individuals on a low income, low savings or those claimants who do not own a property or those who may not be able to generate sufficient funds from the sale of their house may consider staying in their house and claim Attendance Allowance.

If the state is funding your care home fees, it will be routed through your local council and your benefits such as state pension and pension credit will be used to cover the costs. If you have capital below £23, 850, the state will bear most or in some cases all of your care home expenses.  

What Is An Assets And Income Assessment For Aged Care?

An assets and income assessment is a means-based test conducted by local councils to calculate the amount of care home fee that a claimant will be able to contribute considering their financial status, as the council will be bearing the remainder of the expenses. For this purpose, the income, savings and capital of the claimant will be taken into account.

State Benefits such as Attendance Allowance and Pension Credit will be counted as income. However, in the case of Disability Allowance, there will be no accountability for the same.

Based upon the financial assessment of claimants, they will then be categorised into one of the following slots so that local authorities may decide upon the claimant’s contribution towards their care home fee as well as the amount due on the state: 

  • If someone has savings over £ 23,250, the claimant will have to bear the entire cost of the care home fees
  • If someone has savings of £14,250–£23,250, the claimant will have to contribute most of their weekly income towards care home fees. They will also pay an assumed extra amount of £1 per £250 of capital that they have
  • If someone has savings below £14, 250, the claimant will not be required to pay for their care home fees from this amount and will have to pay from their weekly income. 

While the residential property owned by a claimant is considered as capital, however, in case their house is occupied by any of the following, residents, the premises may not qualify to be accounted for in a means test:

  • spouse/civil partner/unmarried partner
  • a close relative over 60 years of age
  • a close relative below 16 years of age (legal dependant)
  • former spouse or partner if they are a single parent

This is called property disregard.

Once an individual qualifies for funding from local authorities, they design a personal budget for them according to which the following criteria is decided:

  • the total cost of claimants’ needs
  • the amount of contribution to be made by the claimant
  • the amount of contribution to be made by the local council

If the results of someone’s assets and income assessment reveal low income, low capital or low savings, council authorities will increase their contribution towards their care home fees. In some cases especially when an increase in the claimant’s income or assets is expected,  even if the council bears their expense in the short term, they will design a recovery plan for the future. 

If the claimant has no savings or capital yet they are a homeowner, the council will consider recovering the expense from the proceeds of the sale of the house. This is called a deferred payment and may be considered when the applicant has a capital of around £23,250 (excluding the value of their house).

To view all aspects of this topic, we will explore the following areas:

  • How Much Can You Keep Before Paying For Care?
  • How Much Savings Can You Have Before You Have To Pay For Care?
  • Who Pays Care Home Fees?
  • What Is A Deferred Payment Agreement?
  • Can Council Take House To Pay For Care?
  • Are There Any Other Care Options Instead Of Moving Into A Care Home?

How Much Can You Keep Before Paying For Care?

Claimants are permitted to keep a weekly allowance of £24.90 per week for themselves before paying for care home fee. People who are on pension credit will be allowed an additional weekly amount of £5.75.

The good news for claimants is that according to a recent announcement by the UK Government, with effect October 2023 nobody will have to pay more than £ 86,000 as a care home fee. Once they have paid the amount, the remaining expense will be borne by the state and funded through their local council authorities.

How Much Savings Can You Have Before You Have To Pay For Care?

If you are a UK resident, the amount of savings you can have before having to contribute towards a care home fee depends on whether you live in England, Wales, Northern Ireland or Scotland. Below is the threshold for each country:

  • England: £23,250
  • Wales: £50,000
  • Northern Ireland: £23,250
  • Scotland: £28,750

Anyone who holds savings above this amount will have to contribute towards their care home fees until their savings fall below this threshold. When that homes, claimants will be able to receive financial aid from the state through their local councils. 

Who Pays Care Home Fees?

Care home fees can be borne by the state, partially or wholly, depending upon the circumstances of the claimant or they may be self-funded, partially or wholly by those in care. According to estimates, nearly half a million people in the UK need a care home facility, Out of these 50 per cent of care home residents are self-funded while the rest of them are state-funded.

The amount that one pays towards their care costs depends on  whether they live in England, Scotland, Northern Ireland or Wales (each country has their capital thresholds that determine the claimant’s contribution as compared to that of the state) as well as the following financial aspects of the claimant:

  • income 
  • savings 
  • investments
  • property 

Care costs are means-tested. This means that this is a decision taken after a detailed financial assessment of the eligible individual. If someone needs care but is unable to bear the expenses the council takes care of them. 

Individuals living in care homes have the option of selling or renting out their unoccupied house to pay for their care home costs. However, if they have a partner or legal dependents living on the premises, the house will not be considered for care home costs.

What Is A Deferred Payment Agreement?

If someone is not willing to sell their house, there is an option of Deferred Payment Agreement according to which the homeowner signs a formal agreement with their local council. The local council agrees to bear the entire care home expense of the claimant until they are ready to sell their house or the property is sold after the death of the claimant. 

If you want to check your eligibility for the DPA scheme, below is a list of key criteria to be met:

  • your savings and capital are less than £23,250 
  • you have no other funds to pay for care home expense
  • you are a homeowner or are able to offer any other asset as security
  • in case of your home serving as security, it must be unoccupied

In addition to the care home facility, if the claimant needs medicines or general health care, the NHS will be willing to fund both for them under the NHS Continuing Healthcare. To qualify for this scheme, the claimant should have ongoing physical or mental health needs. In certain cases, the NHS may also pay a flat amount for the nursing care of the claimant.

Can Council Take House To Pay For Care?

If a homeowner moves into a care facility indefinitely and there is no claim on the residence of their house (this means that there is no family member or a qualifying dependant living in their house) the council may then seek sales of their property. However, this too does not take place on an immediate basis. Yet, in such situations, the homeowner may not qualify for care costs to be taken care of by the council. 

With care costs in the vicinity of £30 k to £40 k per year, per person, in some cases, it proves to be more feasible for homeowners especially those with little savings to stay in their own property and have a carer to look after them. In such cases, they may be able to claim certain state benefits including attendance allowance.

Are There Any Other Care Options Instead Of Moving Into A Care Home?

Sometimes it is advisable for individuals on low income to consider their situation and make a decision whether they will be better off staying home and receiving care (as well as state benefits) or will they be taken care of better in a care home facility. In such cases, they may consider applying for any of the following options:

  • Attendance Allowance 
  • Personal Independence Payments

Attendance Allowance is a tax-free state benefit applicable to those individuals who have surpassed the state pension age and require supervision due to their health condition. It is aimed towards providing a monthly allowance to those individuals who need assistance with meeting the extra costs of a disability or the support of a carer due to old age.

PIP (Personal Independence Payment) is a benefit intended for people aged 16 years and above; aimed to cover the additional daily costs of living with a long-term disability or illness; be it a physical or mental health condition. It is gradually replacing DLA (Disability Living Allowance) by providing recipients with: 

  • extra money in addition to their prevailing benefits 
  • a reduction in their Council Tax or Road Tax bills 
  • discounts on travel

Conclusion:

The assessment of one’s assets and income is essential prior to the local council preparing a budget and making arrangements for someone’s transition to a care home. This enables them to ascertain the amount due upon the claimant as a contribution towards the facility as well as the amount due upon the state. 

To reduce their self contributions, individuals have considered reducing the value of their assets by either selling their property or gifting it to close relatives. However, it is not advisable to do so as it comes under the deprivation of assets and can negatively impact one’s benefits. In fact, in case of property being gifted to family members, councils have used their legal rights and have been able to reclaim the said property.

FAQs: What Is An Assets And Income Assessment For Aged Care?

What assets are assessed for care home fees?

Your income and capital are assessed for care home fees. All benefits, earnings and pensions are included in income, while capital includes all forms of savings, investments, land and property.

What is a financial assessment for care?

A financial assessment or means test for care is a calculation of the claimant’s assets and capital. It takes into account all of their earnings (including benefits) as well as inventment and property. The purpose of a financial assessment is for local councils to budget the self-funded versus state-funded proportions of a claimant’s care home fee. 

What is classed as an asset for social care?

The value of a claimant’s savings, property and income is classed as an asset for social care.

How do I protect my assets from care home fees?

If someone does not want their assets to be considered for care home fees they must plan in advance and accumulate sufficient savings for the purpose. They can also sell their assets; however, this sale must take place much in advance of the claimant’s financial assessment for moving into a care home.

What constitutes deprivation of assets?

When someone deliberately reduces their assets; either by selling them or gifting them so that they can reduce their contribution towards care home expenses, it constitutes as deprivation of assets.

References:

Financial Assessment for Care Home Fees Explained – carehome.co.uk

Who Pays for What in 2021/22? – carehome.co.uk advice

Paying care home fees | Social care means tests

Paying for your own social care (self-funding)

Paying your own care costs if you’ve used all your savings

How To Avoid Selling Your Home To Pay For Care…

Paying for permanent residential care | Paying for a care home

When the council might pay for your social care

Attendance Allowance

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