Paying for Care: Know the Rules

There are a number of ways people might have their care funded in a care home:

If they have more than £23,250 they will pay for their care themselves. They keep their pensions and any welfare benefits such as Attendance Allowance to put towards their weekly care bill.

After the £23,250 threshold has been reached, only small amounts of the savings are used until they fall to £14,250 at which point no more of the resident’s savings can be used.

If the person has less than £23,250 then the local authority will need to be informed as they will be paying the majority of the care home bill. They will take the resident’s state pension and any welfare benefits such as Attendance Allowance. If the resident has an occupational pension but still has a spouse at home the spouse can keep half the occupational pension. The resident will be left with a personal expenses allowance for clothes, toiletries etc

It may be that the resident requires some nursing care in which case the NHS will make a weekly contribution to the care home to cover any nursing care provided.

If the resident has serious medical conditions in addition to their dementia they could be entitled to free NHS continuing care. More on this under the ‘NHS continuing care’ tab

Top tips:

1. Don’t wait until the bank balance runs down to £23,250 – contact the local authority at around the £30K mark so that they are aware that they have a financial responsibility for the resident and can get their payment systems in order prior to the money running down to the threshold
2. Split any joint bank accounts as early in the dementia journey as possible so that a partner does not end up subsidising the care fees of the person with dementia
3. Check that the financial assessment has been done accurately, disregarding any assets and capital which ought to be exempt under the paying for care rules

A property will be completely disregarded where one of these situations exists:

When a spouse or partner lives in the property

When a close relative over the age of 60 lives in the property

When someone under the age of sixty who is a close relative lives in the property and is registered disabled

Top tips:

1. A local authority has discretion to disregard a property e.g. a woman had moved from Spain to look after her mother with dementia. After a number of years the mother went into care and the local authority asked the daughter to sell the property otherwise they would place a a charge against it. The woman challenged this decision through the Ombudsman’s Office which ruled that since she had given up her life in Spain to care for her Mum, the property was hers to live in for as long as she liked and no charge could be placed against it
2. Someone will need to demonstrate that they are ‘registered disabled’ if they are under 60 – we do find that people are experiencing severe depression upon their loved one entering a care home but if that is not registered as a disability they might struggle to persuade the local authority that they are technically disabled
3. Under the Care Act 2014, local authorities have an obligation to offer families a ‘deferred payment’ on a property. Any money that the local authority has put to the care home bill that they would not have contributed had the property been sold will be placed as a charge against the property, recoverable when the care home resident dies.

Many carers want to keep the person with dementia in a family environment for as long as possible. At Pathways we are encountering more of these situations where the person with dementia sells their house and either moves in with loved ones OR pools resources with a relative to buy a suitable property for all concerned. Whilst we would not discourage anyone from pursuing this kind of arrangement which can be beneficial to people with dementia, we would suggest that families consider the following aspects of the decision…

Mental Capacity – does the person with dementia have mental capacity to make the decision to leave their own home? If they do then they can do what they wish. If someone is making that decision for them then they need to be mindful of their duty of care to that person and to protect their money if they are also operating a Lasting Power of Attorney for Property and Finances.

Pooling resources –  does the person with dementia have mental capacity to take the decision to pool their resources into a property which they co-own with other people? Will the person with dementia have their name on the deeds of the property (technically they should if they are putting their money towards the purchase of the property) ? If the person needs a care home in the future how will this be funded if their money is tied up in that property?

Problems further down the line, a case study:

Dad developed dementia and it was clear he could no longer live on his own. His son asked him to move in with him, they sold both their properties and bought a house together. The son’s wife became seriously ill and it was not possible for the son to care for both of them so Dad moved in with his daughter. His daughter however had no downstairs bathroom and due to Dad’s mobility issues they used the remainder of his savings to install a wet room.

6 months later Dad’s needs were such that his daughter could no longer work from home and look after him so they approached the local authority for help. The local authority were not willing to automatically fund Dad in a care home due to the fact that one year earlier he had owned a property worth £200,000 and now only had £10,500 in his bank account.

This caused problems for the family which, whilst well meaning, had used up Dad’s finances in a way that meant they could not be easily refunded to him.

The topic of gifting money comes up frequently in relation to paying for care as people need to be careful that they won’t be accused of ‘deprivation of assets’ at a later date.

If a person with dementia has capacity to gift money that is their decision to make. However if they are about to be or are already in receipt of paid for care then they need to behave reasonably in relation to the overall value of their estate.

If the person with dementia lacks capacity then it is likely that someone is acting for them as a Lasting Power of Attorney for Property and Finances or a  Deputy for Property and Finances. This person (or persons) needs to be very careful when gifting money on behalf of the person with dementia: the guidance states that ‘reasonable’ amounts can be gifted on occasions such as weddings, birthdays, and religious festivals.

Gifting money, case studies:

1. A man lost his wife and sold his large house to live near his son where he rented a studio flat for many years. He gave 2 grandchildren enough money to pay their university fees. 6 years later he developed dementia and needed a care home. The son relayed the history of his Dad’s move and explained that his Dad had gifted money to the grandchildren. The local authority stated that this constituted deprivation of assets. The son took the matter to the Ombudsman who ruled that this was not deprivation of assets as grandad had no idea he would develop dementia in 6 years and need a care home placement. The grandchildren would not have to repay this money
2. A couple decided to help their daughter out with her mortgage when she lost her job by paying off a lump sum to reduce her repayments. The mother was in receipt of homecare at the time and no longer had enough money to pay the weekly bill. Her husband approached the local authority who refused to fund the care. This decision was not overturned on appeal.

There are many areas to consider when paying for care in a care home. It is worth mentioning at this point that when someone is in receipt of homecare then the property is never taken into account. The person will be assessed on their income and savings and asked to contribute a ‘reasonable’ amount to their home care bill. Some people will be assessed as able to afford to pay 100% of the bill, others may pay nothing, and everyone else will make some sort of contribution.

Jointly held bank accounts: if someone is paying for care from a jointly held bank account then technically the person who is also named on that account is contributing. For example, the person with dementia goes into a home which over the course of the year costs £40,000. If there was £100,000 in the account at the start of the year both parties had £50,000 each. But at the end of the year both parties now have £30,000 each so the person who is still at home has ‘lost’ £20,000.

Deferred payments on a property: under the Care Act 2014, local authorities should now be offering people a deferred payment on a property. The property may be occupied by a working relative who is under 60 for example, so the property is not automatically disregarded. The local authority may place a charge against that property for any money they are paying out that they would not have paid had the property been sold immediately. The property may be rented out if it is empty. This rental money will then go towards the weekly care home bill.

When a child/children have inherited half of the property from a deceased parent through ‘tenants in common’: more and more people are changing the deeds of their properties to tenants in common when one person develops dementia. The worry is that if they go into a care home and the person still at home dies first then all of the property passes under property law to the person in the care home. To avoid this the deeds of the property can be changed from a joint tenancy to tenants in common and new Wills drawn up.

If the person at home does die first then their half passes to whoever they have named in their Will as the beneficiary. This complicates the picture in terms of assessing now what the person in the care home’s half is worth as that half is diminished in value due to the market depending on a willing buyer for that half. Anecdotally we have heard that where a child/children now owns half a property the local authority disregards it because it is not worth the paperwork and time it would take to evaluate half the property (note that this IS anecdotal feedback and won’t be the case in all boroughs).

Why people with dementia don’t automatically receive it: it is not easy for people with dementia to qualify for NHS continuing care. Whilst dementia is an organic disease of the brain, the needs of people with dementia can often be met through ‘social care’ which is means tested.

Qualifying criteria: when someone is assessed for continuing care they are assessed against a set of criteria which includes skin problems, breathing, and mobility, amongst other ‘domains’. If they score highly enough in enough domains then they will qualify for continuing care.

Challenging a decision: we would never discourage people from challenging a decision and there is no doubt that case decisions have been overturned on appeal. For more information about organisations which (for a charge after a free initial conversation) assist families in securing this kind of funding please contact the helpline: 0203 405 5940