Chapter 3: Local authorities: charging and assessing financial resources

Question 1

What is the high level process for local authorities make financial assessments for either domiciliary
care or residential care?

Answer 1

Referral

Needs assessment

Financial eligibility

Arrange care and support

Question 2

What is the needs assessment process?

Answer 2

Relates to the assessment of social care needs.

The local authority will have its own published assessment criteria, under the Care Act 2014 it has a duty to assess if an individual has care needs and, if so, what those needs are.

It is the care and support that is being assessed; the ability to pay is irrelevant.

Question 3

Is the local authority allowed to charge for conducting the needs assessment?

Answer 3

No

Question 4

Are there prescribed timescales for carrying out an assessment?

Answer 4

There are no prescribed timescales to carry out the assessment but it must be carried out within an appropriate timescale

Question 5

When must an advocate be appointed?

Answer 5

Where the individual being assessed has ‘substantial difficulties’ either understanding, retaining information or making decisions, the Care Act requires an advocate to be appointed to represent the individual’s interests.

This will take place where a carer or family member is unable to act for them in this capacity.

The local authority may appoint an advocate if they believe someone representing the individual is not acting in their best interests.

Question 6

If an individual needs the support from someone else to demonstrate an outcome, they would be regarded as unable. They would also be regarded as unable if three further criteria are met, what are these?

Answer 6

1. performing the outcome would cause the individual significant pain, distress or anxiety.
2. The individual is able to achieve these outcomes but represents a potential risk to themselves or others in doing so.
3. the individual is able to achieve these outcomes but it would take significantly longer than normal.

Question 7

What legal duty does the local authority have with regards to an eligible individual?

Answer 7

The local authority has a legal duty to ensure that the needs of an eligible individual are met although this doesn’t mean that services have to be provided by the local authority.

Question 8

A care and support plan should have a ‘light touch’ review carried out, when?

Answer 8

Within six to eight weeks of the service commencing to ensure it is working as intended. It must then be reviewed as a matter of course within twelve months.

Question 9

under the care act, in England, after paying domiciliary care an individual must be left with an amount equal to what?

Answer 9

rate of income support or Pension Credit they are eligible for.

Question 10

With regards to married couples, how is the spouse’s income/capital treated if one of the couple requires residential care.

Answer 10

In the case of a married couple, the spouse’s income or capital must be ignored unless they too require residential care from the local authority. Where this is the case they must both be assessed separately, i.e. they both have individual limits applied.

Question 11

Local authorities are only expected to fund residential care where an individual’s capital is less than or equal to, what?

Answer 11

£23,250

Question 12

What happens if a person’s capital is over £23,250?

Answer 12

• The individual is expected to meet the full costs of residential care.
• Where assets exceed this amount, local authorities need make no further financial assessment.

Question 13

Capital is £14,250–£23,250?

Answer 13

• Capital within these limits is converted into tariff income. This is added to the individual’s other income to determine their ability to fund the care.

Question 14

Less than £14,250

Answer 14

• Capital below this is ‘disregarded’ from the assessment process. Depending on income, the local authority may fund the full cost of residential care. In other words, low levels of capital will be ignored but other sources of income (such as pension income) will be assessed and taken into account.

Question 15

Capital is defined in the Regulations as something that does not form part of a series of payments.

What assets would be included?

Answer 15

• Cash
  – bank accounts
  – National Savings
  – investments
  – shares
• overseas property
• business assets
• land and buildings
• property under trust to which the individual is beneficially entitled
• other property (excluding the individual’s principal private residence), e.g. second homes.

Question 16

How will capital, which is not easily converted to cash, be valued for care purposes?

Answer 16

Capital will normally be valued at the market value less any costs of selling it. 10% of the value can be ignored in the assessment process to allow for the costs of selling the asset.

Question 17

Building society deposit of £15,000, £8,000 in a National Savings Growth Bond and 1,000 shares currently worth £4.50 per share.

How would the above be valued?

Answer 17

Building society £15,000
Growth Bond £8,000
Shares £4,500
Less 10% sale allowance (£450)

Total £27,050

Question 18

In what circumstance is jointly owned capital not split 50/50?

Answer 18

Property.

In this case, the individual’s actual share or beneficial interest will be used instead.

Question 19

if an individual has absolute entitlement to the capital or income within a trust, how is this valued for care costs?

Answer 19

They have an unconditional right to the assets. Whether the individual is in possession or has absolute entitlement to the assets, they will be treated as possessing the actual capital.

Question 20

If the trustees have discretion to make payments of capital or income (discretionary trust), how is this valued for care costs?

Answer 20

With a discretionary trust, account can only be made of payments that are actually made.

Question 21

Assets will not usually be treated as capital (or notional capital) in a discretionary trust unless the local authority believes, what?

Answer 21

The trust was established deliberately to increase the local authority’s contribution towards care costs.

Any capital held in trust as a consequence of personal injury will be fully disregarded.

Question 22

What are capital disregards?

Answer 22

Certain types of capital are not included in the assessment process

Question 23

When is a property disregarded in care costs?

Answer 23

For the twelve-week disregard period.

If care is expected to be temporary.

Where they have an interest in a property that is the main or sole residence of an estranged or divorced partner, who has a dependent child and is a lone parent.

If a spouse or partner still occupy the property.

A relative over the age of 60 still lives in the property. The same also applies if an incapacitated relative or child under the age of 18 continues to live in the property.

Question 24

Other types of assets or capital typically excluded are, what?

Answer 24

Surrender value of a life policy.

An asset the individual has no current interest in, e.g. potential beneficiary under a discretionary trust.

Personal possessions (unless purchased with the deliberate intention to maximise local authority care funding).

The initial (but not subsequent) payment for personal injury settlements subject to certain restrictions.

Question 25

How is an investment bond regarded in care costs?

Answer 25

It is used as an investment vehicle but is technically a life policy.

The Regulations are clear on this point: the capital should be disregarded but any withdrawals of capital will be treated as income.

Question 26

What is asset deprivation?

Answer 26

Someone gives away assets such as income or capital, or sells them at less than their market value, in order to qualify for or increase the financial support available from the local authority.

If an attempt is made to give capital away, the local authority could try to recover it.

Question 27

What happens if assets are transferred to a 3rd party to try to reduce the estate value for care costs?

Answer 27

The third party is liable for the amount that would otherwise have been paid to the local authority if it had been correctly included within the assessment

Question 28

How would the local authority recover deprived assets?

Answer 28

Unpaid care costs might result in the local authority regarding this sum as a debt and looking to recover it through the courts. If it does so, the maximum debt recovery period is six years.

Aafter this period, the debt must be written off.

Question 29

What is notional capital?

Answer 29

In some circumstances, an individual may be treated as possessing a capital asset even though they do not actually still own it.

For the assessment process, the individual’s capital is deemed to include actual capital plus certain other ‘notional’ capital.

Question 30

Notional capital may include, what?

Answer 30

Capital that would be available if it were applied for, e.g. an unclaimed premium bond win or some social security benefits such as Pension Credit.

Capital which is paid to a third party.

Capital deliberately disposed of to reduce the amount payable, e.g. someone who is close to requiring local authority-funded care gives a one-off payment of £5,000 to each of their grandchildren.

Question 31

Examples of what would not normally be regarded as notional capital are, what?

Answer 31

Capital held in a discretionary trust.

Where the individual’s spouse sells the family home and trades down to a smaller property.

Question 32

is the fund value of a pension considered within care costs?

Answer 32

No

Question 33

is a lump sum accessed via a pension (PCLS) and then placed in a bank or reinvested into a GIA, is it considered for care costs?

Answer 33

Yes

Question 34

Where an individual is entitled to pension benefits but chooses to defer taking them in whole or in part, are these considered within care costs?

Answer 34

yes, as notional income.

Question 35

Where an individual has accessed drawdown from a pension, but takes no income or a low level of income, can this be considered for care costs?

Answer 35

yes, as notional income.

Question 36

Where the value of capital is between the upper and lower capital limits, the individual’s ability to pay for their care costs is assessed as income. To achieve this, the value of the capital is translated into a tariff income.

How is this tariff income calculated?

Answer 36

each £250 (or part thereof) between the lower and upper limit.

This is treated as producing a tariff income of £1 per week. Tariff income is always rounded up to the nearest pound.

Question 37

Erica is being assessed for a local authority care home. She has assets of £17,100. Her tariff income is, what?

Answer 37

£17,100 – £14,250 = £2,850

£2,850 ÷ £250 = £11.40, which would be rounded up to £12 per week tariff income.

Question 38

What sources of income are taken into account for care costs?

Answer 38

• State pension income.
• Occupational pension income.
• Investment income (unless assessed for tariff income).
• Capital withdrawals from a capital investment bond.
• Income received from trust settlements.
• Income from most forms of insurance, e.g. IPI, LTCI.
• Personal pension income, e.g. lifetime annuities, flexi-access drawdown.
• Most social security benefits.

Question 39

50% of the occupational pension, personal pension or retirement annuity may be disregarded where, what?

Answer 39

• the individual has a spouse;
• the spouse does not live in the same care home; and
• the individual actually passes 50% on to the spouse.

Question 40

What income is fully disregarded?

Answer 40

• Income from employment, including self-employed income.
• Some sources of benefit income are not included.
• Income from a mortgage protection policy.
• Annuity income from lifetime mortgages (where the spouse remains in the dwelling as a home).
• Pension Credit Savings Credit is disregarded up to a limit.
• Income from savings (where this is assessed as capital).

Question 41

What is the Personal expenses allowance (PEA)?

Answer 41

The amount of weekly income (currently £28.25 in England) individuals are allowed to keep to pay for items such as newspapers and toiletries.

Question 42

Dolores is planning for her potential future long term care needs. She does not currently require care and lives in Preston. Her details are as follows:

• £17,000 in the bank (her only assets);
• total net income of £180 per week;
• lives with relatives
• wants to work on the assumption that care fees, if required, would be £700 per week.

What, if any, assistance would she get from the local authority?

Answer 42

Cost of care £700.00 + PEA £28.25 = £728.25

Less Dolores’s income of £180.00.

Less Dolores’s tariff income = £17,000 – £14,250 = £2,750 ÷ £250 = £11

Dolores’s income (£180.00) + tariff income (£11) = £191.00

Local authority contribution = £728.25 – £191.00 = £537.25

Question 43

Ahmet, a widower, has an income of £10,000 a year and assets of £16,800. The cost for a local care home in London is £900 per week.

Answer 43

Cost of care £900.00 + PEA £28.25 = 928.25

Less Ahmet’s income of £192.31

Less Ahmet’s tariff income of £11.00 - tariff income always rounded up

Local authority contribution = £724.94

Question 44

What is the The twelve-week disregard?

Answer 44

Ensures that the individual’s main home (typically the largest asset) will be disregarded for means-testing for the first twelve weeks of permanent admission to residential accommodation

Question 45

Once the twelve week disregard has passed what is established?

Answer 45

A deferred payment agreement (DPA) may be arranged. This would be based on the difference between what someone is assessed to pay if a home was taken into account and the amount they actually pay.