NATIONAL ASSOCIATION OF FINANCIAL ASSESSMENT OFFICERS
GOOD PRACTICE, TRAINING AND INDUCTION GUIDE
VOLUME 17
USEFUL DOCUMENTS and SAMPLE INFORMATION LEAFLETS
INDEX
VOLUME 2 / Glossary of Terms
VOLUME 3 / Charging Policies
VOLUME 4 / The Financial Assessment Process
VOLUME 5 / Assessing the Costs of Disability
VOLUME 6 / Charging for Non Residential Care
VOLUME 7 / Charging for Residential Care (excluding Property)
VOLUME 8 / Charging for Residential Care – Property Issues
VOLUME 9 / Financial Safeguarding of Service Users
VOLUME 10 / Information for Service Users and Consultation
VOLUME 11 / Performance Management and Benchmarking
VOLUME 12 / Fast Track Review and Complaints
VOLUME 13 / An Introduction to State Benefits
VOLUME 14 / Case Law
VOLUME 15 / Counsels Opinion
VOLUME 16 / Commissioners Decisions
VOLUME 17 / Useful Documents, Sample information Leaflets etc
Contents
1. Sample information Leaflet for 12 Week disregard and DPS
2. Sample Legal Agreement for the Deferred Payment Scheme
3. Quick Guide for Social Work Staff on the 12 Week disregard and DPS
4. Law Society Guidance to Solicitors on Gifts of Property and the Implications for Care Charges
1. Sample Information Leaflet for 12 Week Disregard and Deferred Payment Scheme
Name of Local Authority……………………….
CHANGES TO CHARGES FOR RESIDENTIAL ACCOMMODATION FOR PEOPLE WITH PROPERTY
If you need to enter permanent residential care the value of your home may be taken into account by the council when working out how much you should pay to meet care home fees. Sometimes the value of a person’s home is not taken into account , for example when a partner continues to live there or if the stay in the care home is only temporary. We will advise you of all of the situations where property is not included.
Where the value of your home is taken into account, and you do not have sufficient income or other assets/savings to meet the full cost of the care home fees, you may have to sell your home in order to pay the fees. This can hit some people hard who, for whatever reason, cannot or do not wish to sell their home so soon after going into the care home or during their lifetime.
The government has recognised that it may be difficult for people to make decisions about selling their homes when they go into a care home and have introduced some changes that may make a difference.
THE 12 WEEK PROPERTY DISREGARD
In April 2001 they introduced a 12 week property disregard which means that the value of your home may not be taken into account for the first 12 weeks of your permanent stay in a care home. This will apply if you do not have enough weekly income to pay the fees or other assets/savings sufficient to qualify as a self-funder. In 2001/2002 this means having other assets/savings of more than £18,500. If you qualify the council will only ask you to pay a contribution based on your income and other assets/savings and will meet any difference between that amount and the fee that the council has agreed to pay for care. After the 12 week period the value of your home will be taken into account in working out how much you should pay.
If you wish to enter a home that is more expensive than the amount that the council has agreed to pay you can pay the difference yourself but must be able to meet this cost from other assets/savings that you have. This is called a top up.
THE DEFERRED PAYMENT SCHEME
In October 2001 the government introduced a scheme that allows the council to continue to meet the difference either, while you are selling your home or when you leave residential care. The difference is called the “deferred contribution”. You, or your estate, would only pay back the deferred contributions when you sell your home or when you leave residential care. The council will not charge interest while the payments are being deferred though reasonable interest will be charged if repayment is not made when the agreement is terminated. The agreement to use the scheme will be put in writing and signed by yourself and the council and you will be given a copy.
If you wish to enter a home that is more expensive than the amount that the council has agreed to pay you can arrange for a member of your family, other than your spouse, to pay the “top up” or ask the council to pay it and add that amount to the deferred payment to be repaid eventually from the sale of your property.
If the council agrees to your request for deferred payments, you are advised to seek independent financial advice before arrangements are finalised. You should particularly check your entitlement to income support or the minimum income guarantee, and attendance allowance or the care component of disability living allowance. If your property is to remain empty for any period you will need to look into issues of security, insurance and maintenance.
If it you would still prefer to sell your home you may also take advantage of the scheme .The Council will loan you the money to pay the costs that would have been met from the sale during this period and you will repay the loan when the sale is completed.
The rules for taking advantage of the scheme are as follows :-
· you do not have other income or savings over £18,500, other than the value of your home , to meet the cost of your care
· you do not wish to sell your home or if you do it may take some time and the funds will not be available quickly enough to meet the costs of your care
· you have a beneficial interest in the property.
· your property is worth enough to meet the criteria to fund the cost of your care – in 2001 this means over £18,500
· there is no outstanding mortgage , or the outstanding mortgage will leave sufficient money to meet the criteria to fund the cost of the care
Please note that if you do not meet this criteria but still want to consider the scheme there may be ways that the Council can help you and you should talk to the member of staff who is dealing with your case.
There are some things that you may want to think about before considering the scheme, such as: -
· a legal charge will be secured against your property giving the Council the right to reclaim the loan against the eventual sale
· you will need to maintain the empty property : pay for insurance on the building and contents ; pay heating bills to save the property from damp and frost
· if you rent out the property the income will have to be used to contribute towards your care home costs but will reduce the amount of the loan
· by not selling your property you will probably not qualify for as much Income Support which will increase the amount of the loan but may qualify for Attendance Allowance/Disability Living Allowance.
The Council has limited funds to give these loans but will always try to help if you wish to use the scheme.
The person who is carrying out the financial assessment will be able to explain the scheme in more detail and answer any questions that you may have.
2. Sample Legal Agreement for the Deferred Payments Scheme
Name of Local Authority…………………………………
CHARGING FOR RESIDENTIAL ACCOMMODATION – THE DEFERRED PAYMENTS SCHEME – FORM OF AGREEMENT
This agreement relates to the Deferred Payments Scheme and is between
*……………………………………………….(the council) and
*……………………………………………….( the service user)
and is effective from……………………………..that being the date that the deferred payment will commence.
The Council agrees to
1. Pay the difference between what the service user has been assessed as being able to pay , excluding the value of their property , and what the service user would have been assessed to pay if the property had been included together with any “top up” necessary to meet the full fees of the accommodation.(this is the deferred payment)
2. Inform the service user, in writing, the weekly amount of the deferred payment.
3. Re-assess the weekly deferred payment at annual intervals and inform the service user of that amount and the total that the deferred payment has grown to at that time.
4. Continue the agreement during the lifetime of the service user and up to 56 days after the death of the service user or until the service user chooses to end the agreement.
5. Charge no interest on the debt provided that the debt is repaid immediately the property is sold if during the lifetime of the service user or the debt is repaid within 56 days of the death of the service user.
6. Charge interest at an annual rate of …………….. only from the 57th day after the death of the service user until the debt is repaid.
The service user agrees that
1. A legal Charge will be registered with the Land Registry under Section 55 of the Health and Social Care Act 2001 to protect the councils ability to reclaim the deferred payments that it is making and that they or their estate will sell the property following the end of the exempt period to repay the deferred payments that have been made.
2. The costs incurred by the council in carrying out land searches and the registration fee will be reimbursed and will be payable on receipt of an invoice from the council. N.B. Optional – delete if you do not charge.
3. The council has advised that independent financial advice should be sought to ensure that the right decision is being taken.
4. The council has advised that entitlement to income support and minimum income guarantee is not likely to be payable, if the property is not being sold, but that Attendance Allowance/Disability Living Allowance may be payable and should be claimed.
5. An information leaflet has been provided explaining the details of the scheme and the requirement to maintain the property if it is left empty for any period.
Signed: ………………………………………(The Service User)
Date…………………………
or I hold Registered/Ordinary Power of Attorney *
I am Receiver appointed by Order of the Court of Protection *
(* please delete as appropriate
Signed: ………………………………………(For and on behalf of the Service User)
Name: ………………………………………(please print)
Address: …………………………………………………………………
…………………………………………………………………
Date…………………………………..
Signed: ………………………………………
(For and on behalf of
Council)
Name: ………………………………………(please print)
Position ……………………………………………………
Date…………………………………..
3. Quick Guide on the 12 Week disregard and Deferred Payment Scheme for Social Work Staff
Name of Council…………………………………………….
A QUICK GUIDE TO THE REGULATIONS FOR SELF-FUNDING RESIDENTS WHO OWN A PROPERTY
THE 12 WEEK PROPERTY DISREGARD
The Purpose
· To reduce the amount that those who have to sell their property to fund their care have to pay for the first 12 weeks of that care.
The Background
· The Government’s regulations for charging for residential care require that all residents pay the full cost of their care or if a financial assessment shows that they cannot afford this amount then the amount that they can afford to pay. The method of assessing how much they can afford to pay is set out in the charging for Residential Accommodation Guide (CRAG).
· The financial assessment includes virtually all income and capital assets and savings including the value of any property owned.
· The property can be disregarded if it is jointly owned by a spouse who is not also in residential care or in certain circumstances if a previous carer continues to live in the property.
· The regulations therefore require that, if applicable, the property must be sold.
Who Qualifies
· Any resident who, only because of the value of their property, are classified as a self-funder or full fee payer.
· Any resident, as above, that was admitted to permanent residential care on or after 9th April 2001.
What is the 12 Week Property Disregard
· The financial assessment, for the first 12 weeks after permanent admission, will be carried out on the basis of income and any other capital assets or savings but will ignore the value of the property.
· At the end of the 12 week period a new financial assessment will be carried out which will include the value of the property and when a legal charge on the property will be raised (similar to a mortgage).
· The legal charge informs the local authority that the property is being sold and the selling Solicitor will have to guarantee that the authorities debt will be repaid.
· For self-funders, provided that they make themselves known to the Department, the authority must fund the first 12 weeks, if they qualify, less the assessed contribution based on income and other savings.
NB When a care assessment is completed and it is likely that the case will be self-funding, and no referral for financial assessment is made, it is important that the scheme is brought to the attention of the service user.
· For the 12 week period the resident can be their own third party top up.
Who Does not Qualify
· Any resident who has more than the upper capital limit (£18,500 in 2001/2002) without the value of their property.
· Any resident where the existing property exemptions within CRAG are applicable.