Issues surrounding choice and finance that elderly people should consider when entering Nursing or Residential Care Homes

Philip Spiers, Nursing Home Fees Agency

Throughout the country we hear reports of local authorities incurring budgeting difficulties and being unable to provide services except in the most needy of cases and, even then, such people may be coerced into local authority accommodation and denied their right of choice. It is a sad fact of life that decisions surrounding the provision of care services are often money led, but the rules relating to the provision of services and choice would seem quite plain.

Where it appears to a local authority that a person may be in need of community care services the National Health Service and the local authority has a legal responsibility under Section 47 of the Community Care Act 1990 to carry out an assessment of that person's needs and then decide whether the results of that assessment requires them to provide any such services.

Following this, where someone is assessed as requiring accommodation in a Nursing or Residential Care Home, under the National Assistance Act 1948 (choice of accommodation) Directions 1992, that person does have the right to choose whether the accommodation is in a local authority owned (or managed) home or in a private or voluntary sector home, as long as:-

a place is available:
the accommodation is suitable to meet the needs assessed:
it does not cost the local authority more than usual for the accommodation of someone with those needs: and,
the home agrees to comply with the terms and conditions set by the local authority.

If the chosen accommodation is more expensive than the local authority would normally pay for, then a person can still choose that accommodation, if a third party is willing and able to pay the extra cost.

People who are paying for their own care should look very carefully at the consequences of being placed in a local authority owned or managed home if accommodation for the same cost can be found in the private or voluntary sector. For example, four weeks after entering local authority accommodation, the right to receive attendance allowance ceases. This is a non-means tested allowance paid at the lower rate of £32.40 per week for those needing care by day or night and, at a higher rate of £48.50 per week for those needing care by day and night. This amount can be quite significant when paying around £250 per week for residential care or £400 per week for nursing care, particularly if the local authority is charging the same amount for accommodation as the private and voluntary sector homes. In accommodation other than that provided by local authorities, residents can be better off by up to £118.50 per week or, use this amount to choose more expensive accommodation at no extra cost.

Elderly people whose only asset is a property to sell, and are receiving attendance allowance and entering nursing or residential care, may consider the benefits of choosing their accommodation privately without involving the local authority. Should the local authority arrange the accommodation, the attendance allowance is lost whilst the property is on the market and the cost of the accommodation being paid by the local authority is recovered by a charge being placed on the unsold property.

Alternatively, by claiming a number of benefits direct from the DSS, the attendance allowance can be retained and no charge is placed on the property. This can be illustrated as shown in Figure 1.

Before considering this option, there are some important factors to be borne in mind:

a) How will the shortfall be paid for, i.e. can a relative afford it or, will the home owner allow it to accrue over the long term if the property does not sell immediately.

b) How much will the property sell for and will this provide sufficient money to meet care costs for life or, if not, if the capital falls to below £16,000, will the person qualify for help from the local authority, i.e. be assessed as needing the level of care they have chosen themselves at a price the local authority are prepared to pay.

c) Will the care home owner agree to keep somebody as a resident in the same accommodation if their capital falls to £16,000 and can only pay what the local authority offers.

A sensible precaution would be to discuss these points with the social services department and the chosen home owner before proceeding.

Some local authorities who have placed charges on properties to recover their costs have also sought to claim interest on the money advanced. However, it was never intended that one should incur interest on this charge. The only way this can happen is if these local authorities ask elderly people or their relatives to agree to and sign charges on properties which include a provision for them to charge such interest. However, by a person not agreeing and signing such a charge, the local authorities can still enforce the charge but only under the Health and Social Services and Social Security Adjudication Act 1983 which does not provide for interest to be paid.

The financial and legal implications to be considered when paying for care are wide, and require careful planning. Elderly people or relatives should seek specialist advice, before taking on any commitment they are unsure of being able to afford. They should seek advice on what their entitlements are from the state, what legal matters they should attend to and how best to use their capital and income to meet ongoing and possible changing care needs.

The NHFA offers such specialist advice, without charge and with an aim to enable elderly people who have to pay for their care costs to continue to do so for the remainder of their lives. The NHFA, through its experience in specialising in long term care fee planning, has developed a range of financial solutions to meet most residents needs. Thus enabling many of them to preserve as much as possible of their original capital and, with that, their independence, dignity, right of choice and, the ability to leave an inheritance should they wish to do so.

Philip Spiers, NHFA Freepost, Old Bank House, 95 London Road, Headington, Oxford, OX3 9AE, Tel: 01865 750665