• Beneficiary & Genealogy
• Care Homes
• Charitable Giving
• Financial Planning
• Legacies
• Personal Injury
• Probate
• Software Suppliers
• Trusts
• Wills

• Bookshop
• Case study archive
• News

Feature

posted 23 Mar 2001 in Volume 6 Issue 3

Charges for residential and nursing homes - keeping abreast of the changes.

Advisers working with older people should be aware of the importance of understanding the rules which local authorities use when charging for residential and nursing home accommodation, and the effect this has on benefits. The regime, which came into being in 1993, has been subject to a number of changes over the years through both legislation and developing case law. This year sees yet more, as the changes announced in the Government’s response to the Royal Commission on Long Term care[1] begin to come into effect.

This article covers the changes due in April 2001. It also looks ahead to briefly flag the changes which have been promised for October 2001 most of which are subject to the Health and Social Care Bill which is currently speeding through Parliament. A future article will cover the changes expected in October 2001.

Readers should also be aware that this article covers the situation as far as it is known for England. Scotland looks as if it will have a very different system in the future, the Scottish Parliament having announced on 25 January, that following a report due in August 2001, there is a commitment to bring in free personal care for all. Wales may also bring in some variations to the way the charges are calculated.   

Things to watch from April (or even before!)

Two changes to regulations due to come into effect in April are changes to the capital limits for charges and a new three month disregard on property.  However advisers also need to be alert for the new continuing care guidance which has been promised ever since the Coughlan case and which might appear before April, but may be later.  Also a new form of care, intermediate care, will be coming on stream from April 2001, some of which may be in residential settings.

Any adviser who has clients with ‘Preserved Rights’ needs to watch out for some regulations which have been promised to ease the situation of older people facing eviction. On the benefits front there should soon be some guidance to DSS Benefits Agency staff on the effects of the recent Commissioners Decision on the payment of Attendance Allowance in residential and nursing home care.

Changes to capital limits.

Regulations are due to be laid so that the capital limits used in the social services means test for charges for residential and nursing home care, are raised to £18,500 upper limit and £11,500 for the lower limit. The new limits come into force on 9 April 2001. It will mean that current and prospective residents will be able to receive help with funding from social services (depending on an assessment of their needs, and their level of income) once their capital reaches £18,500. They will also be able to keep £11,500 of their capital as any figure below that will not attract tariff income.[2]

The Department of Health has issued an Advance Notice[3] of these changes and advised councils to be proactive ‘in aiming to ensure that self-funders, including those who may not have been through the assessment process, are aware of their rights and action to take when their capital is approaching the upper capital limit.’  Any adviser working with a client who has capital above the current £16,000 limit but who is approaching or is below £18,500 should make sure that the resident is aware of the changes to the capital limit and to request an assessment as soon as possible.

If having asked for an assessment there are delays by social services which mean that capital is run down below the new limits, then they should seek a refund. The question of delays by social services funding residential and nursing care came up in the discussions of the Health and Social Care Bill when the Minister of State for Health said ‘no one should be asked to contribute unfairly, outwith the terms of the means test. If a resident is asked to contribute in that way, it raises the issue of compensating him for the charges that he has been asked to pay’[4]

Two other points that advisers need to be aware of on the capital limits:

• the Income Support capital limits are not increasing in line with the social services capital limits.  These will remain at £16,000 and £10,000. This should not make too much difference to the individual as it will mean that social services will have to pay more during the period that a resident is unable to claim Income Support. However care will be needed to ensure that a resident does claim Income Support once capital reaches £16,000, and it is likely that the calculation of tariff income will become more complex once there are two different levels from which tariff income starts.
• it is planned that the capital limits for charges ‘will be kept under review to ensure that they keep pace with inflation’. It is likely therefore that the capital limits will rise on a much more frequent basis than we have come to expect and could change each year.

The new three month disregard on property .

From 9 April there will be a disregard on property for 12 weeks (not three months!) from the time that permanent admission commences. The regulations have yet to be laid but it is expected that they will be limited to the resident’s former home rather than any other property he or she may own.

It is important to be aware that it does not affect any other disregard on property which already exists, and in particular it does not affect the rules for regarding a stay as temporary (and so disregarding the property anyway) if it likely to last for a period not exceeding 52 weeks. The Advance Notice (see Footnotes) states that ‘If a person is first considered temporary, the property is disregarded: if and when the stay has been confirmed as permanent then the property will be disregarded under the new provisions for a further 12 weeks’.

It will make the decision about whether someone is temporary or permanent very important. This is often an area of confusion in particular when the stay is described as a ‘trial period’. In some authorities this counts as a temporary stay but in others it is regarded as permanent - the ‘trial’ is not so much whether the person will go home, but whether they want to stay in that particular home. The Department of Health is going to issue further guidance in mid-March on what should be deemed a temporary stay when it issues a circular with the regulations.

This will be very important for advisers who will need to watch how social services interpret the guidance. There may be pressures on social services, because of their budgets, to decide that more people are permanent from the start of their stay in order to limit the length of time the property is disregarded to the 12 week period. Advisers should be alert to whether their local authority changes its practices in relation to temporary stays and trial periods. The Advance Notice does tell social services to ‘Ensure that admissions are deemed temporary or permanent depending solely on the needs and circumstances of individual services users. As such neither councils’ nor residents’ resources should play a part in the decision’.

Some other points that advisers will need to bear in mind:

• residents who move in and who become permanent following an assessment confirming that a permanent stay is appropriate before 9 April will not be able to make use of these provisions.
• permanent residents who are self funders (ie because they have over £18,500 in available assets) will only be able to make use of the disregard if they become in need of local authority funding within twelve weeks.
• it will mean that more residents will enter residential accommodation with a local authority contract, as local authorities should no longer refuse to make the arrangements for a person with a property which will be sold. However the express provisions for local authorities to disregard the value of property when deciding whether accommodation is ‘otherwise available’ are in the Health and Social Care Bill and so may not be in force until after April 2001. 
• councils have been advised in the Advance Notice to enter into 12 week contracts with care homes to cover the period of the disregard (although this may be longer if the person has a period as a temporary resident first). Advisers will need to be sure that where social services decide that they should end the contract at the end of this period, that their client is helped to negotiate their own contract with the home, that it is clear and in writing. Social services have been reminded that their responsibility will remain for those residents who are unable to make their own arrangements and there is no-one willing and able to make the arrangements for them.    
• there are no plans to change the benefit rules so advisers need to be alert to the following. A resident may be able to claim Income Support in residential care initially because their stay is temporary. It will stop once the stay becomes permanent if there are no steps being taken to sell the property during that time, but could start again if after the 12 weeks it is decided to put the property on the market. This will probably mean a new claim at that time, and unless the Benefits Agency is told the exact status of the resident, there are new potentials for under and over payments of benefits.
• the disregard ends if the property is sold within the twelve week period.

New Continuing Care Guidance.

New guidance has been promised ever since R v N and E Devon ex parte Coughlan (see ECA Vol 4 Issue 6 September/October 2001).[5] Although the Court of Appeal held that the national guidance was legal, it was found to be ‘elusive’, and in any case the guidance HSG (95)8 was due to be reviewed in March 2000, although this review date has now been extended ‘until further notice.’

There is still no firm date, but it is recognised that guidance on what the NHS will fund in full in the way of continuing care, will be essential before the new rules about free nursing care in nursing homes comes into operation (see below). The new guidance could therefore appear at any time in the next few months.

Advisers in this area will know that many health and local authorities have been very reluctant to change their policies in relation to who gets fully funded NHS care in nursing homes until this new guidance is out. Equally there has been concern that the policies which health and local authorities have devised may be open to challenge following the Coughlan case. Some authorities have changed their policies and as a result in some areas more people are now receiving fully funded care in nursing homes.

It seems unlikely that the new guidance will be issued in draft. Once the guidance has been published, advisers will need to be alert as to how the criteria in their local area matches it, and to ensure that there are not delays if the local criteria needs to be changed to accord with the national guidance. It may be that there could be further legal challenges based on the new criteria either on a national or local level.

New ‘Intermediate Care’ .

Within the NHS Plan the Government proposed that £900 million would be spent on ‘Intermediate Care’ IC and related services by 2003/4. The aim is to avoid prolonged stays in hospital and where possible to avoid admissions by getting the right level of service to the person in the best place and at the best time. Guidance has now been issued about IC, giving a definition, and explaining the normal time limits (normally 6 weeks but often 1-2 weeks).[6] Sometimes the intermediate care will be in a residential or nursing home setting. It will be developed from April 2001.

The view of the Department of Health is that services which are integral to Intermediate Care should be free. Because of the mandatory nature of charges for residential care by social services, the guidance suggests that normally the NHS should have the underlying responsibility for IC in a residential setting. Thus it should be free, although it may have an effect on a person’s benefits as they might be considered to be a hospital inpatient.

New regulations for people with preserved rights to Income Support.

Most readers will be aware that there are proposals in the Health and Social Care Bill to end preserved rights to Income Support. People who moved into residential care or nursing homes prior to 1 April 1993, currently receive support from the Benefits Agency, not social services. Indeed there are rules which debar social services from assisting these people financially, other than in very few circumstances. This has caused great problems as often the level of benefit the DSS pays does not meet the fees that residents are expected to pay. This has led to a few evictions of very old, frail people.  The planned date of the change is April 2002. However in the NHS Plan a commitment was made to introduce regulations to help those people in residential care homes who face eviction.

Once these regulations come into force (they were promised for the end of last year), local authorities will be able help residents faced with the threat of eviction, to take over the arrangements and help with the funding without the resident having to move to another home. Currently they can only help financially if the person moves to another home even if this would go against a social work assessment of the risks of moving an older person. However it appears that it will be limited mostly to those in residential care homes. If an older person is threatened with eviction from a nursing home, it would appear that the new rules, when they come in, will not help in the majority of cases.

Any adviser with clients who have preserved rights, that have run out or are running out of money and so might be threatened with eviction, will need to be aware when these new regulations come into force, and to study carefully whether they might help in the circumstances of those particular clients. If a client is in a nursing home and is threatened with eviction and the regulations do not help, advisers may need to establish whether there might be a possible challenge under the Human Rights Act 1998.   

Payment of Attendance Allowance in residential and nursing homes .

Readers will be aware from the article in ECA Vol 6 Issue 2 January/February 2001, that there have been some important decisions recently in the Northern Ireland Court and by a Social Security Commissioner.[7]  These are regarding the payment of Attendance Allowance in residential care and nursing homes when a person receives ‘interim funding’ from social services pending the sale of a property, or whilst waiting for Receivership to be granted by the Court of Protection.

These decisions have left some very complicated better off calculations, currently not made any easier by the fact that as yet the Benefits Agency has not been issued with any new guidance following the Commissioner’s Decision. At present staff are likely to continue to stop the payment of benefit, in spite of the Commissioner stating clearly that benefit should not be stopped where the person will be refunding the local authority in full. New guidance will have to be issued, which should make what the Benefits Agency will do in these cases much clearer, and what checks they will need to make to establish that someone will be paying back to the local authority. It should also clear up which of the various cases will be considered the ‘test case.’ This will be important for those who had their benefit stopped in the past and have been unable to get a refund for the period the local authority were funding them.

In the meantime advisers may wish to read in more detail the current thinking regarding the payment of Attendance Allowance in residential and nursing home care, including some comments about how the three month disregard (see above) may impact on decisions about the best way to fund care in relation to the benefit rules.[8]

Future changes to watch for in October (or before!)

Space precludes any analysis of the changes that are expected as a result of the Health and Social Care Bill.  These were covered in the discussion of key clauses of the Health and Social Care Bill which was in ECA Vol 6 Issue 2 January/February 2001.  There will be a future article covering these changes in-depth at a later date, once more information is available. Those advising older people will need to be aware of them as they could easily affect the advice given in individual situations. Although it is clear that some of the provisions will come into force in October, others may come in at an earlier date. This article lists those changes which are likely to come into effect by October 2001.

Free nursing care in all settings from October 2001. This will mainly affect those who pay the full fees of the nursing home themselves (estimated at 35,000), although there will be some people who do receive some help from the social services whose income is such that the means test includes some nursing costs. Work is in progress on the practicalities of assessment and how the NHS will make payments for the costs of  registered nursing care.

Disregarding certain resources (property) when deciding if accommodation is ‘otherwise available’ . This may come into effect before October 2001 and is aimed at ensuring that people will be able to use the three month disregard on their property (see above) or the ‘deferred payment agreements’ which will take effect from October.

Funding by a resident of ‘more expensive accommodation’ .  This provision may also come into effect before October 2001. It is to ensure that those residents who have a three month disregard on their property (see above) or wish to make use of the deferred payment agreements, will be able to go into the home of their choice even if it is more expensive that the local authority would normally fund and they do not have a third party to make up the difference. They will be able to use their own money.

Deferred payment agreements. This provision is expected to come into force in October 2001 and will allow residents to choose to defer payment of residential and nursing home fees by agreeing with the local authority that a charge will be placed on their property through this new ‘deferred payment agreement’.

NB. All these provisions are still subject to Parliamentary approval, and both the content and the timing may change. Further information will be given when it is available.