Feature

posted 1 May 1997 in Volume 2 Issue 4

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A Summary of Local Authority Charging Procedures For Permanent Accommodation

Standard Rate

Section 26(2) National Assistance Act 1948 requires Local Authorities to set the standard rate for accommodation in homes, not managed by the Local Authority, to be equal to the gross cost to the Local Authority of providing, or purchasing the accommodation under a contract with the independent sector home.

A contract made with an independent home must include arrangements for the Local Authority to pay an agreed and specified amount to the home for accommodation.

Assessing Ability to Pay

Where a resident is unable to pay either the standard rate of the actual cost incurred by the Local Authority, the Local Authority must assess the resident's ability to pay using the regulations of The National Assistance (Assessment of Resources) Regulation 1992.

Social Security Benefits

Residents are entitled to Income Support at the same rate as if they were living at home, plus the residential allowance. They are not entitled to Housing Benefit. Claims for Attendance Allowance should be made in the normal way, although eligibility will cease after four weeks if the resident is receiving care or financial support provided by the Local Authority and not paying the full cost.

Personal Allowance

In assessing the resident's ability to pay the Local Authority is required to ensure he retains an amount for personal expenses as laid down in the regulations to spend as he wishes.

Couples

Where one or both members of a couple are admitted to residential accommodation an assessment is carried out on their individual financial resources in accordance with the normal rules including those relating to liable relatives.

Where both parties are admitted to the same residential care or nursing home it would be normal to assess them as a couple and aggregate their resources as if they were living in one household. The exception to this may be where they are living in different wings of the home i.e. a nursing wing and a residential wing.

Where a resident is in receipt of an occupational pension, personal pension or income from a retirement annuity contract and has a spouse not living in the residential care or nursing home, 50 per cent of that pension should be disregarded if paid to the spouse.

In the case of unmarried couples the Local Authority can use their discretion i.e. pay back this percentage.

In cases were the resident receives the majority of a couples income (i.e. an occupational pension) and the spouse at home is left with insufficient income to maintain his or her usual standard of living the Local Authority, at their discretion, can increase the resident's Personal Expense Allowance to enable him or her to provide support for the spouse at home. (Section 22(4) National Assistance Act 1948).

Capital

A resident with capital in excess of £16,000 is liable to pay the full standard charge for accommodation of the contracted fee.

Capital of £10,000 or less is disregarded.

Capital between £10,000 and £16,000 will be taken into account in a resident's tariff income from capital charge, at the rate of £1 for every £250 or part thereof over £10,000. Capital in many circumstances will include the resident's former home. See "Treatment of Property".

Deprivation of Capital

The Local Authority may consider that a resident has deprived himself of capital in order to reduce his accommodation charges. A transfer may be identified as deprivation of assets regardless of the time of the disposal of it was considered to be with the intention of avoiding accommodation charges.

If the Local Authority decides that a resident has disposed of capital at any time to avoid accommodation charges it may then treat the resident as having notional capital and will treat the resident as if they still have their capital or assets and charge for accommodation accordingly.

This charge will continue until the notional capital has been reduced to an amount which will entitle the resident to local authority support.

Where a resident transfers assets to avoid accommodation charges within 6 months of being assessed as needing residential care under Part III of the National Assistance Act and where that accommodation is being provided by the local authority Section 21 of the Health and Social Services and Social Security Adjudication's Act 1983 gives the Local Authority power to recover the cost of care from the persons to whom those assets were transferred.

Treatment of Property

Property to be disregarded will include:

The value of a resident's dwelling if his stay in Residential Care of Nursing Home is temporary and he intends to return to the dwelling and the dwelling is still available to him.

Only one dwelling can be disregarded in these circumstances.

Where the resident's stay is regarded as permanent his former dwelling can be disregarded if it is occupied in whole or part by:

a) The resident's former partner (who is not estranged of divorced from the resident).

b) A relative of the resident who is aged over 60, or is incapacitated.

The Local Authority has the discretion to ignore the property in special circumstances, for example, if it is the sole residence of a previous carer of the resident who gave up their home in order to care for the resident. In such circumstances the property will be taken into account if the carer were to die or move out.

Where the local authority is unsure about the resident's share, or their valuation is disputed by the resident, a professional valuation should be obtained. The name of the deeds of property should establish ownership, however, if ownership is disputed and a resident's interest is alleged to be less than seems apparent from initial information, the local authority will require written evidence of any beneficial interest the resident, or other parties possess.

Placing a Charge on Land

Where a resident has a beneficial interest in land which is not disregarded and fails to pay an assessed charge for his accommodation, the Local Authority can place charge of the property to recover the cost of the accommodation paid on behalf of the resident. Where the land is jointly owned the residents interest is technically in the proceeds of sale of that land and not an interest in the land itself. In this case section 22 (8) of HASSASSA has the effect of preventing the registration of an interest in the proceeds of sale of land. The authority may therefore only register a less effective caution.

Interest can only be charged on the sum due to the Local Authority from the day after the resident for whom accommodation has been provided dies.

Property Rented

Will be treated as a capital asset and any rent received can be paid to the local authority to reduce any accruing debt through not paying the standard charge.

Treatment of Income

Certain income can be either partially or totally disregarded but in general most forms of income are taken into account when assessing the charge for accommodation.

Trust Funds

Trust Funds will be examined to identify the type of trust and the residents entitlement to both capital and income. The assessed charge will depend on these entitlements whether paid to the resident or not.

Liability of Relatives

Where a spouse of the resident is in receipt of Income Support the Local Authority will not pursue a contribution towards the accommodation of the resident.

Where financial circumstances of a spouse appear to enable him or her to make a contribution towards the cost of accommodation the Local Authority will agree a reasonable amount to be paid, taking into account all his/her circumstances so as not to cause hardship.

Collection charges from residents and method of payment

Normally, the resident's assessed charge will be collected from him/her by the Local Authority, who will then pay the home owner the total agreed fee or, by arrangement and agreement with all parties involved, the assessed charge may be paid direct to the home owner with the Local Authority making up the balance. However the Local Authority will remain responsible for the full amount of the care fees should the resident fail to pay his assessed charge.

The above information has been provided by the Nursing Home Fees Agency. It is intended to be and should be regarded as a brief summary only, it is based on their understanding of present legislation, regulations and guidance. Changes in legislation may therefore affect the content and it's usefulness. No responsiblity can be accepted for any action taken based on this information.