Preserved Rights or a Source of Despair?

Margaret Richards examines the legal position of clients who purchased residential care before April 1993

Before Part III of the National Health Service and Community Care Act 1990 was implemented on 1st April 1993, most clients made their own care arrangements directly with the home of their choice, knowing that if their own resources proved inadequate to sustain the placement, they would receive an uncharacteristically generous subsidy from the DSS. The subsidy, which in 1992 was running at about £2 billion a year, took the form of enhanced income support payments, well above the level of what was available to people living in their own homes, which could be claimed by residents with modest income, whose capital fell below £8,000. Only a minority of clients entered "Part III Accommodation" provided for them by local authorities in pursuance of their protective responsibilities laid down in section 21 of the National Assistance Act 1948.

The "new" financial regime for residential care replaces the DSS subsidy with funding allocated by local authorities This funding is conditional, first on an assessment of need under section 47 NHSCCA and, secondly, on a financial assessment prescribed by the National Assistance (Assessment of Resources) Regulations 1992, which mimics the means test for income support. These days most clients enter residential care either as the beneficiaries of contracts made by local authorities with independent providers, or as contracting purchasers themselves, but, in all cases local authority financial support is available where a resident's resources are depleted below the new capital threshold of £16,000 (since April 1996) subject only to there being a need for residential care.

Post April 1993 the overriding responsibility of local authorities under the now amended National Assistance Act is to meet the assessed needs of vulnerable, frail elderly people for all types of residential care, including care in nursing homes. If a resident is unable to meet full care fees, the local authority will underwrite them, but the resident will be asked to claim income support at a new lower rate if he or she qualifies. If a resident fails to pay an assessed contribution towards care fees the local authority may take enforcement measures but must maintain the service. No client who has been properly advised should now have to face eviction from a residential home resulting from problems in upgrading care as dependency increases.

These new measures are not retrospective. Most clients who entered private residential care before 1st April 1993 are not subject to assessments of need or to the Assessment of Resources Regulations. Instead they have "preserved rights" to income support (Income Support (General) Regulations 1987, Reg 19 (1ZB)) which is payable, still, at an enhanced level. Preserved rights attach to residents of care homes or nursing homes registered under the Registered Homes Act 1984, or to Abbeyfield homes. Since 1st April 1993 "small" homes with fewer than four residents have been regulated by the Registered Homes Act and people living in such homes on 31st March 1993 also have preserved rights, subject to what is said below. It has been estimated that, on 1st April 1993, 350,000 residents had preserved rights.

The enhanced rates of income support vary according to the type of residential accommodation. For the 1996/7 benefit year they range from £203 a week for a residential care home to £304 a week for a nursing home, looking after patients with Alzheimer's disease. For homes in the London area there is a supplementary weekly payment of £43. These are maximum payments and are not directly related to the fees charged for the accommodation. The capital limit prescribed for the income support means test was raised to £16,000 in April 1996, to match the new limits applied by local authorities under the Assessment of Resources Regulations. This new limit does not, however, apply when older people are looked after in their own homes.

Some residents will already have been claiming income support on 1st April 1993; they may need financial help at some time in the future, and will qualify as long as they were living in, or only temporarily absent from a residential care home or a nursing home on 31st March 1993. People who were living in small homes on 31st March only have preserved rights, however, if they were actually receiving income support on that date, not if they were then paying for themselves.

EXAMPLE - Mrs Gibbs went into a nursing home in February 1992. At that time she had substantial capital assets, in excess of £100,000, and a small pension. In January 1997 her remaining capital is just below £16,000, and she is entitled to enhanced income support.

Her benefit will be as follows:

Allowance for registered category:         £
Nursing home for people
with mental disorder                           304.00
Personal expenses allowance               13.75
Income support available                    317.75

Mrs Gibbs' pension will of course reduce the income support payable to her, as will the tariff income on her remaining capital in excess of £10,000.

What are the problems for clients with preserved rights?

a. The main problem is that the income support payments, albeit enhanced, may not meet the full residential home fees. Historically, although enhanced income support has been available to subsidise residential care since the early 1980's, from 1986 onwards the DSS stopped matching benefit rates and actual fees charged, and in 1992/3 there was nationally a gap between benefit payments and fees charged of, on average, £40 per week. Clearly market forces allowed providers of care to raise their fees above benefit rates, either because there were plenty of resources to top up benefit payments (for example from residents' relatives, voluntary organisations or, in some instances, local authorities), or because they could sell their beds to well off older people who could afford higher fees and would never need to claim income support. Since April 1993 the market has been further affected by the prices at which local authorities, now the major purchasers of residential care, have been prepared to buy from providers and in some areas the gap between fees and benefits is widening.

b. Some residents also face unexpected increases in fees, either because their care needs have increased, or because 'extras' such as incontinence supplies and chiropody services, which used to be provided by the NHS free of charge, now have to be paid for. Such extras often reflect on the adequacy of income support to cover the economic cost of care. Under new local authority contracts, however, residents are protected against extra expenditure.

c. Residents whose health deteriorates and who need to upgrade their care, perhaps from a residential care home to a nursing home, may be prevented from moving because they are unable to meet nursing home fees. Homes which have dual registration offer some advantages here, but the rate of benefit payable depends on the type of care received by the resident and disputes with the benefits agency over this question are not uncommon.

Are Any Welfare Benefits Available

Residents with preserved rights may benefit from the attendance allowance provided that they have not yet claimed income support. The higher rate of attendance allowance (£48.50 at present) is well worth claiming, in order to eke out dwindling capital. Once income support is in payment, however, the allowance is subject to the means test and, from that point, the resident is no better off for claiming it. Disability living allowance (mobility component) is immune from any means test (section 73(14) Social Security Contributions and Benefits Act 1992) and so can always be used to top up fees or pay for extra services. It must, however, be claimed for the first time before a resident's 66th birthday.

Can the Local Authority Help?

Local authorities have no power to make residential care arrangements for people who were ordinarily resident in registered private or voluntary homes by 1st April 1993 (S26A National Assistance Act 1948) If, for instance, an elderly person is threatened with eviction from a nursing home because capital is exhausted and her family are unable to top up her income support payments to meet the full fees, it will generally be ultra vires for the local authority to intervene in any way to support the placement.

The Residential Accommodation (Relevant Premises Ordinary Residence and Exemptions) Regulations 1993 create limited exceptions to this exclusionary rule. In particular local authorities may assist residents who face closure of, or eviction from residential care homes (Reg 9) by finding them accommodation elsewhere, using their preserved rights and, if necessary, topping up the difference between income support and the new fees. They may not, however, maintain residents in the existing homes where their occupation is under threat, or move residents directly from residential care homes into nursing homes. This is because the Regulations give power to support nursing home placements only where residents are under pensionable age.

What are the responsibilities of the NHS?

Health authorities have a general responsibility to meet continuing nursing needs which overlaps with the responsibility of local authorities to arrange nursing home care under section 21 of the National Assistance Act 1948. Health authorities may purchase beds in nursing homes for patients for whom they accept responsibility (section 23 National Health Service Act 1977). Since April 1996 all health authorities have had to operate local eligibility criteria identifying patients for whom they will provide long term care. When purchased by a health authority, nursing home care is free of charge to the patient, but most eligibility criteria exclude all save the most severely disabled elderly people from such care.

Health authorities have no specific duties to protect people facing eviction from nursing homes or to top-up inadequate levels of income support. If they do intervene the complex income support rules force them to take over the full funding of the placement, and preserved rights are lost (Botchett v Chief Adjudication Officer, The Times May 8th 1996). The Governments' view is that the onus for finding alternative accommodation where a nursing home placement is at risk lies with "the resident or their relatives, with help from the homeowner. This is because the patient will have arrived at the home as a result of their private arrangements in the first place". (Circular LAC (93) 6)

What are the other options?

The raising of the income support threshold from £8,000 to £16,000 in April 1996 has helped the situation because residents now have more residual capital which they can use to top-up their income support. The change does not, however, assist people who have relied on income support for some time and whose capital had been depleted, or possibly exhausted before April last year.

Wherever there are difficulties in meeting the care fees, family members may top-up an elderly relatives' income support. Payments made are disregarded as income of the resident under the Regulations. (Income Support (General) Regulations 1987, Schedule 9). The position is the same where a charity agrees to make top-up payments. Payments made by a spouse of the resident however are "liable relative" payments under the income support rules and usually have to be taken into account as income of the resident (Reg 54). Therefore, they are not effective in bridging the fees gap. Sometimes the homeowner may agree to reduce fees, for giving notice to a frail, possibly mentally incapacitated elderly person is not easy to contemplate. In addition, two further options may be worth considering:

i) Regulation 5 of the Residential Accommodation Regulations 1993 states that section 26 (A) of the National Assistance Act does not apply where a person ceases to have preserved rights. These rights are not affected if a person moves from one registered home to another, goes on holiday, or is admitted to hospital for short periods. They are lost, however, if a resident moves out of a home for more than 13 weeks, or is a hospital in-patient for more than 52 weeks.

EXAMPLE - Miss Chadwick, who is 55, has angina and has had to give up work. Since 1991 her elderly mother has been in a nursing home suffering from Parkinson's Disease, and Miss Chadwick has topped-up her income support payments. Miss Chadwick can no longer afford these payments, and her mother's modest capital is almost exhausted.

If Mrs Chadwick leaves the nursing home to live with her daughter, or moves into a hotel for at least 13 weeks, her preserved rights will cease. Miss Chadwick may then ask the local authority to assess her mother's needs and to arrange a nursing home placement for her. The local authority will be responsible for the home fees and will seek to recover a contribution from Mrs Chadwick, who will be able to claim income support at the reduced level which now applies to all placements made after 31st March 1993. Her daughter will not be required to make a contribution.

ii) Under section 135 (3) of the Social Security Contributions and Benefit Act 1992, the Secretary of State has power to adjust the preserved rates of income support to take into account local variations in home fees, as negotiated by local authorities under the new system. The predecessor to this section was enacted during the passage of the NHSCCA 1990. The measure was supposed to come into effect in April 1993, but this has not yet happened. Voluntary agencies continue to lobby for its implementation.

Conclusions

Some case studies were identified by Age Concern in "Preserved and Protected?" (1994).

1) "A 72 year old pensioner in the southern counties. Mother aged 94, has been in a nursing home for 2 years. She receives no personal expenses allowance - (presumably used to top-up fees) - When he went in to pay the latest bill, there was a charge for incontinence pads, which he knew nothing about. Referred to a charitable source."

2) "Letter from a man in East Anglia regarding his father in a nursing home in Yorkshire. Fees have been increased from £76 a month to £165 a month over and above DSS limits (at that time). 'I do not have the resources to keep it up!'"

3) "Local authority social worker, very concerned about a person in residential care whom the home can no longer care for. There are no local nursing homes at income support rates. The local authority is prevented from stepping in on behalf of this person. They would do so if they had the power."

It is clear from these and other well documented examples that the community care changes have left behind a marginalised group of typically, very elderly, very dependent people, who have been made more financially vulnerable than they were before April 1993. Advisers need to be aware of their predicament and must be prepared to explore all possible options on their behalf.

Margaret Richards - Solicitor and Consultant, on Community Care