Attendance Allowance, Residential Care and Retrospective Self Funding

Feature

posted 1 Mar 2000 in Volume 5 Issue 3

Attendance Allowance, Residential Care and Retrospective Self Funding

Case 1
Mrs C needs residential care. She has a house worth £90,000, but little other capital and a modest income. Her local authority assesses her needs and undertakes to make the care arrangements for her. It also carries out a financial assessment.

The value of Mrs C's property is taken into account in the assessment and her actual capital is therefore in excess of £16,000. She is assessed as liable to pay a full contribution. Pending sale of the bungalow the local authority places a charge on the bungalow¹.

Mrs C was receiving attendance allowance before she entered residential care. 28 days after admission benefit stops. Six months later the bungalow is sold, and Mrs C refunds the outstanding fees to the local authority.

Case 2
Mrs T has just entered a nursing home. As in case 1, her local authority has made the arrangements for her and is covering the full fees, pending sale of Mrs T's house.

Mrs T's son, who is her attorney, has taken legal advice, and has decided to top-up his mother's fees from his own capital. Three months later the house is sold and the attorney is reimbursed.

Mrs T retains entitlement to attendance allowance throughout this period.

Case 3
Mr W has been in a nursing home since October 1999. He has substantial assets, but lacks mental capacity. He has no attorney, and his nephew has just been appointed his receiver.

The local authority has arranged Mr W's care and has been paying the fees in full since October. The receiver is about to make a full refund to the local authority. Attendance allowance has been disallowed for the period from November 1999.

Background: Entitlement to Attendance Allowance when in Residential Care

The rules which affect claims made by older people who are in residential accommodation are complex. In principle, entitlement is the same whether someone is living in a residential care home; a nursing home; in sheltered accommodation, or at home in the community. However, given that entitlement to benefit is based on a need for personal care, and that the function of a residential placement is to provide such care, wherever local authorities make arrangements under Part III of the National Assistance Act 1948, the possibility arises of double funding of the same need by different public agencies. This is considered to be wrong, in principle, and the Social Security (Attendance Allowance) Regulations 1991 therefore seek to distinguish between claimants whose accommodation is and is not publicly funded. As a general rule the first group is not entitled to the attendance allowance, whereas the second group will receive benefit.

More specifically, the following are entitled to receive attendance allowance when in residential care:

Residents who make private arrangements with the home, and pay for their own care;

Residents who fund their care by claiming income support, but who do not seek assistance from the local authority (the 'loophole' option);

Residents for whom the local authority accepts responsibility under section 26 of the NAA 1948 by commissioning residential care in private sector care homes or nursing homes, but whose resources are such that they must refund their care fees in full to the local authority. Such arrangements take place where a resident lacks mental capacity and has no attorney, receiver, or advocate, or where her/his only significant asset is a property, which will have to be sold².

Residents who have been in a home since before 1st April 1993, and who therefore have preserved rights to income support. In these cases, however, once the resident begins to receive income support the attendance allowance is means tested, so that the resident is no better off.

The following groups are not entitled to receive attendance allowance:

Patients in hospital;
Residents in local authority owned or managed homes, whether or not they pay a full contribution³;
Residents in private sector accommodation which is purchased by the local authority under section 26 of the NAA 1948, and where the local authority is providing financial assistance.

In all these cases, where benefit is in payment before the older person goes into hospital or residential care, it will continue to be paid for the first 28 days.

Retrospective self funding

Regulation 7(1) of the Social Security (Attendance Allowance) Regulations 1991 states that attendance allowance is not payable where the cost of an older person's accommodation is borne out of public or local funds.

In all the case studies outlined above, residential care arrangements have been made by a local authority and the resident has been assessed under the charging regulations as able to pay a full contribution to the costs of his or her care. In each case the resident has assessable capital assets which are tied up in a property, or otherwise not immediately available. In each case the local authority has paid the resident' s full fees under its contract with the home, recorded the fact that a debt was due from the resident, placed a charge on property where it has power to do so, and eventually accepted a full refund of the outstanding fees.

Regulation 8(6) of the Attendance Allowance Regulations states that regulation 7 shall not apply where 'the whole cost of the accommodation is met - out of the person's own resources, or partly out of his own resources and partly with assistance from another person or a charity, or on his behalf by another person or a charity'.

For some time the Social Security Commissioners in England have been struggling with the question whether regulation 8(6) applies in the circumstances previously described, where, following a retrospective payment, public funds are wholly relieved of the cost of an older person's residential care. Over the past few years they have handed down mixed messages as to the legal status of the arrangements which have been described and, more particularly, as to their effect on entitlement to the attendance allowance. The 'majority' view has been that regulation 8(6) does not apply unless a resident is currently funding his or her placement, and that attendance allowance is not, therefore, available for a period in respect of which a refund of fees is paid once capital has been released. The Commissioners' reasoning has been inconsistent and, in some instances, has defied common sense. However, given the difference of opinion, it has always been open to a claimant to seek to challenge an adverse decision before a tribunal and to seek to exploit the uncertain state of the law.

Chief Adjudication Officer v Creighton and others

In December last year the Court of Appeal in Northern Ireland handed down a decision which supports the view that where public have been wholly relieved of the cost of a claimant's accommodation (even ex post facto), there is no good reason to refuse payment of attendance allowance.

Five appeals were heard together. In each case a health board or trust in Northern Ireland had paid the cost of the claimant's accommodation for a period and subsequently obtained a refund⁴ . In all of the cases the local social security appeals tribunal had upheld the claimant's appeal against disallowance of benefit. The Chief Social Security Commissioner of Northern Ireland subsequently upheld the tribunal's decision in each case, following which the Chief Adjudication Officer appealed to the Court of Appeal.

The English Commissioners⁵, on whose decisions the Chief Adjudication Officer relied, variously decided:

when a local authority funds a placement pending sale of a property it is making a loan to the resident, and there is not an arrangement under section 26 of the NAA 1948.

The reference in regulation 8(6) to the whole cost of accommodation being met out of the claimant s own resources means that the provision only applies where the claimant meets a liability which is directly owed to the provider of the accommodation and not where, as in the cases under discussion, there is a statutory responsibility to the local authority to refund care fees.

The cost of the accommodation in the circumstances under discussion is not met out of the claimant s own resources.

Perhaps it is not surprising that at least one of the Commissioners conceded that the construction of regulation 8(6) was 'contrary to common sense and fairness' ! Subsequently the Chief Commissioner in Northern Ireland suggested that 'if regulation 8(6) cannot apply unless payment is made directly by the person concerned to the provider of the accommodation it seems to me that it serves very little purpose'. The conclusion of the Court of Appeal was similar. It held, in particular, that

(i) A prior arrangement for payment and subsequent reimbursement of residential care fees is not a loan and does not take the arrangement outside the scope of section 26 of the NAA 1948.

(ii) The word 'met' in regulation 8(6) is intended to refer to the person who actually meets the costs, not the person or body which makes the actual payment of fees to the provider of the accommodation.

(iii) Consequently where a health board or trust enters into an arrangement with the provider of accommodation, and pays the costs but is ultimately reimbursed by or on behalf of the claimant, the latter does not lose her/his entitlement to attendance allowance.

(iv) It makes no difference whether reimbursement is agreed in advance, or whether it is subsequently arranged, if it is in fact made.

Implications of Creighton

This is an important decision. Given that the legislation governing attendance allowance is identical in England and Wales and in Northern Ireland it should have general application but it appears that the Secretary of State has not yet issued guidance and, in practice, there is as yet no certainty that the decision will be applied by the Benefits Agency in individual cases. Furthermore there are bound to be problems in situations where there is no advance agreement between a claimant and the local authority as regards retrospective self funding, and where there is delay in selling a property. Adviser may find the following points helpful:

(i) Attendance allowance claims may not be backdated.

(ii) Where there has been an adverse decision on a claim to attendance allowance based on retrospective self funding before the decision in Creighton was handed down, the 'test case rule' prevents any application for review from being effective in respect of the period before Creighton⁶ . Where the time limit for an appeal (now 28 days) has expired it can only be extended for 'special' and 'wholly exceptional' reasons⁷.

(iii) Clients who fell foul of the old retrospective self funding rule are unlikely to be able to recover benefit for a period before 15th December 1999 unless they are now in a position to bring an appeal to a tribunal.

(iv) Where a client who is in receipt of benefit is admitted to a home, and funded by the local authority pending sale of a property it will be important to try to ascertain what the position of the Benefits Agency will be after the first 28 days. As yet there is no guarantee that Creighton will be followed, so that residents currently contemplating retrospective self funding will either have to appeal against adverse decisions or consider an alternative strategy, such as the one outlined in case 2.