Feature

posted 1 Jul 1997 in Volume 2 Issue 5

Welfare Benefits and Residential Care

This article looks at the benefit provisions for those in residential or nursing care who are unable to afford such care for themselves. It should be emphasised that an article can do no more than outline the provisions, and individual cases will probably require detailed advice.

The article considers the position of people aged 60 and over who are entering residential care now, or who have done so in the last four years. A new funding system for residential care was introduced on Ist April 1993, and people who were then in residential care may well be entitled to the more generous system of "preserved rights". They are outside the scope of this article. We shall start by considering the position of a single person entering a residential care home permamently, and then go on to consider what happens if that person has a spouse or partner, and what happens if entry is temporary as opposed to permanent.

The first question is whether the home is an independent home or a local authority home an independent residential care or nursing home is one registered as such under the Registered Homes Act 1984, or its Scottish equivalents, or which is run by a body set up by Royal Charter or Act of Parliament, which provides personal care. The definition excludes a hospice.

Apart from a small group of people who are entitled to housing benefit, funding for residential care comes from income support, and the client must firstly fulfil the basic conditions for that benefit. These are that the client:-

(i) has less than the maximum capital permissible;

(ii) does not work for 16 hours a week or more;

(iii is not in full-time education:

(iv) is both present and habitually resident in Great Britain

(v) is aged at least 16;

(vi) is not claiming jobseekers allowance, and

(vii) is a member of one of the groups who are entitled to this particular benefit.

People aged over 60 (both men and women) are one group who are entitled to income support under (vii) above In practice most people within this group are also likely to fulfil the other conditions above.

Income support is then calculated on the basis of an "applicable amount" (the defined minimum level of income which a person or couple requires) which is compared with actual income; any shortfall is made up by income support.

Box 1 gives information about capital and its treatment for income support purposes. Though people with more than £8,000 capital (single people or couples are normally disqualified for income support, for those permanently in residential care the figure is £16,000.

Provided the client passes all these tests, his or her income support is worked out as follows. Their weekly applicable amount consists of a personal allowance of £49.15 (£77.15 if they are one of a couple), together with any premiums to which they may be entitled. People over 60 are entitled to a pensioner premium, as follows:

Aged 60-74
£19.65 single, £29.45 couple

Aged 75-79
£21.85 single, £32,75 couple

Aged 80+ or disabled
£26.55 single, £38.00 couple

Only one premium is allowed at a time. If the claimant has a partner, it is the age of the elder of the two which determines which premium is payable. Disability is normally indicated by receipt of attendance allowance or disability living allowance, or an industrial or war pensions equivalent.

If the client is claiming one of the benefits for attendance, there may also be an entitlement to the severe disability premium of £37.15 in certain circumstances - see below under "Disabled People".

In addition to the personal allowance and any premiums, the applicable amount includes a residential allowance of £56 per week, or £62 if the home is in Greater London. This residential allowance stops after three weeks' absence from the home, unless the claimant is in hospital, when the period is six weeks.

Income support then consists of the applicable amount less all the income which is taken into account. An example of an income support calculation for a single person is set out in Box 2.

Local Authority Accommodation

The second alternative is residence in a local authority home. This includes homes maintained by the local authority under Part III of the National Assistance Act 1948 or their Scottish equivalents, where the home is managed by the local authority and board is provided. In this case the income support applicable amount is £62.45 per week (the same as the basic state pension). If the client's income is less than this amount, it is topped up by income support.

Under the National Assistance Act 1948, it is the duty of the local authority to charge for residential accommodation provided under the Act. Such charges are worked out on the basis of the National Assistance (Assessment of Resources) Regulations 1992 and the guidance notes on their interpretation, known as CRAG.

Where a client has less than £16,000 in capital, so that the charging regulations apply (and this should be read subject to the comments on the Sefton case contained in the last ECA), the client pays towards the cost of their care the whole of their income except for a personal expenses allowance of £14.15 per week.

In most cases their income wi11 consist of income support: calculated as above, but it may consist of other types of income such as a retirement pension a flat-rate retirement pension of £62.45 would disentitle the claimant to income support. Certain income is disregarded, as it would be for income support, but tariff income from capital (described in Box 1) is take into account .If the client has more than £16,000 capital, they are 1iable to the whole charge.

Disabled People

A future article will consider in more detail entitlement to disability living allowance and attendance allowance, Someone who needs help with their bodily functions, or who needs supervising or watching over to avoid danger to themselves or others, should be receiving one of these benefits, The income support of someone receiving the higher levels of payment for care is affected in one important respect.

Their applicable amount will be increased by the addition of a severe disabi1ity premium to the higher pensioner premium , provided that nobody e1se 1ives with them and that nobody is receiving Invalid care allowance for looking after them. The effect of this is shown in the calculations in Box 3.

Where the claimant enters an independent residential care home, he or she is entitled to retain the attendance allowance or disability living allowance, and also the severe disability premium as part of his or her income support entitlement, Where the client is funded by a local authority, however. their entitlement to attendance allowance or disability living allowance stops after four weeks, as does any entitlement to the severe disability premium . There may therefore be situations in which it is not worth claiming local authority help with funding, in order to retain the extra weekly income - which can be as much as £86.65 per week.

As an example, consider the situation where a single person is claiming attendance allowance and a severe disability premium, and has a house for sale. It is the house which will eventually meet the costs. If the local authority is asked to help with fees in the meantime, the attendance allowance and severe disability premium will stop after four weeks and the local authority will ultimately recoup their contributions out of the proceeds of sale. If, however, a private arrangement is reached to pay the accommodation costs out of the proceeds of the house when sold, the attendance allowance and severe disability premium can be retained, since the local authority need not be involved at all.

Couples

All of the above has assumed a single claimant. What if the claimant is one of a couple? For income support purposes, a couple consist of a man and a woman who are married to each other and live together (or would do if not separated by circumstances, eg. ill-health): or a man and a woman who "live together as husband and wife". If both of the couple go into an independent residential or nursing home, income support will be worked out for both partners as if they were single people, and there will be two accommodation allowances. An example of the calculations in such cases are shown in Box 3. If the home is a local authority home, the entitlement is to two lots of .£62.45.

If only one of the couple goes permanently into residential care, they are effectively treated as two single people. The one in residential care has their benefit entitlement calculated as above, while the other is entitled to income support as a single person, together with housing costs paid either by income support or by housing benefit. Any capital is now notionally divided equally between the partners; the partner in care has a £16,000 limit and a £10,000 tariff income rule (see Box 1), and the other has an £8,000 limit and a £3,000 tariff income. The partner in care can pay up to half of any occupational pension to the partner who remains at home, and it will be disregarded as income. See Box 1 for what happens if there is an owner-occupied house.

Note that the rule about division of capital is different when calculating a local authority's contribution to charges; here, whether the stay is permanent or temporary, the capital is divided between the partners straight away.

Temporary stays in residential care

For a single person, the main differences between a temporary and a permanent stay are firstly that the upper limit on capital for a temporary stay is £8,000, and secondly that while they are temporarily in residential accommodation for short-stay or respite care, they will be entitled to retain their entitlement to income support housing costs (for owner-occupiers) or housing benefit (far those in rented housing). This lasts for up to 52 weeks as long as their stay in residential care is not expected to exceed this period. However, if the stay is a trial period, benefit is only payable for 13 weeks for a trial in one home, and 52 weeks in all.

A couple where one is in residential care temporarily continue to be treated as a couple for income support purposes. Their income support applicable amounts are calculated as if they were two single people. However, their income and capital are assessed jointly: bear in mind that the income support capital limit for a temporary stay is £8,000 and not £1,000.

Conclusion

It should be emphasised that this is an outline of a very complicated topic, and that rules may differ in particular cases. It is hoped that future articles will deal with other aspects of the Benefit system as it affects older clients.

BOX 1
TREATMENT OF CAPITAL

There are two issues around capital; the capital itself, and the income from it. Capital is not defined in the regulations, but includes any money, property or valuable assets. Most problems arise over the home. If the client is a single person, then for income support purposes their home is ignored while they are living there, or are temporarily absent. Once they move out permanently, however, the value of the equity in the house counts as their capital.

In many cases this would disqualify them for income support, but there are a number of concessions. For benefit purposes a house which is for sale is disregarded for six months, or longer if this is reasonable (for example where the house cannot easily be sold). A house is also disregarded where it continues to be occupied by the claimant's partner, or a relative (for example a child or a niece) who is aged at least 60 or is incapacitated. There are a number of other concessions, but these are most likely to be relevant to those in residential care.

Different rules apply to charges levied under the National Assistance Act. Here property that is up for sale is not disregarded, but there is a discretion to disregard property which is still occupied by anyone.

In calculating income for benefit purposes, no account is taken of actual income from capital, but a "tariff" is applied to the total capital. The first £10,000 of capital (for those with a capital cut-off point of £16,000) has no effect on benefit at all; thereafter, the claimant is treated as receiving £1 per week income for every £250, or part £250, above £10,000. Thus a claimant with capital of between £10,000.01 and £10,250 is treated as receiving £1 income per week; between £10,250.01 and £10,500 the figure is £2 per week, and so on.

BOX 2
INCOME SUPPORT FOR A SINGLE PERSON IN PRIVATE RESIDENTIAL CARE

Applicable Amount Income £

Personal allowance 49.15               State pension 62.45
Pensioner premium 19.65               Occupational
Residential allowance 56.00            pension          12.65

Total 124.80 Total 75.10

Income support = £124.80 - £75.10 = £49.70. This is the maximum income support to which the client is entitled; additional fees must be met by the local authority , or from charitable or voluntary payments (which do not count as income as long as they do not exceed the difference between the home fees and the applicable amount less £14.15 for personal expenses).

BOX 3
INCOME SUPPORT FOR COUPLES

Couple, neither in care, no housing costs: man aged 72 receives attendance allowance, Wife is aged 64. Man goes temporarily, then permanently, into residential care.

( a ) Benefit before going into care

Applicable Amount £ Income £

Personal allowance 77.15 Pension 99.80
Higher pensioner premium 38.00

Total 115.15 99.80

Income support = £1l5.l5 - £99.80 = £15.35

(b) Benefits when he goes temporarily into care

Applicable amount £ Income £

Husband
Personal Allowance 49.15 Pension 99.80
Higher pensioner premium 25.55
Severe disability premium 37.15
Residential allowance 56.06

Wife
Personal allowance 49.15
Pensioner premium 19.65

Total 237.65 99.80

Total income support award = £237.85 minus £99.80 = £137.85.

Note that he now receives the severe disability premium since he receives attendance allowance and no longer lives with his wife - doing so would disqualify him from that premium.

Once he goes permanently into care, the pension (which consists of a pension for him and an addition for his wife will be split into its constituent parts. Their applicable amounts will stay the same, but they will be treated as two separate claimants. Benefit will now be:-

Husband - applicable amount £168.85, income (pension) £62.45, income support £106.40.

Wife - applicable amount £68.80, income (pension) £37.35, income support £31.45.

Note that the total income support remains the same as when residence was temporary,. but it is paid to them as individuals. The principal difference is the more generous capital rules available when the stay becomes permanent .

Alan Robinson, Legal and Welfare Rights Training, Orchard House, 11 Commonside, Crowle, DN17 4EX, Tel: 01724 710819