Care funding assessments: Income

If a care recipient is deemed ineligible for NHS Continuing Care, the responsibility for ensuring the provision of appropriate care in an appropriate setting ultimately falls upon the recipient’s local authority.

However, financial support towards the cost of care from a Local Authority is means tested and once a care recipient’s care needs have been assessed, a financial assessment is carried out to determine their means

If the care recipient has sufficient assessable income, they will be required to fund their care costs from that source

If income is insufficient capital will also be assessed and any shortfall will have to be made good from that source

Because they will be required to meet the cost of care in any event, most care recipients who have assessable means above the threshold limits tend to make their own arrangements, rather than leave this role to Social Services

Even in this case, it is, however, important to contact Social Services in good time if it ever becomes likely that the care recipients own means will be exhausted, so that appropriate arrangements can be made for Social Services to take over the financial responsibility

 Assessment of your ageing parent’s Income

Income will either be:

1. Fully taken into account
2. Partly disregarded
3. Wholly disregarded

1. Income Fully Taken into Account

Most income is fully taken into account, including:

• Trust Income
• Pension Income
• Most Social Security Benefits
• Income from letting

2. Partially Disregarded Income for the Elderly

Examples of partially disregarded income include:

• £10 per week of war widow’s pension
• 50% of a private, or occupational pension paid to maintain their spouse or civil partner, (provided that payment is made to the spouse, or partner and that spouse, or partner does not live in the same home)

3. Fully Disregarded Income for the Elderly

The most common disregarded incomes are:

• Disability Living Allowance mobility component
• Christmas bonus, charitable and voluntary payments, (which can be made by a relative)
• Awards of certain damages

Personal Expenditure Allowance for the Elderly

A care recipient is allowed to keep an amount of their income to meet everyday expenses and this amount is ignored by the means assessment.

The Personal Expenditure Allowance in England is currently £23.90 per week. (2013/4)

 State Benefits

When making calculations, the local authority will probably assume that benefits such as Pension Credit, or Attendance Allowance are being claimed where a care recipient is eligible.

Therefore, it is important that if you are eligible to receive such benefits, you do apply for them.

Intentional Deprivation of Income

Deprivation will have occurred if a person relinquishes, or transfers to another person, an income for the purpose of paying a reduced charge

It is up to the resident to prove that they no longer have the income and that they have not intentionally deprived themselves. If they cannot prove this, the local authority will treat the resident as still possessing the actual income

Consideration should be given to the timing of the disposal of the asset when deciding whether the purpose of disposing of the asset was to avoid a charge for the accommodation

The local authority should make a judgment as to the purpose of the disposal of income after balancing all the person’s motives, explicit and implicit, and the timing behind the action.

An Example:  A resident is assessed as having to pay the full charge based on his income from retirement pension and occupational pension. When reviewing the charge, the local authority find that he has sold his right to receive the occupational pension thereby reducing the charge he is assessed as having to pay. The local authority decides that this was done for the purpose of reducing the charge and the occupational pension was taken into account

Spouse’s and Civil Partner’s responsibility

It is important to emphasise that a spouse or civil partner is not responsible for meeting the care costs of their spouse or partner. It is only the care recipients own capital (or their share of jointly owned capital) which is assessable

It is often the case that most of a couple’s income is received by one spouse or civil partner (i.e. where one has significantly higher pension income than the other)

In such cases, the local authority has discretion to disregard further amounts of income or capital and therefore allow them to retained by the spouse or partner if, for instance, it can be argued that they will suffer hardship as a result of their spouse or partner’s income or capital being applied to pay for care.

Dave Robinson is a Partner in Albert Goodman Chartered Accountants and a Director of Albert Goodman Chartered Financial Planners and WBW Chartered Financial Planners www.wbw.co.uk