Care Standards Update
Edition No. 10 - October 2001
Introduction
The NHS plan made a number of commitments to make the charging system for residential accommodation fairer. Two of these changes - the twelve weeks property disregard and restoring the capital limits to their 1996 real term value - were introduced from April 2001.
The Health & Social Care Act 2001 introduced two other initiatives; deferred payments and top ups by individuals. This Care Standards Update explains these two new initiatives.
CRAG
Members may often hear reference to CRAG guidance. This is the vehicle by which the Government publish instructions to local authorities on the way in which their responsibility to provide residential accommodation under Part III of the National Assistance Act 1948 should be interpreted.
The Charging for Residential Accommodation Guide (CRAG) is issued under Section 7 (1) of the Local Authority Social Services Act 1970 - which in simple terms means that local authorities MUST do as it says.
CRAG is a comprehensive guide to all aspects of residential accommodation. It includes definitive guidance on all of the controversial issues such as 'earnings', 'liability of relatives', 'treatment of property' and 'income other than earnings'. A copy of the complete CRAG guidance is kept at Head Office, members with queries over the interpretation of benefit should contact Deirdre Kowalski at Head Office.
Country Specific
It is important to recognise that there are different versions of CRAG for each of the countries in the United Kingdom. This Care Standards Update is based upon the English version.
Deferred Payments
Regulations made under section 55 of the Health & Social Care Act 2001 allow councils to agree and operate deferred payments whereby they take legal a charge on a person's main or only home in which they have a beneficial interest, instead of contributions towards the cost of his/her residential accommodation. The aim is to allow people with property, but without income and other assets sufficient to meet their full assessed contribution, to have a legal charge placed on their property to meet any shortfall. Hence people will be able to keep their homes on admission to residential care and for the duration of the deferred payments agreement.
It is anticipated that the deferred payment initiative will eventually become self funding, but in the first instance the Government have introduced some 'pump priming' in the form of access to a ring fenced grant. This will rise from £15 million in 2001/02 to £40 million in 2003/04. The grant is intended to help councils to reach equilibrium when it is expected that they will be able to fund new deferred payments from proceeds of repayment of previous agreements.
Eligibility
Councils may agree to deferred payments only if a person entering or in permanent residential care has insufficient income and other assets, other than the value of their main or only home in which they have a beneficial interest, to meet the cost of their care and the person:
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For whatever reason does not wish to sell their home or
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Is unable to sell their home quickly enough to pay for their care home fees.
Councils have discretion over whether or not to agree to deferred payments in individual cases. In published information about deferred payments, councils have been asked to describe those residents who they are most likely to help.
There are two instances where councils have been told they will need to exercise caution. First, deferred payments may be agreed for a resident for whom there is an outstanding mortgage on his property only if the resident can continue to make mortgage payments while at the same time make their assessed contribution to care costs.
Second, in agreeing to individual deferred payments, councils should take into account the size of the weekly deferred contribution in each case. A high level of deferred contributions in one case may limit a council's ability to enter into other deferred payments. It is clear that this is an encouragement to councils not to consider 'high fees' for residential or nursing home care. If you experience difficulty with such a refusal please contact Head Office.
The ability to make deferred payments should not disrupt existing good practice that councils have developed when supporting residents on admission to permanent care who may have very short term difficulties in selling their homes to meet care fees. In these cases, placing a charge on a resident's property might be disproportionate.
Some of the Conditions
The statutory provision for deferred payments came into force on 1 October 2001, it cannot be back dated to a date before 1 October.
Deferred payments should not be agreed in situations where current mandatory property disregards apply. A person may only enter into a deferred payments agreement once the twelve weeks property disregard has been completed, and the property once again is taken into account as part of the financial assessment. Deferred payments do not apply to people entering residential accommodation on a temporary basis as, when the financial assessment under CRAG is applied, the value of the resident's main home is disregarded. In addition, deferred payments should not be used in place of other discretionary property disregards set out in CRAG, for example, where a former carer continues to live in the property.
Councils should only offer deferred payments if a person has already been financially assessed under the Assessment of Resources Regulations and accompanying guidance in CRAG.
Deferred payments should not be used to enable a person to retain more of their income or capital than would usually be allowed in a normal CRAG assessment.
If they have not done so for other reasons, councils should enter into contracts with care homes for each resident subject to a deferred payments agreement. If deferred payments agreements are terminated while the resident is still in residential accommodation, the council should re-assess the resident, and if appropriate terminate the contract.
Residents seeking deferred payments are to be advised by councils to seek independent financial advice. In addition, when agreeing to deferred payments, councils will need to be aware, and make residents aware, that if a property is not up for sale residents are not entitled to income support or the minimum income guarantee.
Attendance allowance and the care component of disability living allowance are paid to eligible residents not in receipt of income support / minimum income guarantee, who are subject to a deferred payments agreement, that has been put in writing according to this guidance, and in which the resident agrees that they or their estate will sell their property following the end of the exempt period.
Councils may ask residents to cover the costs of land registry searches and other such legal expenses. These legal expenses should be paid up front, and may not be added to the deferred contributions.
Deferred payments arrangements last for the duration of the exempt period, i.e. from the moment that a person enters into the agreement until:
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56 days after the person dies, or
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the date on which the agreement is terminated by the resident
Councils cannot terminate deferred payments of their own accord.
Where a resident has been refused a deferred payment, the reason should be put in writing by the council and a copy given to the resident. At the same time, the resident should be advised of how to complain or otherwise comment on the decision.
Resident and Third Party Top Up
Regulations under section 54 of the Health & Social Care Act 2001 make provision for certain residents to top up from their own resources in order to allow them to enter residential care which is more expensive than the council would normally pay for to meet assessed need.
Currently, council supported residents may not top up themselves as the financial assessment is responsible for full costs and fairly takes into account the contributions that both residents and councils should make in order to meet assessed needs.
However, not allowing residents with property who have either accessed the twelve weeks property disregard or deferred payments to top up from their own resources is unfair as, when the value of their home is realised, they will be able to support themselves in a way that suits them best. Therefore, residents in either of these situations will be able to top up themselves from resources disregarded under CRAG.
In addition, regulations made under section 54 also confirm current practice whereby third parties may also provide top up contributions. Please note that the new regulations replace paragraph 4 of the Choice of Accommodation Directions 1992.
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