Practical support

The term self-funder is used to describe someone who receives no financial support from the local authority. Self-funders fund their care home placement using their savings and capital. This is usually because their assets, including property, are worth over £23,250. If their weekly income is more than the cost of the fees of the chosen care home, they will also be required to pay the full cost of the care placement.

Residents are also classed as self-funders if they receive help from family or friends to pay their fees or use social security benefits to help them pay. If they have entered a deferred payment scheme where the local authority pays fees on their behalf and recovers the money once their property is sold, they also count as self-funders. For more information see the Deferred payments scheme, below.

Self-funders still have certain rights to assistance. Social services has a duty to carry out a community care assessment to assess the level of need and type of care required. For more information about community care assessments.

Other assessments may also be relevant. For example, an NHS continuing care assessment may be required to see if the costs of care should be met in full by the NHS. A registered nursing care assessment may be needed to decide whether the NHS should make a contribution to the costs of nursing care.

Advice and information

Social services can offer advice about the care needed and the options available to provide that care. If social services fails to give appropriate advice about the type of care home required or the way in which the costs can be met, it could mean the person you're looking after has to pay more than they need to for residential care. In this case, a complaint to social services should be made.

Duty to provide accommodation

Even if the person you're looking after has sufficient capital to pay their own care home fees, social services may still have a duty to ensure that accommodation is provided. For example, someone may lack mental capacity and have no one who is willing or able to help manage their affairs. If this is the case, social services would have to step in and make the arrangements for residential care.

Help with negotiating care home fees

It is possible to ask social services to negotiate with a care home and pay the fees direct to them. Social services will then ask for full reimbursement from the care home resident if they're a self-funder.

The advantage of this is that the contract is between social services and the care home. Social services can make sure a competitive fee is set.

When the savings of a self-funder start to fall

Social services will carry out a further assessment as soon as the capital of a self-funder falls close to or below the upper capital limit of £23,250. Social services may then start assisting with care home fees. If social services delays it may have to reimburse payments that the resident has made to the care home.

Other protection for self-funders

Anyone entering into a contract with a residential care home should be given adequate information about the fees. Care homes should issue a service user’s guide containing:

• information about the fees charged for various services provided,
• arrangements for paying the fees, and
• the fees charged for any additional services.

When a local authority assesses the person you're looking after (to establish whether they must contribute to the cost of their residential care) it will look at both their income and savings (also known as capital).

The local authority can only consider the income and capital of the person receiving care. If the person receiving care is in a couple, the local authority may take into account income or savings to which the person receiving care has a legal entitlement, such as a share in a bank account. This can apply even if the income and savings are not in their own name.

This may mean that the local authority will ask for information about the finances of the partner of the person you're looking after. If the person receiving care at home wants to dispute their partner's  income or savings being taken into account they can use the complaints procedure.

Capital

The upper capital limit is £23,250 and the lower limit is £14,250. If capital is above the upper limit, the care home resident won't normally receive any assistance with the fees. If capital is between £14,250 and £23,250, £1 a week for every £250 is taken into account as income. For example, if a resident has £15,250 in capital they'll be treated as if they had an extra £4 of income a week.

Most forms of capital are taken into account but some can be disregarded. For example:

• the value of personal possessions,
• payments from charities, and
• payments from personal injury trust funds.

If savings are held in a joint account they are presumed to be owned in equal shares by each partner of a married couple or civil partnership.

Property

The value of the property of the person you care for will be disregarded for the first 12 weeks of their stay in a care home.

After that, the way the value of a property is treated depends on whether the person is a temporary or permanent resident of a care home, or whether there's still someone else living in the property after they go into residential care.

If the stay is temporary, or turns out to be temporary even if that was not at first intended, the value of the property is disregarded. If a temporary stay becomes permanent, the 12-week period for which property is disregarded starts from the date it is decided that their care is permanent.

The value of the property will also be disregarded if it's occupied by the resident’s partner. This also applies if the property is occupied by a relative of the resident who is aged 60 or over, or incapacitated, or a child of the resident who is under 18.

Social services can use its discretion to disregard the value of a property in which a third party continues to live.

If the resident owns a property jointly with someone else, they won't be asked to sell the property to pay for their fees. The resident will be assessed as owning a share of the property, but the market value of their share is likely to be low or nil as the property would be shared with someone else.

Example

Simon cared for his mother and lived in her property until she went into residential care. Simon is 48 and has physical health problems so can only work part time. He was financially supported by his mother before she went into a care home.

Simon can say that the value of the property in which he continues to live should be disregarded because of his incapacity. He can ask the local authority to use its discretion in this case.

Income

Most income is taken into account but amounts of certain benefits can be disregarded. For example:

• Disability Living Allowance (DLA) mobility component,
• income from the Independent Living Funds (ILF),
• special payments for war widows and widowers,
• some income for those entitled to the savings credit part of Pension Credit,
• any payments of Child Tax Credit and guardian’s allowance, and
• 50% of an occupational or personal pension, if the care home resident is paying this amount to a spouse or civil partner.

Personal expenses allowance

A care home resident is entitled to a personal expenses allowance. This is an amount intended to ensure residents have some money to buy, for example, personal toiletries and small presents. It is currently £22.30 a week. It is taken into account when income is calculated.

A local authority has discretion to allow a larger personal expenses allowance. This is relevant if the care home resident has a dependant child or is a temporary resident and needs to meet the costs of their own property. If the person you're looking after would experience hardship if the allowance was not increased, they should complain to social services.

People who go to stay in a care home may need to sell their property to pay the care home fees. Where there is a delay in selling the property or they do not want to sell the property immediately, payment can be deferred. If the local authority pays the care home fees it will recover the payment from the proceeds of sale once the property is sold. This is known as a deferred payment scheme.

A deferred payement scheme is only available if the care home resident has insufficient income to pay for residental care and has less savings than the upper capital limit of £23,250. In these circumstances, the savings do not include the value of their property, but do include other savings such as money in bank accounts.

How the deferred payment scheme works

The local authority will put a legal charge (similar to a mortgage) on the care home resident’s property. They then pay the residential care fees in full. The resident is assessed to see whether they're able to pay a weekly charge to the authority. Their ability to pay is based on their income less the personal expenses allowance. Repayment of the money borrowed is deferred until the property is sold or the resident dies.

The deferred payment scheme is discretionary. This means that local authorities have the choice of agreeing to such a scheme or refusing to enter into it in individual cases. Local authorities should put any refusal in writing, and the complaints procedure can be used to challenge a refusal. For more information about complaints, see NHS Choices links.

Before considering a deferred payment scheme, you and the person you're looking after must consider whether the property concerned will be disregarded from the calculation of their capital. If so, a deferred payment scheme will not be necessary.

It's important that the person you're looking after gets independent financial advice before agreeing to a deferred payment scheme. See External links.

They should also be aware that there may be legal expenses if a legal charge is placed on the property.

If the person you're looking after enters a deferred payment scheme, this will affect their entitlement to benefit as follows:

• If they're under 60, they're unlikely to be entitled to Income Support because the value of their property would be taken into account.
• If they're 60 or over, the value of the property may stop them receiving Pension Credit, but this should be checked.
• They will be treated as a self-funder if they're going to repay the local authority in full at some future date. This means they can continue to receive the care component of Disability Living Allowance or Attendance Allowance.

If the local authority makes the arrangements for the person you look after to move into a care home, they should make all reasonable efforts to offer them a choice of placements. These placements could be in one of the local authority’s own homes, or in a private or voluntary home. Some local authorities will have a list of preferred providers which they will usually recommend.

If you or the person you look after do not like the home suggested, or you both have a particular home in mind, you can ask the local authority to arrange a place of your choice. This is called preferred accommodation, and the home can be anywhere in England or Wales or, by special arrangement, in Scotland.

The local authority has a duty to explain this right of choice to you and the person you're looking after. This free choice is subject to certain conditions, which include the following:

• the preferred accommodation must be available,
• the preferred accommodation must be likely to meet the person’s needs, and
• the cost of the care home should be no more than the local authority would usually pay for a home that would meet the assessed needs.

Where preferred accommodation is more expensive

If the person you're looking after chooses a care home which is more expensive than the local authority would usually pay, there are a number of options:

• a third party (such as a relative or friend) can agree to top up the difference in cost,
• the person you're looking after can top up the fees themself during the first 12 weeks they're in the care home but not after that time, or
• the person you're looking after can enter into a deferred payment scheme (see the Deferred payment section, above).

Guidance to local authorities about choice

Local authorities have been given guidance to take into account when making decisions about how much they will pay towards a particular care home.

They must look at individual circumstances when they compare the cost of the preferred accommodation to what they would usually pay. They should not, as a matter of routine, ask third parties to make top-up payments if the accommodation is over a certain limit. They have discretion to pay above the normal amount if they think it appropriate.

They must be careful to compare costs only with care homes which would fully meet the resident’s needs.

The way local authorities commission services is important. If they fail to pay reasonable amounts to care homes in their area, those needing residential care may be under pressure to pay top-up fees.

To meet assessed needs it may be necessary to find a care home outside the local authority area. Even if this is more expensive the local authority will need to meet the cost if there is no viable alternative.

Challenging requests for top-up payments

You or the person you're looking after can make a complaint about an assessment.

For example, it may be that the local authority has failed to take into account all of their needs, including psychological, religious and cultural. It may be possible to argue that only certain care homes can meet those needs, even if they are more expensive.

If the local authority is arguing that there are care homes that are suitable at a lower price than the preferred accommodation, you can ask them to give you specific examples and check whether or not there are any vacancies.

When the local authority carries out a financial assessment of the person you're looking after it will need details of their savings as well as their income.

If the local authority thinks that the person you're looking after has deliberately disposed of capital in order to get financial assistance from the local authority, it will treat that person as if they still had that capital.

What counts as deprivation of capital

This could apply, for example, if the person you look after:

• spends money on a non-essential or luxury item,
• gives money away, or
• gives away property or a share of property.

The local authority will look at the reason why the money has been spent. Repaying a debt, for example, may justify the action. It will depend on the individual circumstances.

Example

Jenny had £25,000 in capital, which is above the limit of £23,250 for assistance with care home fees. She spent £4,000 on a new kitchen in her home shortly before her local authority carried out a full assessment to see if she was eligible for help with care home fees.

The local authority may question the £4,000 Jenny spent and could view it as deliberate deprivation of capital. Jenny could argue that these were essential home improvements which were necessary for health and safety reasons and because someone else is contuing to live in the property.

Timing

The timing of the expenditure or disposal of capital is also important. The longer it is before the person you're looking after is aware that they need to go into residential care, the less likely it is to be seen as deliberate deprivation of capital.

However, there are no definite rules about timing. It will depend on whether the local authority has evidence that there was any intention to reduce capital in order to qualify for help with residential care fees.

If the local authority decides there has been deliberate deprivation of capital the care home resident will be treated as if they still had the capital. This is known as notional capital.

The rules also mean that, over time, the notional capital is treated as gradually reducing. This may allow the care home resident to qualify for full help with care home fees in the future.

Where the care home resident has transferred capital or property to a third party, the action local authorities can take will depend on how long ago the transfer of capital or property took place. There are various ways in which they can try to recover the capital or property from third parties if they believe the transfer was done deliberately to qualify for help with care home fees.

Disputing a ‘deprivation of capital’ decision

The person you're looking after can use the complaints system to dispute a decision. If the situation is complicated it may be best to get specialist legal advice.