FREE Care Funding Advice Line: 0800 043 4036

Local Authority Provided Care | NHS Provided Care | Temporary Care

The Conditions for Local Authority & NHS Funded Care

State funding is provided by either the Local Authority or NHS. The conditions and provisions for both are completely different.

I. Local Authority Provided Care

There has been a series of legislation and case law deciding the basis of care provision going back to the National Assistance Act 1948. This has culminated in the 'Charges for Residential Accommodation Guide' (CRAG) issued by the Department of Health for local authorities to follow.

1. Means Testing for Care

Currently a Means Test Threshold (MTT) is applied to those needing LA funded care. In effect, if someone needing care has income to pay for it they are expected to do so - except for £21.90 per week Personal Expense Allowance for items such as toiletries and newspapers, etc.. In graphic terms, if care is £750 per week and the person has an assessed income of £550, they will be expected to use that income to pay for their care plus allowable personal expenses. If LA funding is to be utilised, it will therefore only cover the shortfall, not the care in full. The threshold has an upper limit of £23,000 and a lower limit of £14,000. If someone needing care has capital above the upper limit they have to pay for care in full, if they have capital below the lower limit it is disregarded.

Capital between the two limits is treated as‘ tariff’ income at the rate of £1 per week (£52 per year) for every £250 of capital. This is virtually a 20% return, so the capital between the two limits will deplete – once it falls to below the lower limit it should be reassessed and disregarded.

2. Disregarded Capital

Certain capital is disregarded in the LA assessment process, this includes:-

*There are two types of capital investment bond: life insurance and capital redemption, it is the former only which is disregarded.

3. Deferred Payments Agreement

The LA, at its discretion, can provide interim funding for those with homes counted within the means test, which they cannot or do not wish to sell, who have insufficient income to pay care fees and capital below the upper means test threshold. This agreement places a charge on the home, and the LA’s contribution will be recovered from the value of the home after the person has died or otherwise terminated the agreement.

This arrangement is interest-free until 56 days from death or other agreement termination, after which interest will accrue. The setting up costs, such as Land Registry searches, are usually paid
up front and not added to the deferred arrangement. Property under a deferred payment charge can be rented out, with the rent applied to care costs, which will slow the property value taken by the LA if successful. However, there are many risks and considerations involved, outlined in the ‘Utilising the Domestic Home’ chapter. If the value of all assets, after deduction of LA loans, falls between the upper and lower thresholds, tariff income will apply, if it falls below the lower limit, LA funding can then be provided in full, with no further repayments due - as normal.

4. Property Protection Trusts

Although property in which a spouse lives is disregarded, if the spouse dies whilst their partner is in care, or before their partner goes into care, the whole property then becomes the sole possession of the person in care and therefore included in their means test.

One way around this is to convert the property to tenants in common from joint tenancy and place it in an appropriate trust upon death. Only the person in care's half is then assessable, as the other half is owned by the trust, but current practice (which can change) is usually to apply the market value to the half of the house owned by the person in/due to go into care - which is worth next to nothing with the other half in trust - as you cannot sell half of a house with the other half owned by a trust - thus taking all or practically all of the house out of the means test. This adviser suspects that the second benefit will be taken away at some point and at least a charge made on half of the value. However, if only half of the house is removed from the equation it is usually worth doing.

5. Deliberate Asset Deprivation

Capital movements, such as gifts or placements into disregarded areas for the purpose of beating the means test are treated as 'deliberate deprivation' and the capital treated as 'notional' - meaning that it is treated as still being owned and assessable.

The DoH ‘Charges for Residential Accommodation Guidelines’ (CRAG) rules state that a significant (not only) motive for transfer of assets should be deliberate deprivation to avoid means testing, and also that if the disposal took place when the person was fit and healthy and not foreseeing care, it should be ignored.

However, CRAG does leave a lot of unanswered questions, case law contains some contradictions and LA practice may vary and need appealing against if deliberate deprivation is unjustly found. In practice, if a transfer is made whilst health is failing and care is likely, it is also likely deliberate deprivation will be assumed, unless there is clear evidence to the contrary. If capital was moved within 6 months of needing care, the local authority has powers under s.21 of the Health & Social Services & Social Security Adjudication Act (1983) to recover it. If capital was moved beyond 6 months of needing care, it is simply treated as still being owned by the person needing care for means testing purposes.

6. Local Authorities' Flexibility

It is noteworthy that local authorities do have some discretion in how they interpret and apply the CRAG guidelines. How much is open to interpretation and is 'guide' rather than rule has been and will be a matter for the courts to decide on a case by case basis. That being said, most core matters do seem to have been to court, with legal precedents being set. However, we can reasonably expect local authorities to test the waters to access capital currently disregarded, as well as changes in the CRAG guidelines themselves to allow them to do so.

Where the level and location of care is concerned, local authorities typically have fixed budgets and will put people who need care in homes and in locations that meet those budgets. This has sometimes meant people going into residential care in homes and in locations that residents would not ordinarily wish, sometimes far away from their domestic home and loved ones.

II. Fully Funded NHS Care (or ‘Continuing NHS Healthcare’)

If the person in care has primary health needs, which require 'continuous and intense' medical attention by a registered nurse, their care should be fully paid for by the NHS, including accommodation.

This has legal precedent via the Grogan v. Bexley NHS Care Trust (2006) and the earlier R v. N & E Devon ex parte Coughlan (1999) case. The Coughlan case ruled that where nursing needs are 'continuous and intense' its provision should be fully funded by the NHS. NHS fully funded care is also known as ‘continuous care.’ This is a higher benefit than the NHS Funded Nursing Care contribution (or Registered Nursing Care Contribution), which is outlined in the ‘State Benefits and Care’ section of this site, which contributes towards nursing care lower than primary need.

The level of care and funding the person and/ or his or her relatives think is needed and the officially assessed levels are often poles apart. This has particular application for someone in receipt of lower level private nursing care, which has been officially assessed as not needed, with no nursing contribution payable, and a person whom the family think require Fully Funded (Continuous) NHS care, but who has a £106.30 per week contribution (see ‘State Benefits & Care’) and extremely high private fees due.

III. Temporary Care

1. Intermediate Care

Intermediate care should be provided and funded by the NHS.

2. Respite Care

Respite care can be either privately funded, NHS or LA funded. NHS funding can sometimes be given for cases such as late dementia. For LA funding, the same rules as below apply. There are also rules about carer’s allowance (for the carer, if applicable), generally that four weeks can be taken off in any 26 weeks of care and it will still be paid. However, there are variations and caveats - the Pensions, Disability & Carer’s Service should be contacted in advance to ensure that Carer’s Allowance will still be payable and to enquire for how long.

3. Trial Care

Trial care can be either privately funded or LA funded. If the trial is to be LA funded, it can ask you to contribute a ‘reasonable amount’ for up to eight weeks, and then apply the means test, or it can apply the means test straight away. The means test is the same as for permanent care, apart from some key differences:-

Once it becomes plain that the trial has become permanent, the LA should apply the standard means test.

Temporary Care & Benefits

The following will be made clearer in the next chapter:-

If respite or trial care includes nursing, the NHS funded care contribution (the registered nursing care contribution) should usually still be paid. Pension Credit is generally paid as for full-time care. However, the home is not means tested and couples continue to be assessed as couples rather than individually. Attendance Allowance should continue to be paid as normal, if eligible, and care is privately funded. It has often been wrongly withdrawn in practice, and if so should be appealed against. If LA or NHS funded, it should continue to be paid for 28 days – although if any time was spent in hospital in the four weeks prior to care admission, this is included within the twenty eight days (except the days of admission and discharge).

29/03/09 Revision [top]