Financial assessment

Find out what a financial assessment is and why someone affected by dementia might need one. 

What is a financial assessment? 

A financial assessment is used to help decide who will pay for the care and support required. Usually, this will be either the person themselves or the local authority, and sometimes it will be a combination of both.

The financial assessment varies depending on the type of care and support the person requires. For example, it will be different depending on whether the person is receiving care at home or in a care home, although there are some similarities.

What happens when an assessment is carried out? 

The person doing the financial assessment is likely to ask the person with dementia or their carer or relative to complete some forms about their finances and declare that this information is true. Someone from the local authority may also visit the person to help them to fill in the forms.

The Care Act states that if a person is going to receive care and support at a low cost, it may not be necessary to do a full detailed financial assessment. See ‘Light-touch financial assessments’ below for more information.

It can feel like an invasion of privacy when the local authority or its representative is looking over something as private as a person’s finances. However it does need to be done to avoid unnecessary charges. It may be necessary for those close to the person with dementia to reassure them of this fact.

Some key points about the financial assessment:

  • Income refers to any money the person receives regularly, for example benefits or a pension. Capital refers to any other assets the person has. This includes savings, investments and, in some cases (for residential care), may include the value of their home. The person will always be allowed to keep a certain amount of income known as a Personal expenses allowance.
  • Both capital and income must be taken into account. It will then either be fully included in the assessment, partially disregarded or fully disregarded.
  • An example of an asset that must be fully disregarded is the value of a person’s main or only home when they are receiving care in a setting that is not a care home or where a ‘qualifying relative’ (eg a partner) occupies the property as their main or only home. 
  • The forms may ask about a partner’s finances but, once it is decided what belongs to the person with dementia and what belongs to the partner, the assessment should only take into account the finances of the person with dementia, and no one else’s.
  • If there are joint bank accounts or other assets held jointly, the assessment can only take into account the share belonging to the person with dementia. It is assumed that their share is 50 per cent, unless it is shown otherwise.
  • The local authority must provide a written statement of how they have calculated the amount the person will contribute towards their care. This should show clearly what has been taken into account, and regular statements should follow.

Light-touch financial assessments

In some circumstances, a local authority may choose to treat a person as if they have had a full financial assessment, even if they haven’t. This is called a ‘light-touch financial assessment’.

If the local authority decides to do this it must inform the person that a light-touch assessment has taken place and make it clear that they still have the right to request a full financial assessment, if they want to. This might be necessary if there is a dispute about the charges, for example.

The main circumstances in which a local authority might consider carrying out a light-touch financial assessment are listed below:

  • Where a person has significant financial resources, and does not wish to undergo a full financial assessment, but wants the local authority to arrange their care. The person will then be self-funding but the local authority must be satisfied that the person can afford, and will continue to be able to afford, any charges due.
  • Where the local authority charges a small or nominal amount for a particular service that the person is clearly able to afford, and carrying out a financial assessment would be disproportionate (ie requires more resource to do the financial assessment than to provide the service).
  • When an individual receives means-tested benefits which demonstrate that they would not be able to contribute towards their care and support costs.

Benefits and financial assessments

Certain benefits, such as the mobility component of Disability living allowance or personal independence payment, must not be taken into account in a financial assessment for paying for care. Some other benefits, for example the War widow’s pension, should only be partially counted. Half of any occupational or personal pension will not be considered, as long as it is passed on to a spouse or civil partner who remains at home.

Depending on the outcome of the financial assessment, benefits may be affected. If someone is self-funding, they will still be entitled to some benefits – these can help towards paying fees. If the local authority is paying a person’s care home fees, then any benefits the person is entitled to will all go towards the cost of care (including a state pension, any other private pension and income)In these cases a person will be left with a Personal expenses allowance. 

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