Financial assessment for care in England
To help them decide who will pay for a person with dementia’s care, a local authority will carry out a financial assessment. The financial assessment for homecare is slightly different to the assessment for a residential care home.
A person with dementia can ask for a financial assessment even if they think they may pay for their own care – it may still be helpful to them.
The Care Act 2014 states that if a person is going to receive care and support at a low cost, it may not always be necessary to do a full financial assessment. In this case, the local authority may decide to do a ‘light-touch’ financial assessment.
In some circumstances, a local authority may choose to treat the person with dementia as if they have had a full financial assessment, even if they haven’t. This is called a ‘light-touch financial assessment’.
The mainly happens if:
- The person is paying for their own care but wants the local authority to arrange it for them. The local authority will usually charge for this service.
- The local authority is charging a small amount for a particular service that the person is able to afford. Carrying out a full financial assessment would be disproportionate in this case. For example, if it requires more resources to do the financial assessment than to provide the service.
- It is clear that the local authority would cover the cost of the person’s care. For example, the person may receive means-tested benefits which show that they would not contribute towards the costs.
If the local authority decides to do a light-touch financial assessment, they must tell the person that it has taken place. They should also make it clear that the person still has the right to request a full financial assessment if they want to. The person may want this if they dispute the charges, for example.
Paying for dementia care if you have a partner
A financial assessment for care should only take into account the assets of the person with dementia, even if they have a partner.
What happens during a financial assessment
The person with dementia (or their carer or relative) will be asked to complete some forms about their finances. Someone from the local authority may visit to help the person fill in the forms.
In these forms, the person with dementia will have to report on two things:
- income – this refers to any money the person receives regularly. For example, this may be a pension or certain benefits (such as Universal credit or the guarantee credit element of Pension credit).
- capital – this refers to any other assets the person has. This includes savings, investments and, in some cases, the value of the person’s home (for example, when paying for care home fees).
It can feel like an invasion of privacy when the local authority is looking over a person’s finances. However, it is important to make sure that the person is charged the right amount for their care. If the person refuses to answer the financial questions, they could be charged the full amount for their care.
Based on the information in these forms, the local authority will then decide what to include in the person’s financial assessment. They will either:
- fully take into account a type of capital and income
- partially take into account a type of capital and income
- ignore the type of capital and income completely (known as ‘fully disregarding’ it).
For example, some benefits like PIP mobility component will be fully disregarded and not expected to contribute to care costs. Whereas other benefits can fully or partially be included and expected to contribute to care costs.
How does a local authority decide who pays for care?
Your local authority will compare the person’s capital and income to the capital limits. This will show how much the person with dementia will pay for their care.
In England, there are two threshold limits for a person’s capital:
- Upper capital limit – £23,250
- Lower capital limit – £14,250
If the financial assessment shows that the person’s capital is above the upper capital limit, they will be expected to pay all of their own care costs.
If the person’s capital is likely to drop to the upper threshold, they or their carer should ask the local authority for a review of their finances.
If the person’s capital is between the capital limits, they will pay what they can afford from their income.
They will also give a means-tested contribution from their assets. This contribution is calculated as £1 per week for every £250 of capital between the capital limits. The person must still be left with a minimum amount of income.
Depending on the person’s income, the local authority may then start to contribute towards the care costs.
If the person’s capital is below the lower capital limit, they will still pay what they can afford from their income (leaving them a minimum amount). However, they won’t have to pay the extra contribution from their assets.
This means that they can keep their capital and use it as they wish. The local authority will pay the shortfall between the person’s income and their care costs.
Can you keep any of your income?
The person will always be allowed to keep a certain amount of protected income. This is income that can’t be used to pay for care costs.
If a person is contributing to their care home fees, they must be left with a minimum amount of money for themselves each week. This is called the Personal expenses allowance (PEA).
In England, the Personal expenses allowance rate for 2023/24 is £28.25 a week.
What can Personal expenses allowance (PEA) be used for?
The person with dementia can spend this money as they wish. It is not a benefit, but the person’s own income, made available to them. This can be used for anything they wish, such as newspapers, haircuts or clothing.
There are some circumstances where the local authority increase the PEA. For example, if the person has an occupational pension being paid to them.
They can keep half of this income to pass back to their spouse or civil partner who remains at home. The Local Authority must allow this.
The Local Authority may use their discretion and increase the PEA for other reasons too, such as covering some housing costs where their property is disregarded in the financial assessments.
The local authority must allow people living at home enough income to cover some housing costs, including:
- mortgage repayments
- rent or ground rent
- council tax
- certain service charges.
They only have to do this if those payments aren’t covered in other ways. For example, claiming council tax support could cover some payments.
If the care package will not be meeting the need, they must consider any costs people have related to having a disability. This is known as disability related expenditure.
Examples could be community alarms, food for a specialist diet or extra laundry costs. If disability benefits are included in the financial assessment, the local authority must allow people to keep enough income to cover their disability related costs.
Once any housing costs and disability related expenditure are paid, they must also retain their Minimum income guarantee (MIG).
What is the Minimum income guarantee (MIG)?
The MIG is the minimum amount of money the person must be left with each week when they are contributing towards their homecare fees.
The amount that a person receives as MIG will depend on whether they are:
- single or in a couple
- over or under State pension age
- a carer
- living with a disability.
The MIG is always higher than the Personal expenses allowance (PEA), as someone living at home has higher living costs.
For example, a single person over State pension age will receive around £214.35 per week (2023/2024 rate). The local authority will assess the amount of a person’s MIG dependent on their circumstances.
It may work out that the person would be left with less than their MIG after paying for housing, care, and disability related expenditure. If that is the case, they should not be asked to pay for the full cost of homecare themselves.
The local authority should cover some of the cost so that they can keep more of their income.
Do you have to sell your house to pay for care?
Whether a home is taken into consideration during a financial assessment depends on where the person with dementia is receiving care.
Are benefits counted in the financial assessment for care?
If the person is receiving care in a care home, certain benefits must not be taken into account in a financial assessment for care.
This includes the mobility part of Disability living allowance and Personal independence payment. Some other benefits, for example the War widow’s pension, should only be partially counted.
They should inform the DWP of any change in their circumstances.
Will receiving financial support for care costs impact the person’s benefits?
If the person is receiving care in a care home, their benefits may be affected. This will depend on who is paying the care home fees:
- If the person is a self-funder and is paying their own care costs in full, they can still receive some benefits, such as Attendance allowance. These can help towards paying care home fees.
- If the local authority is contributing towards the care fees, some benefits will continue and contribute towards the cost of care. This includes their State pension. Some benefits, such as Attendance Allowance will stop after 28 days. The person must always be left with their Personal expenses allowance (PEA).
It may help to arrange for the person to get a full benefits check. They could also speak to their local Citizen’s Advice or Age UK to find out whether financial help is available. The person’s carer may also find this useful – for example, to discuss protecting their pension rights.
If the person is receiving care at home, local authorities can decide whether or not to count the following benefits as income:
- Severe disability premium
- Disability living allowance
- Personal independence payment
- Attendance allowance.
Most local authorities do decide to include these benefits in the assessment. Local Authorities must consider disability related expenditure to help ensure that the person is still able to pay any expenses related to a disability.
Inclusion London is an organisation supporting deaf and disabled people in London. But it has a helpful chatbot (digital assistant) on its website that is free for anyone to use. This can help you work out your disability related expenditure. To find out more visit www.inclusionlondon.org.uk/chat-bot
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