Not Understanding Funding

[AnneF]

I'm posting this feeling a bit silly because I'm failing to understand the funding process, even though I've read the rules several times. Can someone help me to clarify please.

I know that the upper limit is just over £23k in England, so if you are even a few pounds over that you are treated as a self funder. As a self funder you get to keep all of your income and benefits which you put towards self funding your care.

When you fall under the £23,250 limit the local authority assesses you and contributes to the cost of your care. This is where I'm getting confused. At this point do they take the entire value of your income (for example pensions, occupational pensions, benefits) as well charging you their tariff (£1 per £250 you have). So you are not only giving up all of your income you are also paying an additional tariff charge on top? To my rather tired brain would I be right in thinking that this could actually cost you more in losses than if you were a self funder (particularly if somebody is paying topups as well)?

Then when you drop to the lower £14k level, the local authority continues to take all of your income/benefits but they no longer take the tariff.

Maybe I'm being incredibly dim (entirely possible) but in some situations the losses as a self funder would not be far different than if the local authority was involved!?

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By way of hypothetical example:

Self funder: Let's say your income per month from pensions and benefits is £2000. Let's say you are paying £6400 a month in care home fees. Your outgoing will therefore be £4400 a month.

Local authority contributes: When you fall below the upper 23k threshold the local authority takes all of your monthly income of £2000. It also takes its tariff from you which will be approximately £128/mo. A third party is paying top up fees of £3200 a month. The losses are £5328/mo.

Local authority contributes: When you fall below the lower threshold the local authority takes all of your monthly income of £2000 but you are no longer charged a tariff. Third party continues to pay top up fees of 3200 per month. The monthly loss is then £5200.


I feel I'm missing something obvious.

 

[northumbrian_k]

Hi AnneF,

This looks mostly right but doesn't take account of a couple of things, most particularly that the Local Authority pays a substantial amount from its own resources up to its funding limit. I can't speak to your hypothetical example as I have no knowledge of top up fees.

There are some good worked examples here:

https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs10_paying_for_permanent_residential_care_fcs.pdf

My real example from my wife might help to get things straight for you:

1) my wife has a state pension, an occupational pension and savings in her own name

2) she was self-funding her care home costs for about 20 months, swallowing up the entirety of her pensions and reducing her savings significantly over that time

3) as she approached the £23,250 limit a financial assessment was carried out by the local authority and her contribution was calculated (see below)

4) her savings fell below the threshold and remain inbetween the upper and lower thresholds

5) her weekly contribution is calculated thus:

- her entire state pension plus half of her occupational pension plus a tariff calculated on the amount of her savings that are above the lower threshold amount (up to a maximum £9,000, giving a tariff of £36 pounds per week ie (23,250-14,250)/250)

- the other half of her occupational pension is deemed to be gifted to me and is paid into my bank monthly by bank transfer

- a statutory allowance known as the Personal Expenses Allowance is disregarded from the calculation (ie deducted from the total above): this is currently £28.25 a week

- a further small amount in lieu of pension credit is also deducted from the contribution

6) the net result of this is that my wife has moved from paying for her care entirely from her own resources (income supplemented by capital) to paying a much smaller amount based on part of her income and a tariff based on her capital

7) this works out at somewhere between a quarter and a third of what she was paying as a self-funder

8) the Local Authority makes up the balance by paying the much larger proportion of the total costs at a rate that her care home accepts, with no top-up required

9) the Personal Expenses Allowance and any other balance in her current account is used to provide a cash float in her care home used for such things as chiropody, hairdressing, toiletries and so on, as well as one-off purchases such as clothing and shoes

 

[canary]

I wrote a reply, but am not sure it was correct

 

[AnneF]

8) the Local Authority makes up the balance by paying the much larger proportion of the total costs at a rate that her care home accepts, with no top-up required

9) the Personal Expenses Allowance and any other balance in her current account is used to provide a cash float in her care home used for such things as chiropody, hairdressing, toiletries and so on, as well as one-off purchases such as clothing and shoes

Thank you very much indeed for that, extremely helpful to see how the calculation is done.

The thing which would keep the costs high in my calculations (when hitting the local authority funding threshold) is the top up amount which I would have to pay as a third party to keep my mother in the home. The care homes have all said that if it were the case that a self funder falls to the threshold level, the local authority will only pay your personal budget and so a third party would have to step in to top up the balance. The balance would apparently be the difference between your local authority personal budget and the full private rate of the room.

I'm curious as to how the local authority in your example is making up the balance without a top up being required?

 

[northumbrian_k]

The short answer is that my wife's care home accepts the local authority rate so her personal budget is the sum of her contribution plus what the local authority pays.

 

[AnneF]

The short answer is that my wife's care home accepts the local authority rate so her personal budget is the sum of her contribution plus what the local authority pays.

The problem I've got is that the care homes which meet my mum's needs don't accept the LA rate on its own - they will only do that if somebody tops up to the full private rate. I was hoping to negotiate, but no!

I think my mum is under the 23k threshold so she would essentially lose all her pensions (less £28 per week subsidence allowance), and pay the LA tariff, and I would have to pay a third party topup to keep her in the home. *

My calculation above is somewhat hypothetical but it seems to make it appear as though someone who was self funding for a while would not be worse off, given the need for topup from a family member when the 23k threshold hits them.

* The homes in question said that if you couldn't top up beyond 2 years they would then accept the LA rate (but not before).

 

[northumbrian_k]

If I understand your hypothetical calculations correctly you are saying:

- as a self-funder total amount is £6,400 paid from income and savings

- with LA funding the total amount is still £6,400 but now met jointly by contribution of £2,000 from income (in practice as shown above it would be less), £128 tariff and £3,200 top-up, leaving a balance of just £1,072 to be met by the local authority

From my experience (without the complications of top-up) that doesn't sound right. See my point above about the relative amounts paid my wife and the local authority. A top up of 50 percent of the total monthly cost is surely incorrect.

Has a financial assessment been done?

 

[nitram]

My way of looking at it is.
The LA considers the home worth X
The resident is assessed as paying Y
The LA makes up X-Y

The home wants Z and asks for Z-X (voluntary) top up

 

[jackdog35]

The problem I've got is that the care homes which meet my mum's needs don't accept the LA rate on its own - they will only do that if somebody tops up to the full private rate. I was hoping to negotiate, but no!

I think my mum is under the 23k threshold so she would essentially lose all her pensions (less £28 per week subsidence allowance), and pay the LA tariff, and I would have to pay a third party topup to keep her in the home. *

My calculation above is somewhat hypothetical but it seems to make it appear as though someone who was self funding for a while would not be worse off, given the need for topup from a family member when the 23k threshold hits them.

* The homes in question said that if you couldn't top up beyond 2 years they would then accept the LA rate (but not before).

What happens if you can’t afford the top up for the home that meets her needs and a cheaper one isn’t appropriate?

 

[nitram]

What happens if you can’t afford the top up for the home that meets her needs and a cheaper one isn’t appropriate?

Define appropriate.

The LA have to find a placement that meets it's assessment for care, guidance says 'at least one'

 

[northumbrian_k]

My way of looking at it is.
The LA considers the home worth X
The resident is assessed as paying Y
The LA makes up X-Y

The home wants Z and asks for X-Z (voluntary) top up

That's clear @nitram and my understanding too although I think that the top-up would be Z-X.

In my wife's case Z and X are the same so no top-up applies.

It is also worth reiterating that top-ups are meant to be voluntary.

I have no answer to the point raised by @jackdog35

 

[canary]

What happens if you can’t afford the top up for the home that meets her needs and a cheaper one isn’t appropriate?

The LA is legally bound to find at least one home that meets their need and will accept the LA rate. If there is none, then the LA has to increase its rate until one can be found

Please note, that this is about the person with dementias needs, not the relatives wants. It may be further out and not so easy for relatives to get to and may well be shabbier than the relatives would like, and things like having an on-site hairdresser, cafe, nice view of the garden or being taken out by staff to go swimming, do not count

 

[nitram]

That's clear @nitram and my understanding too although I think that the top-up would be Z-X.

Correct!
Have edited post

 

[AnneF]

What happens if you can’t afford the top up for the home that meets her needs and a cheaper one isn’t appropriate?

I think I would have a very hard time arguing the case unfortunately. Their version of meeting her needs would likely be along the lines of a roof over her head, and food.

My version of meeting her needs would be along the lines of avoiding a dedicated dementia or nursing home because my mother's dementia is mild and she is very activity focused, and those environments would be harmful to her wellbeing. I would also argue that due to her head injury she is extremely noise sensitive and absolutely must have a setting which has a quiet lounge as well as the residents lounge. I would also argue that an outside space to retreat to would be vital to her wellbeing.

I doubt that any of what I say would be given any credence.

 

[AnneF]

The LA is legally bound to find at least one home that meets their need and will accept the LA rate. If there is none, then the LA has to increase its rate until one can be found

Please note, that this is about the person with dementias needs, not the relatives wants. It may be further out and not so easy for relatives to get to and may well be shabbier than the relatives would like, and things like having an on-site hairdresser, cafe, nice view of the garden or being taken out by staff to go swimming, do not count

Yes, this is very much the case.

I want my mother to be in a setting which on a 'needs basis' is not detrimental to her, and is pleasant in some way - the latter not being seen as 'needs' based.

This is why I am focusing on the likelihood of having to pay a top up. I just have to hope that a suitable home might be willing to negotiate on that. I also note from what I've been reading, the top should apparently be arranged by the local authority not directly with the care home - I'm a bit confused about how that would work.

 

[nitram]

I also note from what I've been reading, the top should apparently be arranged by the local authority not directly with the care home - I'm a bit confused about how that would work.

If you pay the top up to the LA which then pays the care home it's required fee, the contract is with the LA meaning any increases will have to be submitted it,
Doesn't mean the LA will not pass it on to you but does mean LA are aware.

 

[AnneF]

If you pay the top up to the LA which then pays the care home it's required fee, the contract is with the LA meaning any increases will have to be submitted it,
Doesn't mean the LA will not pass it on to you but does mean LA are aware.

Thank you. That might potentially make it easier when I run out of funds to top up (which I would within a couple of years). One or two of the care homes did say that providing the top up fees had been paid for two years they would then accept the local authority rate in full if I run out of money.

However as things stand at the moment, the asset I would have to liquidate in order to pay the topups could take many months to sell. Because the sale proceeds aren't available now, the care homes have said they would enter into a private deferred agreement allowing me to pay them back the top ups later on when the asset sells. It appears I would have to arrange that agreement through the local authority in some way.

I have never been more confused and out of my depth than I am right now, and I think the hospital is wanting my mum out ASAP. I desperately want to avoid her going into a placement which would be detrimental - as some of the places I've seen would be.

 

[maisiecat]

Hi, I pay a top up for my husband of £250 a week. The LA are aware of it and I had to prove I could fund it for 2 years but it is paid directly to the care home. I don't think top ups are the £3000 level you quoted from the other relatives at Pete's Dementia home and it is an expensive £1800 a week but my husband has complex needs and it was the only place that could meet them. The issue of relative's preference comes into play over the PWD having a right to social interaction with a close family member. Age UK can help you with it as I can't remember all the details.

 

[nitram]

the asset I would have to liquidate in order to pay the topups could take many months to sell. Because the sale proceeds aren't available now, the care homes have said they would enter into a private deferred agreement allowing me to pay them back the top ups later on when the asset sells. It appears I would have to arrange that agreement through the local authority in some way.

Is the asset a property?
If so it looks like a deferred payment agreement a loan from the LA secured on the property.
When repaying you will have interest and fees to pay.

 

[AnneF]

Hi, I pay a top up for my husband of £250 a week. The LA are aware of it and I had to prove I could fund it for 2 years but it is paid directly to the care home. I don't think top ups are the £3000 level you quoted from the other relatives at Pete's Dementia home and it is an expensive £1800 a week but my husband has complex needs and it was the only place that could meet them. The issue of relative's preference comes into play over the PWD having a right to social interaction with a close family member. Age UK can help you with it as I can't remember all the details.

Thank you. The £3200 I mentioned is per month for the topup - it's the difference between the LA rate and the care home's private rate (varies between £1600 and £1700 in these parts), it's what the care homes said the topup would be. It's a huge amount by any standards. As you say, you were able to argue that the home your husband is in is the only one which could meet his needs - but I suspect that may be difficult in my case.

Thank you for mentioning Age UK, I will try to contact them tomorrow.