When an elderly person requires care there is an assessment competed to establish the type and extent of the care that is required. Following this a care plan will be provided and a financial assessment will be carried out to determine if the individual or the local authority will pay for the care required.
If the recommendation is for the care to be provided in a residential care home their local authority will carry out a means test and if their available assets are below the lower means test thresh hold of £14,250 the local authority will fund the cost of care up to their maximum cost. Each local authority will have a limit set for the cost they will pay for a bed in a residential home. Should a more expensive home be chosen then a ‘top up’ payment may be required by the person needing the care.
On entering care the Local Authority will disregard the value of any property for the first 12 weeks for the means test. This is known as the '12 week property disregard'. After 12 weeks the value of your home will be assessed with your other assets. At this point your local authority may be able to continue to cover the cost of care but on a Deferred Payment Scheme basis.
A Deferred Payment Scheme is effectively a loan from your local authority to cover the cost of your care. Your costs for care will be secured against the property as a legal charge and would become payable if the property is sold. These Deferred Payment Schemes are interest free loans provided they are repaid within 56 day of the death of the care recipient. The main benefits to this scheme are:
- No immediate need to sell the property
- Property may be let out to provide extra income to help towards care costs.
- Potential for property to benefit from house price inflation
- If let the property will not be lying empty and subject to vandalism
- Interest free loan