6 questions answered for Lawyers on Financial Means Testing
- Why did the law around the provision of care need to change?
It is fair to say that the legislation in relation to the provision of community care had become confusing, complex and, arguably, unsustainable. The Care Act 2014 consolidates the earlier legislation and develops new concepts, particularly for funding care in England. Different rules apply elsewhere in the UK. The Act provides a framework within which the new system will operate but the details are set out in Regulations (of which there are 22 so far) which can be introduced by the Secretary of State at any time. The Charging for Residential Care Guide (commonly known as CRAG) published by the Department of Health, has been replaced by over 500 pages of Guidance which applies from 1 April 2015. There are also a series of Fact Sheets published by the Department of Health on the www.GOV.uk website.
- What changes have already occurred for financial means testing?
Having determined that a person and/or their carer needs help ss 14, 17, 69-70 Care Act 2014 places a duty on a Local Authority (LA) to arrange care and support for those with eligible needs. This is the first time carers are equally entitled to support. These sections also provide LAs with power to meet both eligible and non-eligible needs. Most of Part 1 of the Act came into force on 1 April 2015 but not all sections came into force at the same time, for example, s.14 (5) to (8), the provisions providing powers to LA to charge for care and support, partially came into force on 1 October 2014 [SI2014/2473]; s.14(1) and (3) to (8) came into force on 1 April 2015.
People receiving services and support prior to 1 April 2015 will continue to receive them under the old law until the LA completes a review of that person’s case, at which point the new law applies. The new law applies for new applicants from 1 April 2015. Reviews of existing care and support plans should take place annually and LAs must undertake a review within one year of the implementation of the Act i.e. by 1 April 2016. LAs risk violation of their duty to review regularly if they delay in undertaking reviews.
There is a discretion as to whether or not to charge a person under s.14 but where it decides to charge a LA must follow the Care & Support (Charging & Assessment of Resources) Regulations 2014 (SI2014/2672) and the Care & Support and Aftercare (Choice of Accommodation) Regulations 2014 (SI2014/2670).
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The LA must treat each person as an individual and decide what types of support are needed. There are some services that must be arranged for free e.g. community equipment and minor adaptions up to £1,000. To introduce consistency in approach across the country LAs must follow the Regulations and Guidance when assessing people’s ability to pay for the care and support they need.
If a person has to pay for any charge for care and support services the LA has to help that person in identifying the best options of how to pay any charge. This may include offering that person a deferred payment agreement. Previously, it was a post code lottery as to whether such an agreement would be offered. Now the scheme must be offered universally across England from 1 April 2015.
- What changes are in the pipeline but not yet in force?
Where care home accommodation is assessed to be required there is a delay to implementation of s.18 in so far as it creates a duty to meet needs by providing or arranging care home accommodation. S.18(3) read with s.18(1) gives people with assets above the financial limit the right to have their eligible needs met by the LA. More work is required to assess the impact on the social care market of this provision and so its implementation is delayed until 1 April 2016. For other types of care and support s.18 commenced on 1 April 2015.
From the 1 April 2016 a cap on care costs is introduced. The cap is a restriction on the amount that a person has to pay over the course of their lifetime. Although not yet set out in regulations and/or guidance consultations on the Act indicate that the lifetime cap is to come in at the initial level of £72,000. However, the cap does not include ‘living costs’ such as utility bills and food to introduce some consistency between those living in a care facility and those living at home with domiciliary care. The Government has suggested that these ‘living costs’ will be set at £12,000 pa from 1 April 2016.
In order to ensure no-one pays for care over and above the lifetime cap the LA must keep care accounts for each person for 99 years or until the user’s death!
- What, if anything, should the Local Authorities do to prepare for the changes in the pipeline?
The overwhelming initial task will be to ensure all assessors are familiar with the need to assess the well-being needs of an individual and their carer. The inclusion of carers in the assessment process whilst welcome will place an extraordinary extra burden on LAs and LAs may need to outsource some of the assessments, although individuals cannot be charged for an assessment so that cost of outsourcing will need to be compared to engaging extra staff for this task.
In addition to providing training and support for staff in the new rules which apply largely from 1 April 2015, LAs must put in place policies and procedures for:
- Which services will be provided, at their discretion, free of charge or for a nominal fee and make this clear to staff
- How staff will know who is an authorised person to look after the affairs and finances of a person who lacks capacity or who the person has nominated
- Conducting the financial assessment process in accordance with the new Regulations and how they will manage once a person has reached the care cap once it is in force
- The implementation of the new scheme for deferred payment agreements – valuation of property and calculation of the equity limit; arranging for liaison between care workers conducting eligibility assessments, surveyors ensuring adequate security and finance teams calculating interest and collecting repayment
- Keeping the care account records of individuals to ensure their lifetime cap is not breached
- Of what should lawyers take note?
- Check that an individual is assessed separately from their carer and both needs are ascertained without pooling resources under the new rules for new cases from 1 April 2015
- Familiarise themselves with the details of the Regulations and the Guidance. In particular know which services must be provided free of charge; which services their particular LA may provide free of charge or for a nominal fee; and the statutory financial limits for contribution to the cost of care
- Study the rules for the deferred payment agreements, which differ from what was available previously, and reflect on the suitability of this option for particular clients who have to pay for care
- Consider the firm’s own services and ensure LAs are made aware of these since LAs should engage with local providers about paid for as well as free services available to which individuals and their carers may be sign posted
- Raise awareness about the changes
- Familiarise themselves with the way LA present care and support plans and consider if and in what way these may need to be challenged to benefit clients
- What are the trends and predictions for the future?
The Government’s own statistics estimate there are currently three million people aged more than 80 years of age and this number is projected to almost double by 2030 and reach eight million by 2050. While one-in-six of the UK population is currently aged 65 and over, by 2050 one in-four will be. The ‘baby boomer’ generation Is reaching retirement age and will gradually need to access care and support services. Something had to be done to meet the cost of care but I am not sure this Act will prove to be enough.
The immediate prediction I would make is that the explosion in assessments required (one million more per annum according to Government estimates) will place a heavy burden on LAs strapped for cash. So meeting the target of promoting individual well-being may take years.
The care cap is likely to be set at a relatively high level for most people because of the exclusion of living costs. The capital limit for eligibility to access care paid for by LA is modest at £23,250. If non-one eligible is entitled to occupy the family home following an individual’s removal to care, so it is not excluded from the mean testing, then the capital limit is exceeded straight away. Whilst the new deferred payment agreement system is applicable across the country to avoid a sale of the property but compound interest is charged from the start so the cost of this borrowing will quickly mount leaving less equity for those left behind.
This means, as now, many people who own their own home will have to pay for their own care and that cost may well use much of the value of their capital assets. The costs of providing care will go up as the Government wishes to drive up the quality of care across the system and reduce immigration, the effects of both will in all probability squeeze the employment options for employers.
All of this will continue to fuel the desire of many to avoid care costs and seek to successfully reduce their assets to ensure payment by LAs. Vigilance by LAs as to examples of deprivation of assets will be needed even more and a willingness to intervene where deprivation through financial abuse leaves individuals vulnerable. Lawyers too need to manage expectations (see Annexe E to the new Guidance).
The Guidance expands on the focus of the legislation being to prevent damage to well-being and therefore anticipates there will be timely intervention by the LA rather than crisis management. It will be interesting to see how LAs will identify, contact and motivate relevant individuals to take advantage of appropriate services – many older men in particular are not willing to be sociable, even if they are lonely.
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