Make allowances for self-funding

Neil Bateman looks at changes to rules that allows extra
benefit for people in residential care.

What is retrospective self-funding?

At first sight, this looks like yet another of those
impenetrable phrases that mean nothing to a non-expert. On closer
examination, it turns out to be a rule in the benefits system that
means that someone who has a property on the market and is liable
to pay for their care out of the proceeds of the sale, can receive
attendance allowance or disability living allowance care component
(AA/DLA).

In turn, the additional income from AA/DLA can be recouped
through charges by social services. As the charging rules for
residential care are complex, and because of the importance to
social services departments of income from residential charges,
retrospective self-funding is worth looking at in some detail.

Normally, people living for more than 28 days in publicly-funded
residential accommodation are not entitled to AA/DLA – the benefit
gets suspended. The logic of this is that it could amount to double
funding – why pay people extra for their care needs when these are
being paid in full by social services? Conversely, if someone is
meeting the full costs of their residential care they can receive
AA/DLA provided that if they are placed through a social services
contract, they do not also receive income support.

The rules have also been relaxed in the last year so that full
cost payers in local authority owned residential care can now
receive AA/DLA when in the past they were barred. As there are
perhaps 60-100 people in most local authorities in this position,
there are clear financial incentives to maximise take-up among this
group as it prolongs the time when they are full cost payers. The
Department for Work and Pensions has tried to do a trawl, but how
many local authorities have run their own exercises to identify
people in their care homes who could be entitled to AA/DLA?

For retrospective self-funders, those people whose care costs
will eventually be recouped from sale of their properties because
of the legal charge, the law has previously been uncertain.

However, thanks to a useful commissioner’s decision (number CA
2937/97), which has now been accepted by the DWaP (see DMG Memo vol
10 4/01), anyone placed in a care home by social services and who
has a property with a charge in favour of social services can
receive AA/DLA, provided that they don’t also receive income
support.

Once the property is sold, the benefit may continue as most
people will then have capital above the limit for social services
financial help (and income support) and they become completely
self-funding as a result.

However, as we have also recently seen the introduction of a
three-month period when permanent residents in care homes do not
have the value of their properties taken into account, they will
not be regarded as retrospectively self-funding for this time. In
practice, especially in areas with buoyant housing markets, the
property may be sold before the three month period is up. This
means that the person then becomes fully self-funding instead (and,
of course, entitled to AA/DLA through the usual route of being a
whole cost payer).

If any of this is still unclear (and it is complex), the very
least you should do is persuade your manager to purchase you a copy
of the new edition of the excellent Paying for Care published by
the Child Poverty Action Group and priced at a mere £13.95
(Child Poverty Action Group, 94 White Lion Street, London N1
9PF).

It not only covers the issue of self-funding but also explains
the relationship between the benefit system and the charges rules
for social care, highlighting areas to concentrate on in income
maximisation as well as important areas of discretion in
charging.