“Our adviser was a life-saver – she was very calm, knowledgeable and went out of her way to help.”
Janet Baker, Carehome Selection client
Means test for care home funding
This factsheet has been developed by Carehome Selection to explain all the rules involved in the means test for care home funding carried out by your local authority.
If it has been decided that your loved one requires full time care and is unable to stay at home, your local authority will carry out an assessment commonly known as the means test. This is used to determine how their residence in a care home will be funded. The only exception to this is individuals who qualify for NHS continuing care funding. We cover the question of how you qualify for NHS continuing care funding in a separate factsheet.
The social services means test assessment will look in detail at all types of income received by the individual and all capital owned, including property. From this information it will be decided whether or not the individual will be self-funding or will be funded, or part-funded by local authority social services.
Couples are treated as two separate individuals. Neither the income nor the capital belonging to the client's spouse will count in the assessment. (Except where assets have been recently transferred). If a couple hold joint accounts it will be assumed that 50 per cent of the capital belongs to the client.
All sources of income in the client's name will be included in the means test. This will include benefits such as state pension, attendance allowance and pension credit plus other sources such as rental and dividend income.
Who is eligible for NHS continuing healthcare?
Anyone assessed as having a certain level of care needs may receive NHS continuing healthcare. It is not dependent on a particular disease, diagnosis or condition, nor on who provides the care or where that care is provided. If a person's overall care needs show that their primary need is a health need, they should be eligible for NHS continuing healthcare. Once eligible for NHS continuing healthcare, care will be funded by the NHS, but this is subject to review, and should the care needs change the funding arrangements may also change.
Some types of income are disregarded. The most common disregards include:
- the mobility component of Disability Living Allowance
- War Widows' special payments
- the Christmas bonus
- interest on savings (counts as capital)
- personal injury payments (except where intended to cover cost of care)
- charitable payments made for specific items not covered by care home fees
Partly Disregarded Income
The most common partly disregarded incomes include:
- 50 per cent of a private pension where the pension is received by a married person in a care home, provided the amount is paid to his/her spouse
- qualifying income for Pension Credit Savings Credit equivalent to the amount of Savings Credit received is disregarded up to a maximum of £5.75 per week (£8.60 for a couple)
- £10 per week of a War Widow's, War Widower's or War Disablement Pension
2: Capital and savings
Most forms of capital and savings are included in the means test. Examples of capital include:
- bank and building society accounts
- investments including premium bonds and stocks and shares
- property (building or land)
The capital limit in England is currently £23,250. This means that if a client has capital of more than this amount they will be designated as self-funding and consequently expected to pay the full fees for the home. If they have between £14,250 and £23,250 they will have to contribute towards the cost of the home i.e. for every £250 they have above £14,250 they will be assumed to have £1 per week income (referred to as ‘tariff income’). The capital limit changes on an annual basis.
The local authority will carry out a means tested assessment to determine how much the client will have to contribute from their own income.
Capital of £14,250 or less will be ignored in calculating the contribution towards care. This means that if a client has less than £14,250 they will not have to contribute towards their care home fees from their own savings. They will however, have to contribute their income which will include their benefits (pension, attendance allowance etc). They will be entitled to a weekly personal allowance for spending money.
Capital limits are different for Scotland, Wales and Northern Ireland. View these at disabilityalliance.org.
3: The family home or other property
If the client owns the property they live in (prior to moving into a care home) its value will be treated as capital and the same capital limits (ie £23,250) will be used to determine whether they will be classed as self-funding. The exceptions are when it is occupied by one or more of the following:
- Their spouse or partner
- A relative who is aged 60 years or over
- A relative who is aged under 60 years but is incapacitated
- A child under 18 years of age whom the person entering a care home is liable to maintain
- A lone parent who is estranged/divorced from the person entering a care home
The local authority also has a discretionary power to ignore the value of the home, when someone who does not fit into the above categories is living with the client, eg A younger relative who is not incapacitated but who has been helping to care for the client, or a same sex partner. The local authority can review discretionary decisions at any time.
12 week property disregard
If the client does have a property that will cause him to be classified as self-funding it is important to note that the value of their property will be disregarded from the means test for the first 12 weeks of permanent admission to a care home, providing other assets are below the capital limit. Local Authority funding will be provided for the first 12 weeks and is not repayable. Residents who use the 12 week disregard may top up out of their own resources.
Interim or fast track funding
If after the 12 weeks either the property remains unsold or the client is applying for Court of Protection Receivership (CoPR) to be granted then the local authority may continue to help towards the care home fees if capital is likely to be released or available within the foreseeable future. This is known as interim funding or fast-track funding. However, once the capital is released (the house is sold or CoPR granted) all money must be paid back. If this process takes some time the local authority may put a legal charge on the property.
Deferred payment scheme
The local authority can agree to a deferred payment when a client does not want to sell their property or is unable to sell their former home quickly enough to pay the care home fees. The local authority will place a legal charge on the property; this may incur a small fee to cover administration and a property valuation.
For more information about the local authority means test for care home funding or to use our advice service, please contact us.