- The council must be able to offer at least one care home that can meet the person’s needs at the council’s expected cost. If not, the council will pay the expected cost and the top-up. If the customer and / or representatives choose a care home with a bed cost above the council’s expected costs, and can meet the person’s needs a third party top-up will be charged to the family / representative.
- Ensure that the customer (or their representative) and whoever is paying the top-up understands the costs.
- If Deferred Payments are declined, practitioners should advise the customer and / or representative to enquire with the provider what the self-funding rates will be to determine whether this is sustainable for them.
- As a local authority we must always advise the customer / representative to seek independent and / or legal advice with regards to the Deferred Payment Agreement.
This chapter will be updated in the next APPP revision in August 2020 after the new Charging Policy has been implemented.
1. Third Party Top-Ups
Lincolnshire County Council publishes the expected costs for each category of care within a residential or nursing home (please see Contribution to Care Costs). Where the cost of the care home is above the expected cost, then a top-up may be payable.
In most cases, a top-up will be paid by a third party who is willing and able to pay the difference between the council’s usual cost and the actual cost of the home.
The council must be able to offer at least one care home that can meet the person’s needs at the council’s expected cost. If not, the council will pay the expected cost and the top up. If the customer and / or representatives choose a care home with a bed cost above the council’s expected costs, and can meet the person’s needs, a third party top-up will be charged to the family / representative.
The only time a person can legally pay their own top-up is when they have joined the deferred payment scheme. The top-up charge can then be added to the debt that is accruing. This is called a “First Party” top-up; they can also pay from their own resources during the 12 week property disregard period.
Where a care home intends to charge a third party top-up, practitioners must ensure the customer and their representatives are made fully aware of what the agreement entails and the ongoing responsibilities for making the payments. It may be appropriate for them to seek independent legal advice at this stage.
Practitioners must ensure whoever has agreed to pay the top-up is aware that rates may go up or down on an annual basis and placements may be at risk if payments are not made.
Care homes are not allowed to charge more than the price stated in their Schedule of Charges but, practitioners, customers and their representatives may negotiate a lower top-up or for the top-up to be waived. The Contracting Team will tell you the maximum top-up that can be charged by the care home for a specific room. The room number will be required as charges vary from room to room.
It is the practitioner’s responsibility to ensure that the customer (or their representative) and whoever is paying the top-up understands the costs. Practitioners must also ensure the Third Party agreement form is signed and completed prior to placement or within 5 working days of an emergency admission.
A copy of the completed form is held on the person’s record and sent to: CommercialTeamPeopleServices@lincolnshire.gov.uk.
Third Party Flow Chart (Lincolnshire County Council Intranet)
Third Party Agreement Checklist (Lincolnshire County Council Intranet)
Annex A: Choice of accommodation and additional payments in the Legislation, Regulations and Codes of Practice chapter.
2. Property Disregard
Property disregard applies to customers moving into permanent care having had a care needs assessment and a care home is appropriate to meet their needs and risk.
If the person currently owns their own property and has less than £23,250 in savings, they may be entitled to a 12-week property disregard.
This means the property value is not included as an asset when calculating their contributions for the first 12 weeks of permanent care.
They may not be eligible for the 12 week disregard facility if they did not live in their property prior to going into long term residential care.
This time can also be used to decide if they wish to join the Deferred Payments Scheme through a Deferred Payment Agreement or self-fund their care.
If the person does not choose to apply for Deferred Payments Agreement then they will be self-funding when the 12-week property disregard ends and they will need to contract with the home directly. If Deferred Payments are declined, practitioners should advise the customer and/or representative to enquire with the provider what the self-funding rates will be to determine whether this is sustainable for them.
3. Deferred Payment Agreement (DPA)
Under the Universal Deferred Payment Scheme, should the customer choose to join, a Deferred Payment Agreement can take place. This means that after the twelve week property disregard period, the council may be able to lend the cost of care. Interest will accrue throughout the loan and until repayment is made. There is also a one off set up fee of £600 which can also be deferred.
People who are considering long term care and their representatives must be made aware of the Universal Deferred Payments at the earliest opportunity. Practitioners should take a copy of the Deferred Payments Agreement Guidance and the Deferred Payments Agreement Fees to assessments where long term care is a possible consideration.
Practitioners are advised to familiarise themselves with the Deferred Payments Agreement Guidance. Some key areas to be aware of include:
- the payment for care and support is “deferred” and not ‘written off’ – the costs of the provision of care and support will have to be repaid by the customer (or a third party on their behalf) at a later date;
- under the Deferred Payment Agreement (DPA), the council will lend the customer the cost of care so they do not have to sell their house immediately. The customer, or their estate upon them passing away, will need to repay LCC when the house is sold or there is no longer a need for residential care.
Other key areas to be aware of include:
- the customer must own a property;
- Deferred Payments enables the customer to defer the cost of their care fees during their lifetime;
- the Deferred Payment usually ceases when the property has been sold or at the death of the customer;
- a person must be ordinarily resident in Lincolnshire to qualify even if they have property in another county;
- a charge of £600 administration / management is required, along with disbursement costs with HM Land Registry;
- interest is charged throughout the loan while repayment is arranged;
- the interest rate changes twice yearly and is linked to government decisions (determined by the Office of Budget Responsibility);
- a legal charge registered with the HM Land Registry will be applied to the property;
- where a property is jointly owned then the deferred payment applies to the customer’s share of the property, however all co-owners will need to sign the DPA;
- the customer will need to provide valuations of the property and evidence of it being insured while the Deferred Payment Agreement is in place;
- the local authority must be informed of any change in circumstance regarding the property e.g. rental income, value;
- there should be no outstanding mortgage or loan on the property;
- the customer may apply for an allowance to assist with the maintenance of the property;
- if the customer lacks capacity to deal with their finance, property and affairs, they will need an authorised legal representative to act for them;
- letters of intent may be available for those needing Lasting or Enduring Power of Attorney or Deputyship, but which is not yet in place;
- for the duration of the deferred payments the assessed contribution will need to be paid directly to the provider;
- DPA can apply for a leasehold property but depends on the type of leasehold and length of leasehold remaining.
As a local authority we must always advise the customer/representative to seek independent and / or legal advice with regards to the Deferred Payment Agreement.
If you need further advice on Deferred Payments email firstname.lastname@example.org including ‘F.A.O. the Payments Team DPA’ in the subject line.
3.1 Universal Deferred Payment
Universal deferred payment agreements were introduced as part of the Government commitment to ensure that “people should not be forced to sell their home in their lifetime to pay care home bills.” It is designed to help those who have been assessed as having to pay full cost for their residential care but cannot afford to pay full cost because their capital is tied up in their home.
- The payment for care and support is ‘deferred’ and not ‘written off’ and is repaid by the individual (or a third party on their behalf) at a later date.
- Under the Deferred Payment Agreement (DPA), the council will lend the cost of care so they do not have to sell their property immediately.
- The customer, or their estate upon the customer passing away, will need to repay Lincolnshire County Council when the house is sold or there is no longer a need for residential care.
The local authority must offer a DPA to people who meet the qualifying criteria but do not require the local authority to arrange care on their behalf i.e. people who self-fund their own care. In this situation, local authorities can offer both types of DPA: a ‘traditional’ type where it holds the contract with the care home to meet the individual’s needs or a ‘loan-type’ DPA where the person contracts with the care home and is loaned the money by the local authority to pay the care home directly.
When considering the approach as to when or whether to offer loan or traditional type deferred payment agreement, the local authority should have regard to their duties under the Care Act, including their duties under the well-being principle and their market duties. Local authorities cannot refuse to enter into a loan-type deferred payment agreement if the qualifying criteria has been met and the individual requests it.
For more information regarding Deferred Payments, refer to Chapter 9 in the Care Act Care and Support Statutory Guidance.
3.1.1 Traditional type versus loan type Deferred Payment
|Traditional Type Deferred Payment||Loan Type Deferred Payment|
|Ordinarily resident in Lincolnshire.||Ordinarily resident in Lincolnshire.|
|Individual has £23,250 or less in assets other than their main or only home. No outstanding mortgage on the property.||Individual has £23,250 or less in assets other than their main or only home. No outstanding mortgage on the property.|
|Care Act assessment has confirmed need for long term residential or nursing care.||Care Act assessment has confirmed need for long term residential or nursing care.|
|All owners/co-owners must agree to a Legal Charge being placed on the property and all sign the Deferred Payment Agreement.||All owners/co-owners must agree to a Legal Charge being placed on the property and all sign the Deferred Payment Agreement.|
|LCC contracts on customer’s behalf and pay the home the LCC contracted rate.||Service user/representative contracts directly with the provider. The amount loaned is the cost of the care home’s private rate.|
|May be eligible for 12 week property disregard.||There is no 12 week property disregard period.|
|Pay a financially assessed contribution toward the care.||Do not pay a financially assessed contribution unless choose to use rent/income to reduce the debt accruing.|
|Entitled to a Disposable Income Allowance to help toward cost of maintaining and insuring home.||Not entitled to Disposable Income Allowance. Maintenance and insurance of home is at own expense.|
|First/Third Party Top Up may be applicable. May be able to add to the deferred amount.||No Third Party Top Up applies.|
|If choose to rent out house the income will be taken into account in the financial assessment to pay your assessed contribution.||First payment is made after date legal charge is secured.|