From April 2015, the Care Act introduces new regulations and guidance which allows local authorities to decide whether or not to charge for residential care and non-residential services for the person you care for, and services for you as a carer.

In practice, local authorities are likely to always charge for residential care and non-residential services for the person you care for, unless they are services which must be provided free of charge. However, it is yet to be seen whether local authorities will charge carers for services. Under the current system, most local authorities choose not to charge carers for services, and the hope is that this will continue to be the case.

Once the local authority has completed its needs assessment and/or carer’s assessment, it will agree with the person being assessed which needs will be met. If the local authority has decided to charge for services to meet these needs, a financial assessment will then be carried out. When carrying out the financial assessment, the local authority has to follow these new regulations and have regard to the new guidance.

Only the person receiving the services can be charged for them. As a carer you cannot be charged for services provided to the person you care for, and the person you care for cannot be charged for services provided to you as a carer.

The financial assessment

The financial assessment will look at the income and capital of the person receiving the services (including any share of joint income or capital), and the outcome could be that:

• The person is entitled to receive the services free of charge.
• The person has to pay something towards the costs of the services they receive.
• The person’s income or savings are above the threshold and so the local authority does not have to provide them with any services. In this situation, they can still ask the local authority to meet their needs, however the local authority can not only charge for the services provided, they can also charge for the cost of arranging and managing those services. Note that you will not be able to ask the local authority to do this if you are assessed as needing residential care, although this may change in the future.

This is how the local authority work out what you will pay:

• Step 1: They decide which services they will provide and their cost.

• Step 2: They check if the person has savings or assets (capital) above a certain amount (see below).

• Step 3: They work out how much income the person has coming in (see below).

• Step 4: To ensure that the person has enough money to live on the local authority has to leave them with a protected amount. For residential care this amount is called the Personal Expenses Allowance (PEA) which from April 2015 will be £24.20 a week (this amount can be increased in certain situations). For non-residential services and services for carers this amount is called the Minimum Income Guarantee (MIG) which is equivalent to Income Support or the Guarantee Credit element of Pension Credit (plus any relevant premiums excluding the severe disability premium), plus a buffer of 25%.

• Step 5: The local authority will charge an amount from the person’s income and capital above the protected amount.

Capital

The upper capital limit for 2015/2016 is £23,250. This means that if the person has capital over this amount, they will pay the full cost for any services they receive.

The lower capital limit for 2015/2016 is £14,250. This means that if the person has capital below this amount, it should be ignored for the financial assessment.

If the person’s capital is between £14,250 and £23,250, £1 a week for every £250 is taken into account as income. So, if the person has capital of £4,000 above the lower capital limit, £16 will be taken into account as income a week.

For residential care, the value of the person’s home may be taken into account as capital. However, there are exceptions to this rule such as when certain people will remain in the home, so do get further advice from the Carers UK Adviceline.

For non-residential services and services for carers, the value of the person’s home should not be taken into account as capital.

Income

When deciding how much income the person has, only some income is taken into account.

Certain types of income are always ignored including:

• earnings (employed or self-employed)
• the mobility component of Disability Living Allowance (DLA) or Personal Independence Payment (PIP)
• Child Benefit and Child Tax Credit

The local authority can treat disability related benefits, such as the care component of DLA, the daily living component of PIP, or Attendance Allowance as income. If they do, they should deduct any disability related expenditure before they take it into account as income. So, if the person gets PIP paid at £54.45 a week but has £40 a week of disability related expenditure the local authority can only treat the income from PIP as £14.45 a week.

Here is a list of some examples of disability related expenditure:

• laundry and specialist washing powders
• special dietary requirements
• special clothing or footwear
• extra bedding, for example, because of incontinence
• extra heating or water costs
• garden maintenance, private cleaning, or domestic help, if needed because of disability and not provided by social services
• privately arranged care services, including respite care
• the purchase, maintenance and repair of disability related equipment
• transport costs needed because of disability, over and above the mobility component of DLA or PIP

This list is not exhaustive. Other items can be included as long as they are reasonably needed for the person to live at home.

Changes from April 2016

Capital

From April 2016 the upper and lower capital limits will increase. As things stand, the government have announced the figures below as the new capital limits, but regulations confirming this have not yet been published, so this may be subject to change.

The upper capital limit for residential care where the value of someone’s home is included will rise from £23,250 to £118,000. The upper capital limit for residential care where the value of someone’s home is not included will rise from £23,250 to £27,000. The upper capital limit for non-residential services and services for carers will rise from £23,250 to £27,000.

The lower capital limit for residential care, non-residential services, and services for carers will rise from £14,250 to £17,000.

These changes mean that from April 2016 people who have capital and who were previously receiving some help from the local authority might receive more help, and people who have capital and who were previously self-funders might receive help for the first time.

The capping of care costs

From April 2016, there will be cap on the maximum amount of care costs someone has to pay during their lifetime, for both residential care (see note) and non-residential services. As things stand, the government have announced that the cap will be set at £72,000 for those of retirement age, but regulations confirming this have not yet been published, so this may be subject to change.

Once the local authority has carried out an assessment for the person being cared for, they will work out the cost that they think is sufficient to meet the person’s needs. The local authority will then carry out a financial assessment to work out whether the person will need to contribute towards this cost and if so how much. This figure (the amount the person contributes) will be recorded in their ‘care account’.

If the person choses care services which are more expensive than the local authority thinks is sufficient, the extra money the person pays will not be recorded in their ‘care account’.

When the cap is reached, the local authority is responsible for all further costs which are sufficient to meet the person’s needs. Again, if the person choses care services which are more expensive then the local authority would not be responsible for these extra costs.

Note: The care account excludes daily living costs if the individual is in residential care. It has been announced that £12,000 of care home fees in 2016-17 will be treated as daily living costs for this purpose. Therefore, only contributions to care costs in excess of £12,000 and within the local authority’s cost-of-care estimate will get credited to the individuals care account. Also, people will be liable for charges for daily living costs even when their accrued care costs pass the cap.