Everything in CF8 leads to one question: who pays. The answer comes from two separate assessments, and confusing them is the single most common error in the exam.
Two assessments, not one
The needs assessment decides what care a person requires. It is carried out by the local authority, it is free, and eligibility is judged against national criteria based on outcomes the person cannot achieve without support.
The financial assessment decides who pays for that care. It looks at capital and income.
A person can pass the needs assessment and still pay for everything themselves. They are then a self funder, but they remain entitled to information, advice and a care plan, and can ask the local authority to arrange the care for them.
The means test in England
| Capital | Treatment |
|---|---|
| Above £23,250, the upper limit | Full self funding |
| Between £14,250 and £23,250 | Local authority contributes, and capital produces tariff income of £1 a week for each £250 above the lower limit |
| Below £14,250, the lower limit | Capital ignored, but income is still assessed |
Capital includes savings, investments, second properties and, in most circumstances, the value of the main home for permanent care home stays. It does not include personal possessions, the surrender value of a life assurance policy is excluded, and an annuity in payment is treated as income rather than capital.
Income is generally taken into account in full for a care home resident, including state pension, private pensions, most benefits and tariff income, but the resident must be left with a personal expenses allowance. For care at home, a minimum income guarantee applies instead and the rules on which income counts are more generous.
Where a couple hold a joint account, the usual approach is to treat half as belonging to each. Attendance allowance and the care component of other disability benefits stop after a period in local authority funded care.
The property rules
The home is not always in the calculation, and knowing the disregards earns marks.
- Mandatory disregard where the property remains occupied by a spouse or civil partner, a partner, a relative aged sixty or over, a relative who is incapacitated, or a dependent child
- Twelve week property disregard at the start of a permanent care home stay, giving time to arrange a sale or a deferred payment
- Discretionary disregard where a carer has lived there, at the authority discretion
- Temporary stays in a care home do not bring the property into account at all
Deferred payment agreements
Where the property is counted and the person does not want to sell immediately, a deferred payment agreement allows the local authority to pay the fees and take a legal charge over the home. Interest accrues and administration charges apply, and the debt is repaid from the eventual sale or from the estate. It is not free, but it removes the pressure of a forced sale, and it can be combined with renting the property out to reduce the amount deferred.
Deprivation of assets
Where a person has intentionally reduced their assets to avoid care charges, the local authority can treat them as still owning notional capital, or recover the charge from the person who received the asset. There is no fixed time limit equivalent to the inheritance tax seven year rule, and the authority looks at the timing of the disposal, whether care need was reasonably foreseeable and the motive.
The practical consequence for advice is important. Gifting the home to children to avoid care fees is not planning. It risks a deprivation finding, exposes the property to the children divorce or bankruptcy, creates a capital gains tax problem on eventual sale and may be a gift with reservation of benefit for inheritance tax.
NHS responsibilities
Where a person primary need is a health need, NHS continuing healthcare funds the whole package, including accommodation in a nursing home, and it is not means tested. Where a person in a nursing home does not qualify for full continuing healthcare but needs registered nursing care, NHS funded nursing care contributes a weekly amount towards the nursing element. Aftercare under mental health legislation is another route to fully funded care.
Differences across the United Kingdom
- Scotland provides free personal care to adults assessed as needing it, with an additional amount for nursing care, and its capital limits differ from England
- Wales applies a single, considerably higher capital limit for residential care, and caps the weekly charge for non residential care
- Northern Ireland operates through health and social care trusts, with domiciliary care generally provided without charge
Always answer to the jurisdiction the question specifies, and if a question does not say, England rules are the default.
Exam technique
Set your working out in order. Identify permanent or temporary care, apply the property rules, total the capital, apply the thresholds and tariff income, then add the assessable income and deduct the personal expenses allowance. Written out in that order the answer is almost mechanical, and it is easy to check.