Post No30....The BIG question ‘what happens when the money runs out?’
Posted on 18th June 2023 at 07:00
Introduction
Now then, this is a very important question, and one that is on the mind of almost all who are seeking a care home placement. In this post, I want to look at the threshold for exactly when someone becomes able to access support from the local authority, and what happens when they do.
Before getting started, I would like to make a disclaimer that the decision for what happens when funds deplete is between the care provider, the local authority, and the resident. The purpose of this post is to inform only, and is not a representation of how any care provider should act in these circumstances.
What is the threshold for fund depletion?
When we talk about fund depletion, we are talking about a person’s transition from paying privately for their care to being funded, at least in part, by a local authority (LA). To clear up any jargon that the industry often uses, people who are paying for care from their own monies are known as self-funders, or private funders.
To be recognised as a self-funder, as person must have over £23,250 of total wealth in their name, either in savings, tied up in a property, or both. When a person reaches or is below this threshold, they qualify for a financial assessment from their local authority, and potential ongoing funding.
In a later post, I will discuss state benefits including the 12-week property disregard and deferred payments, but for now the focus is on fund depletion.
Did you know? The government have considered increasing the threshold to £100k, but this has now been delayed.
What do I do when I reach the threshold?
Most local authorities will only speak with families once they get to the £23,250 threshold, which makes pre planning a bit tricky. It would however be advisable to speak with the care provider about the situation in advance, perhaps at around £30,000, so that they are aware.
When the person reaches the threshold, making a call to the local authority’s finance and benefits team is the first step in the process. From here, a financial assessment is set up and at this point the LA is trying to determine if they will fund, and more importantly, how much they can contribute.
Do I need to contribute at this stage?
When a person is being considered for LA funding, it is not as straight forward as the LA simply ‘picking up the bill,’ there are actually a number of different funding contributors:
· The resident – the resident will contribute their income, which could include their pensions and Attendance Allowance (if being claimed).
· The local authority – based on their assessment, the local authority will provide an amount of money that they are able to contribute.
· A third party – a third party basically means anyone but the resident themselves, who is not allowed to top up their own fees (known as a first person top up). It is important to note that a third party (son or daughter for example) is under no liability to contribute, but they may be asked as part of the negotiation.
· The care provider – the care provider may ‘contribute’ by considering a lower fee rate to support the negotiation, although they are under no obligation to do so.
· Funded Nursing Care (FNC) – FNC can be claimed as a separate money stream and adds £235.88 (as of 24/25) per week ‘into the pot’. This means the care provider will charge the LA a lower price but claim FNC to help meet the nursing fee (note, FNC can only be claimed if the person is a nursing resident).
Did you know? Local authorities deal with fund depletion, whereas Continuing Healthcare (the NHS) does not.
Will I have to leave the care home if my funds deplete?
The bullet points above highlight a process, which all people will go through when they reach the threshold. The purpose of the LA’s financial assessment, and subsequent contribution breakdown, is to try and negotiate the persons ongoing stay in the same care home they are currently in.
However, the outcome of this negotiation will nearly always be unknown beforehand, which means there is a chance of both a positive, or negative, outcome for the resident.
There are also differences between local authorities, some may have slightly different policies, budgets, and demographics. For example, if a local authority is based in an area where people choose to retire to, there maybe less monies to go around as the number of older people in the area is higher than neighbouring counties.
What I will say is that in my time working in care homes in Hampshire, I have never lost a negotiation in this regard. In my experience, most care providers do try hard to retain residents whose funds have depleted, but given the number of factors involved it is very difficult to say if the outcome will be positive or not.
Conclusion
Fund depletion is something that almost all families are concerned about. This is because the majority of self-funders fund their care from a depleting pot of money, as opposed to using a Care Fee’s Annuity.
As a result of this known funding method, care providers over the years have improved their processes surrounding fund depletion, but may ask for a minimum amount of time that a person is capable of funding privately, normally around 2-3 years.
When it comes to funding it is important to do research in the early stages, and perhaps consider the services of a SOLLA accredited IFA, who specialise in funding long term care placements.
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Tagged as: Care Industry Insight, Financing Care
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