Funding a retirement home: the Deferred Payments scheme

Watson
Watson Posts: 239 Forumite
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edited 28 June 2012 at 7:00PM in Over 50s MoneySaving
My father (87 years old, blind and physically handicapped but mentally perfectly sharp) is no longer able to live alone, even with twice-a-day carers, and has decided to go into a retirement home. He owns his own bungalow (with no mortgage) which has a market value of some £170,000. He has savings of around £16,000 and no investments. His income from state and private pensions is around £1000 a month.

I'm trying to find details of the Deferred Payments scheme. As I understand it, it's rather like a loan taken out with the local authority which uses the bungalow as collateral, but for some reason my web searches haven't turned up any detailed explanation of exactly how the scheme works, its advantages and disadvantages.

I've contacted my father's Care Manager on the subject but she has yet to get back to me. While I'm waiting, if anyone here has any experience in this field, or can point me to a good source of information, I'd be very grateful.

Many thanks.
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  • anmarj
    anmarj Posts: 1,819 Forumite
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    edited 28 June 2012 at 7:19PM
    don't know full info only going by what I have seen at work, it is basically a legal charge on the property that means in the event of any death or sale they will get their money back first before any residual is paid out, not sure of advantages or disadvantages, but sure someone else will be along shortly!

    found this, it relates to Leicester council but should give you some idea

    http://www.leics.gov.uk/index/social_services/asc_support/asc_general_info/social_care_legal_financial_information/asc_paying/social_care_paying_towards_support/asc_care_home_charges/asc_care_home_deferred_payments.htm
  • clemmatis
    clemmatis Posts: 3,168 Forumite
    I found this:

    "People who go to stay in a care home may need to sell their property to pay the care home fees. Where there is a delay in selling the property or they do not want to sell the property immediately, payment can be deferred. If the local authority pays the care home fees it will recover the payment from the proceeds of sale once the property is sold. This is known as a deferred payment scheme.

    A deferred payement scheme is only available if the care home resident has insufficient income to pay for residental care and has less savings than the upper capital limit of £23,250. In these circumstances, the savings do not include the value of their property, but do include other savings such as money in bank accounts.

    How the deferred payment scheme works

    The local authority will put a legal charge (similar to a mortgage) on the care home resident’s property. They then pay the residential care fees in full. The resident is assessed to see whether they're able to pay a weekly charge to the authority. Their ability to pay is based on their income less the personal expenses allowance. Repayment of the money borrowed is deferred until the property is sold or the resident dies.
    The deferred payment scheme is discretionary. This means that local authorities have the choice of agreeing to such a scheme or refusing to enter into it in individual cases. Local authorities should put any refusal in writing, and the complaints procedure can be used to challenge a refusal. For more information about complaints, see NHS Choices links.

    Before considering a deferred payment scheme, you and the person you're looking after must consider whether the property concerned will be disregarded from the calculation of their capital. If so, a deferred payment scheme will not be necessary.
    It's important that the person you're looking after gets independent financial advice before agreeing to a deferred payment scheme. See External links.

    They should also be aware that there may be legal expenses if a legal charge is placed on the property."


    http://www.nhs.uk/CarersDirect/guide/practicalsupport/Pages/Chargingforresidentialcare.aspx
  • Watson
    Watson Posts: 239 Forumite
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    edited 28 June 2012 at 8:30PM
    Thanks for the replies and the links: both very useful.

    Clearly it's a complex area and the suggestion to take independent advice is a good one. I wonder if this is a matter which the normal everyday financial adviser is used to dealing with? Or if there are specialists out there I should be tracking down?
  • If he is going into care for HEALTH reasons - not social reasons - then do NOTHING about finance until you have had him formerly assessed for full funded NHS continuing care.
  • clemmatis
    clemmatis Posts: 3,168 Forumite
    I'd suggest talking to AgeUK


    here's some information about NHS continuing care
    http://www.nhs.uk/CarersDirect/guide/practicalsupport/Pages/NHSContinuingCare.aspx
  • Watson
    Watson Posts: 239 Forumite
    First Anniversary Combo Breaker First Post
    edited 28 June 2012 at 10:06PM
    If he is going into care for HEALTH reasons - not social reasons - then do NOTHING about finance until you have had him formerly assessed for full funded NHS continuing care.
    Even though his combined assets (savings and property) are well over the £23,250 threshold? Surely he's not eligible for any state contribution? Or does that not apply if the care is for health reasons?

    Actually, I'm not entirely clear on exactly where health considerations end and "social" ones begin.
    clemmatis wrote: »
    I'd suggest talking to AgeUK
    That's sounds like an excellent idea, thanks.
  • Pollycat
    Pollycat Posts: 34,657 Forumite
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    I think what Deleted_User is talking about is CHC - Continuing Health Care.

    This is where the Primary Care Trust pays the fees for care.

    From what I've read, it is incredibly hard to get agreed, here is a thread about it:
    http://forums.moneysavingexpert.com/showthread.php?t=800521

    This website has some very helpful guides:
    http://www.counselandcare.org.uk/finding-and-paying-for-a-care-home

    Guide #27 is about CHC.

    There may be something about the Deferred Payments scheme in one of the guides here:
    http://www.counselandcare.org.uk/financial-factsheets

    I would also check that your Dad is receiving all the benefits he is entitled to.
  • Watson
    Watson Posts: 239 Forumite
    First Anniversary Combo Breaker First Post
    Pollycat, many thanks for all that. In particular, the Counsel and Care site has the clearest explanation of the Deferred Payments scheme I've yet seen.
  • Pollycat
    Pollycat Posts: 34,657 Forumite
    Name Dropper First Anniversary First Post Savvy Shopper!
    Oh, I forgot to mention - if you ring up Counsel & Care and tell the the numbers of the guides you want, they'll post them out to you.

    Better than downloading them and reading them on screen or printing them.

    Mine arrived pretty quickly.

    I wasn't sure about Deferred Payments as my parents didn't own property when Dad had to go into a care home last year so I didn't go into that subject.

    Good luck with getting your Dad sorted and settled safely.
  • Watson
    Watson Posts: 239 Forumite
    First Anniversary Combo Breaker First Post
    Pollycat, thanks again. I've printed one of their factsheets, but there are several others there that also look very relevant, so I think I'll give them a call.

    Thanks too for your good wishes.
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