Since 2002 deferred payment schemes have been available for care home residents however, many are unaware of their availability.
Care home residents who have insufficient income and capital (excluding the value of their property) to meet care home fees may enter into an agreement with their local authority to defer payment of part of their contribution towards care costs. They can settle these sums with the local authority at a later date when their home is eventually sold. A deferred payment agreement is an agreement between the resident and the local authority. The agreement defines the portion of the resident’s care fees to be deferred and effectively grants a standard security in favour of the local authority over the home to cover the deferred amount.
Eligibility to enter this type of agreement is restricted to those who;
- Are assessed as needing a care home place
- Have capital at or below the lower threshold limit (when resources excluding the value of their home have been assessed)
- Would not normally have their home disregarded from a financial assessment
- Do not wish to sell their home or are unable to sell it quickly to meet the care costs. However, they can grant a standard security in favour of the local authority against the home to cover the reasonable estimate of the total likely to be due to the local authority (which is likely to be any deferred payment plus subsequent interest).
Deferred payments are interest-free until the agreement is terminated by the resident or 56 days after the resident’s death (whichever comes first). Interest is then charged at a “reasonable” rate as determined by the local authority.
Each local authority should provide clear guidelines as to how they will prioritise between different applicants seeking to enter deferred payment agreements. The local authority also have discretion whether to defer part or all of any top-up payment due by the resident.
Should you require any additional information on the deferred payment scheme or any other aspect of care costs, planning for your future by preparing Wills, Powers of Attorney or Advanced Medical Directives please do not hesitate to contact a member of our Private Client Team who will be happy to assist.