Deferred payment agreements
The right to a Deferred Payment Agreement in England was introduced by the Government in 2015. Similar arrangements exist in Scotland and Wales. In Northern Ireland, there is no formal deferred payment system, but it might still be available, your client can contact their View - Health and Social Care Trust.
If your client is moving into a care home and most of their money is tied up in their home, your client’s local authority might offer them a DPA, which is a long-term loan. It means the local authority will help to pay the care costs until the property is sold or the homeowner dies. At this point, the loan is repaid. The local authority must be paid within 90 days of the date of death or the date the property or asset is sold or disposed, whichever is sooner.
The Disposable Income Allowance
Anyone entering a DPA is still allowed to keep some income to pay for any costs they may incur maintaining the home. This is called the Disposable Income Allowance (DIA) and is set at £144 a week.
- What is the criteria for qualifying?
- What are the cost?
- Who might this be suitable for?
- How can your client apply?
What is the criteria for qualifying?
Eligibility for a deferred payment agreement (DPA) varies across the UK. In England, the qualifying conditions for a person applying are:
- Receiving long-term care in a care home or soon will be.
- Financially assessed as having less than £23,250 in savings, other than their property or pension pot.
- A homeowner or have another asset the local authority can use as security.
Typically, your client can’t use more than 70% - 80% of the value of their home to pay for fees.The local authority will take any pension income and certain benefits towards the cost of care into account before calculating the shortfall. The local authority should also ignore the value of any property for the first 12 weeks and help with funding during this period, so the agreement usually begins when someone has been in a care home for 12 weeks or more.
A legal agreement will be put in place with the local authority and they'll usually put a legal charge on the property to ensure the money owed in care fees will be repaid.