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Living in a care home: how much it will cost you

Detailed information on how your charge for living in a care home is calculated.
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Assessing your finances

After your needs assessment has been completed and it has been agreed that you are going to move to a care home for residential care, your social worker will ask you for a small amount of personal and financial details. They will pass this information on to our Financial Assessment Team.

Using this information and any other information we have on file (for example, if you have had a recent financial assessment for non-residential care), our Financial Assessment Team might be able to tell you how much you will be charged for care without carrying out a full financial assessment.

If more information is required, they will need to contact you (or someone you have nominated to act on your behalf) by telephone, to carry out a full financial assessment. This financial assessment will determine how much you will have to contribute towards the cost of your care.

How we work out how much you will pay towards your care costs

Charging for residential accommodation is complicated and we can't explain all of the rules we need to follow when calculating your charges.

Legally, our charges must be in line with the Care Act 2014. You can read more about this in our adult social care charging and financial assessment framework policy.

Providing us with documents for the financial assessment

During the financial assessment, the supporting documents that we will need to see depend on your circumstances. For example, if you have an occupational pension, we will need to see a supporting document that shows this.

We will need to see recent bank statements or your savings passbooks for all of the bank accounts you have, even if they are overdrawn. If we are missing any supporting documents following a financial assessment, we will tell you.

The fastest way to give us your information is to scan or take photos of the documents required and email them to financialassessment@lewisham.gov.uk.

Alternatively, you can send us copies of your documents via post to:

Financial Assessment Team
4th floor, Laurence House

Please note: If you send us documents by post, please ensure you pay the correct postal charge otherwise your envelope may not be delivered. 

Your care costs depend on several factors

These factors include:

Allowable capital

Allowable capital includes things like savings in a bank account, shares and premium bonds – but not your home (if you own it).

Allowable income

Most income can be taken into account but there are some exemptions that we will apply, based on your circumstances.

Personal allowance

This is the money you are entitled to retain from your income and is determined by the Government. For the year 2016–17 the personal allowance is £24.90 per week.

Savings disregard

If you get savings credit as part of your pension credit, we can disregard up to £5.75 per week for single people and £8.60 per week for a couple from your income for the purposes of a financial assessment.

Tariff income charge

Only relevant if you have between £14,250 and £23,250 allowable capital, in which case: for every £250 above £14,250 you have in allowable capital, we add £1 to your allowable income for the purposes of the calculation. For example, if you have £15,000 in allowable capital, we will add £3 per week as income.

How do these factors determine what you pay?

 If you have allowable capital of ...  your charge for care will normally be ...
 less than £14,250   your allowable income minus personal allowance minus savings disregard.
 between £14,250 and £23,250   your allowable income plus tariff income charge minus personal allowance minus savings disregard.
 more than £23,250   the full (net) cost of care (minus any free nursing care provided by the NHS).

What to do if changes to your allowable capital falls below the upper limit

If your allowable capital is about to fall below the upper capital limit, currently set at £23,250, it is your responsibility to get in touch with us. If possible, it would be helpful to give us three months’ notice before this is going to happen.

If you do not get in touch with us and you continue to pay the full amount for your care, we will not be able to compensate you.

To get in touch, email us at financialassessment@lewisham.gov.uk or write to us at:

Financial Assessment Team
4th floor, Laurence House

How property ownership can affect how you pay for care

If you own your home, and if the property is to be included in your financial assessment, we will disregard the value of the property for the first 12 weeks. This is called the ‘12-week property disregard’.

After 12 weeks, the value of your property is added to your allowable capital. If, as is likely, your total capital at this point is above £23,250, you will be asked to pay for the full (net) cost of your residential care, until such time as your capital (which now includes your property) falls below £23,250.

There are certain circumstances in which we will not take your property into account for financial assessment purposes, such as when a spouse remains at home. At your financial assessment, we will ask you questions to work out whether one of the statutory disregards applies.

Deferred loans

If you own your home and have been told that it will be included in your financial assessment, you may be able to defer the sale of your property by applying for a deferred loan.

When the deferred loan comes to an end, you will be given 56 days to settle any outstanding charges, otherwise a higher rate of interest will begin to accrue. We charge interest at 4% above the Bank of England base rate from the 57th day that the debt remains owing until the day the debt is paid.

A deferred loan comes to an end if you sell the property, if you choose to end the agreement or when you pass away.

To be able to apply for a deferred loan, you must have the mental capacity to be able to enter into a legal agreement with us, or you must have someone with legal authority to do so on your behalf. By legal authority, we mean someone who holds a power of attorney or deputyship.

We apply other criteria when deciding whether to grant a deferred loan. If we have told you that we are taking your property into account in your financial assessment and you are interested in a deferred loan, our Financial Assessment Team can send you an application pack.

If you do not apply for, or do not qualify for, a deferred loan, you will be expected to sell your property to pay for your care, unless you have enough income or savings to cover the full (net) cost. We will normally ask you to make your own arrangements in these circumstances.

If you own your own property and are concerned about how we may treat it for financial assessment purposes, please seek independent legal advice.

How your choice of accommodation can affect the cost of care

You are entitled to choose to apply to any care home in England and Wales that meets your assessed needs.

Different rules apply for placements in Scotland but we can still help with your placement by working with a Scottish local authority.

However, we limit the weekly amount that we are prepared to pay towards your residential accommodation. If you choose to go into a home that costs more than we are prepared to pay, a third party (often a family member) will have to ‘top up’ your fees.

If a third party agrees to top up your care fees, they will have to give us their financial details for a financial assessment of their own. This is to check that the third party will be able to continue to meet the cost of the top-up to your care.

Following this, if all parties are satisfied with the arrangements, we will sign a contract with the third party (or with all of the third parties if you have more than one). The contract will oblige them to continue to pay the top-up for as long as it applies. If the third party fails to pay the top-up in full, we may move you into accommodation that is cheaper or pursue the debt through the courts.

Please note: if you choose a care home that is not set up to meet your assessed needs, we reserve the right to refuse to get involved with your placement. This means that you will have to pay for the full cost of your care (and normal financial assessment rules will not apply).

Giving away assets to avoid paying for your care

Giving away assets (or income), in order to avoid social care charges, is called deprivation. We have the power to overturn such transfers of ownership in most circumstances. You should seek independent legal advice before giving away or disposing of assets that have a marketable value, regardless of the reason behind the transfer.

We can also treat these assets (or income) as ‘notional’, meaning that we will include them in your financial assessment, even if you no longer have the asset (or income).

In some circumstances, we can ask whoever you have given your assets or income to to pay towards your accommodation from the assets or income you have given them.

How going into care might affect the benefits you get

We will give you relevant advice on your state benefits at the time of the financial assessment.

Some state benefits continue to be payable to people after they go into care, while others stop (usually after 28 days of you being in hospital or a care home). Although we can, and sometimes do, let the relevant authorities know of your change in circumstances, the responsibility is yours. Being admitted to hospital and moving into a care home are both changes in circumstances that need to be reported.

How to report changes of circumstances for benefits

Irrespective of which benefits you are claiming, you must report changes of your circumstances to the relevant agencies of the DWP.

Depending on which benefits you get, the numbers to call are:

  • jobseeker's allowance – 0845 603 6347

  • income support – 0845 608 8770

  • employment and support allowance – 0845 608 8770

  • incapacity benefit – 0845 608 8770

  • state pension and pension credit – 0845 606 0265.

For any other benefits, please call the benefit enquiry line on 0800 88 22 00 to find out more.

Failing to report a change of circumstances can result in an overpayment of benefit. If a benefit is overpaid because you have failed to report these changes, you will be asked to repay the benefit that has been paid in error.

Whenever you call a Department for Work and Pensions (DWP) office, you will be asked security questions, such as your full name, National Insurance number, date of birth, the bank account your benefits are paid into, the type of benefits (and the amounts) that you receive. Please have these to hand before calling. The DWP may apply other security criteria, which may change without notice.

Information on how going into care affects some of the specific benefits you might get:

Attendance allowance and disability living allowance (care component)

If you get either of these two state benefits, your entitlement to the benefit will stop after 28 days of you being in a hospital or in care. This rule does not apply if you are paying for the full cost of your care home placement, in which case the benefit will continue to be paid. For queries related to either of these benefits, or to report a change in your circumstances, please ring the Disability and Carers Service (part of the DWP) on 08457 123 456.

Disability living allowance (mobility component)

You are entitled to keep income from disability living allowance (mobility component) no matter who is funding your care. The DWP does not stop paying it when you go into care and we do not include it when calculating your charge.

Important advice on personal independence payments (PIP)

The Government has announced that disability living allowance (DLA) is to stop for people aged 18–64. If you are affected by this, the DWP will write to you to invite you to claim personal independence payment (PIP), which will be replacing DLA.

Nobody will have an automatic right to PIP, even if they already have a lifetime award for DLA, because entitlement for PIP is different from DLA. All DLA claimants will have to apply for PIP when asked to do so. The introduction of PIP will not affect you if you are over 65, even if you are getting DLA.

Special circumstances that affect care charges

There are some groups of people who do not pay towards residential care.

Some people do not pay towards the cost of their residential care because we are not allowed to charge them. These circumstances are explained below:

Section 117

Clients who have been sectioned under the Mental Health Act 1983 may qualify for free after-care, which could include residential care. Section 117 of the Mental Health Act 1983 states that councils are not to charge for any services provided as part of their after-care plan, which can include residential care.

Creutzfeldt-Jakob disease sufferers (or their partners)

Income or capital in a trust, resulting from payments to Creutzfeldt-Jakob disease sufferers or their partners, are ignored for financial assessment purposes.

Clients who have no income or capital

We do have some clients who have no income and little or no capital. We usually cannot charge these clients for residential care until they have any income or capital available. We usually cannot charge these clients for residential care until they have any income or capital available.

Residents going into a care home, or their representatives, should always seek independent legal or financial advice if they are not sure of their rights and/or responsibilities.

How going into hospital could affect the cost of your care

If your placement is considered long term and you get admitted to hospital, you will continue to be charged for as long as you are in hospital, or for as long as we are paying to keep your room or bed available to you.

If you are unlikely to return to the same care home when you are discharged from hospital, it is your responsibility to clear your room in the care home, but please make sure you have spoken to your social worker before clearing your room. If you do not clear your room, the care home will continue to charge us for your room and, in turn, we will continue to charge you.

If your stay in hospital is likely to last longer than 12 weeks, your placement may be ended by us and a new placement arranged when you are ready to be discharged. Your social worker will discuss this with you if it applies.

Getting free and impartial advice

The following organisations offer free impartial advice and you are strongly advised to make full use of their expertise if you need it:

  • Age UK (formerly Age Concern and Help the Aged) 0800 169 6565.

  • Citizens Advice Bureau 08444 111 444 (note: call charges apply) Text relay: 08444 111 445

  • Elders First 020 8699 1177, Stanstead Lodge, 260 Stanstead Road, Forest Hill, London SE23 1DD

  • Lewisham Disability Coalition 020 8314 1414 info@ldcadvice.co.uk , 2 Catford Broadway, London, SE6 4SP

  • Mencap 0808 808 1111 help@mencap.org.uk

Most of the above organisations have local contact addresses. To obtain these addresses (if not already given), please call them.

What to do if you disagree with your charge

Assessment is a legal requirement and must be completed for anyone receiving services which are not funded fully by the NHS.

If you feel we have made an error in calculating your charge, please get in touch with our Financial Assessment Team and ask them to review the assessment.

You will need to state the specific error(s) with the financial assessment and why it is wrong and you may need to provide additional information or evidence when asked.

If you are still not happy with your charge (perhaps because of your circumstances), you can appeal by writing to the Financial Assessment Team by email at financialassessment@lewisham.gov.uk.

Alternatively, you can write by post to:

Financial Assessment Team
4th floor, Laurence House

Please note, we normally like to ensure a review of your assessment is conducted before an appeal will be arranged. If you make an appeal before asking for a review, we may review your assessment instead. If this happens and you are still unhappy with your charge, you can request another appeal.

Complaints, compliments and suggestions

You can make a complaint or give us feedback online.


Financial assessments team

London Borough Of Lewisham Second Floor, Laurence House, 1 Catford Road, London, SE6 4RU