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Home Finance Funded Care What is a Financial Assessment for Local Authority Funding?

What is a Financial Assessment for Local Authority Funding?

A Financial Assessment comes after a Care Needs Assessment has been carried out.

financial assessment

Once the services needed are agreed, the council can carry out a financial assessment. It determines how much your parent or relative will need to contribute to pay for their own care. Or – how much the local authority may contribute towards any care costs.

Where care needs are social (assistance with daily living) and, in England, where individual assets are below £23,250, the local authority will assess which one of three categories your parent may fall into in terms of care.

Generally, the higher the level of need, the greater the assistance of Local Authority Funding which ranges from:

  1. Home based care with support in the home
  2. Intermediate care/transitional care designed to help people stay/remain independent-this is only temporary
  3. A place in a residential care home

Here we explain more about a Financial Assessment:


Which assets are included in the Financial Assessment?

All income (property, investments, pensions and benefits); bank and building society accounts, National Savings and premium bonds; stocks and shares; shares in family businesses; regular savings including ISAs.

It is worth noting that parents and relatives should be sure to claim all their allowances and benefits as the assessment will assume they are doing so.  Some disability benefits will not be included in the assessment. 

If one person in a couple is being assessed for care, and if they together have joint bank accounts, joint ownership of the house etc, these will be split evenly in the assessment.  If one person is potentially going to go into a care home, the value of the property is not included in the assessment.

The Local Authority will also look to see if money has been “deliberately” given away to family to reduce the levels of savings in order perhaps have funds below the threshold to pay for care costs.  This is called Deprivation of Assets. 


Thresholds for eligibility in the UK

Current thresholds for eligibility in England are £23,250 in assets and cash for maximum support.

Anyone with more than £23,250 is not eligible for means-tested support. (In Northern Ireland, personal care is free to those aged over 65 who their local authority have assessed. The same applies in Scotland for personal care.)

For more information on the situation in Scotland visit the Care Information Scotland “Where to Start” page.

In Wales, savings above £23,750 mean they will have to pay all of the fees for their care at home or £50,000 (care in a care home)

Read The Money Advice Services’ useful advice regarding the asset limits in financial assessments to get a better understanding.

For anyone with savings below £14,250 the assessment will ensure that they retain a personal expenses allowance of £25.65 per week.

Personal Health Budget and direct payments

If your parent qualifies for help with costs they will be offered a Personal Health Budget and related direct payment, as part of the Government’s move to ‘personalise’ social care. If your relative has been assessed as needing non-urgent help and support, they will also be allocated a personal budget.

They can decide how they receive the money (direct cash payments, council managed account, in a trust) and how they spend it. There is no fixed sum and the amount received is based on their Needs and Financial Assessments. Direct Payments can only be spent on care that has been agreed in needs assessments and records/receipts must be kept to show exactly how the money has been spent.


Paying for carers

If your parent uses direct payments to employ a carer, they will take on responsibilities as an employer. That means tax, national minimum wage, sickness and holiday pay, and liability insurance.

Whether they employ someone for a few hours a week or full time, the same rules apply.

If that sounds a bit daunting, there are people and organisations that can help. Look at local firms who offer payroll services. They’ll handle tax and National Insurance contributions for a fee.

Think about using a home care agency. They’ll deal with all the paperwork, including references and criminal checks, and invoice your parent directly. (Have a look at our guide to hiring a carer/care agency.

If you have a Lasting Power of Attorney, Local Authorities must offer direct payments to you to act on behalf of your relative.


Residential/Nursing Home Fees

Local Authorities have a responsibility to arrange residential care for everyone who is assessed as needing it and who are unable to make their own arrangements. And they also have a responsibility to contribute to the cost of care for people who fit their eligibility criteria and cannot afford to fund themselves.

The average weekly cost of a place in a residential home in England is approximately £900 and significantly more for specialist care such as in a dementia unit. A place in a nursing home costs around £1100 per week. Almost half of the people who currently live in residential homes are fully self-funded and just over one third are fully local-authority funded.

The rules around funding for residential care are based on a means-tested system. Some people – with complex medical needs – may be eligible to receive free NHS Continuing Care which will cover all the health and care fees in a care home. The NHS may also make contributions through NHS nursing care funding paid directly to the care home.

Otherwise, the local authority will assess the individual for financial resources before deciding if they may be eligible for part or full local authority financial support.

Even if your parent is self-funding their care home, they may still be able to claim some contributions in the form of Attendance Allowance, Disability Living Allowance or Personal Independent Payment.

Should the unthinkable happen, and your parents savings start to run out to the point that it takes them below the current thresholds for continuing to afford their care, they then become eligible for local authority funding. This will require both a care needs and financial assessment to assess the level of care and the funding required.

If your parents have chosen a care home that meets the care needs in their local authority care plan, they are more likely to get funding should their financial situation change in the future. However this is complicated – there is a gap between what the local authority will fund, and the cost of care paid by self-funders afor the same room and care often. There is a danger that your parent may need to move home, to one that the local authority contracts its care to.


LA Grants for Home Alterations

Local Authorities can help with funding home alterations and repairs. The first step is to get a professional assessment of the needs. An occupational therapist is most likely to undertake the assessment. If they recommend alterations that will cost less than £1,000 social services will often provide and fit these free of charge, although they might also be funded by your relative’s personal health budget.

If the proposed alterations are major and will cost more than £1,000 you/your relative can apply for a grant from the council to help with the costs. All local authorities in the UK offer grants to help disabled people modify their homes and live more independently and it is called a Disabled Facilities Grant (DFG).

In Scotland, there is a similar grant called a Scheme of Assistance. The kinds of alterations the grant will fund include installation of a stair lift, fitting hand rails, making outside steps easier to use or installing ramps. Have a look at our section of making the home safer and easier to live for useful tips and guidance.

See more in our Complete Guide to Care Needs Assessment

You might also be interested in our sections on Benefits and NHS Continuing Care.


Age Space Podcasts on funding care

We have Age Space Podcast episodes looking at aspects of funding care – finance expert Jason Butler discusses the state benefits available for those in care, as well as those caring for others, and NHS Continuing Care.