Newsletter - Aut/Wint 05/06

Care Fee Top-Up Payments

Can You or Can’t You Pay Them

One of the most contentious issues that arises on the CareAware Helpline is that of care fee top ups and in particular, the reasons why these are required and who can make them.

It is broadly accepted that the contract rate for care paid by Social Services to independent sector homes is not a viable price for the service provided. This is due to a variety of reasons, not least the increased operating costs of care provision in the UK and the continued budget constraints faced by local authorities.

Under normal circumstances, local authorities will limited the extent of their financial support to the contract or tariff rate for care in their area. Due to the financial pressures under which they have operated over the last ten years, many home owners have been forced to accept these terms, even though they do not cover the actual costs of care provision.

Clearly this was an unsustainable position and consequently many homes are now asking residents to make an additional payment to top-up the local authority rate.

However, under the Charging for Residential Accommodation Guidelines, (CRAG), top ups by the individual in such circumstances are not permitted and can only be made by another individual or third party. This situation is often reinforced by the contract terms offered by the local authority to the home.

These restrictions on first party top-up payments under standard Social Services funding arrangements cause considerable distress. Many residents and families see it as unreasonable that their savings, below the upper capital limit, cannot be used as they choose and many feel that if they want to make a top up they should be allowed to do so.

Often families are not in a position to provide a third party top-up and as a result, the basic right of choice may be compromised with individuals prevented from selecting a home which has a higher fee structure than the local authority tariff rate.

When accepting responsibility for funding, many local authorities do not offer a placement to the individual but instead "invite" the family to find a suitable home at the tariff rate, knowing full well that such places are extremely rare or indeed non existent in many areas. This approach tends to divert attention away from the local authority by suggesting that it is the homes who are charging excessive fees rather than the local authority who are offering unviable terms.

In some regions, local authorities effectively turn a blind eye to the practice of first party top-ups, presumably on the basis that if they were to aggressively enforce the rules, it would simply fuel demands from care providers for higher contract rates. However, in other areas, there appears to be a much more rigid approach with social service departments taking every opportunity to intervene in fee price negotiations even for privately funded residents. They will often argue that their negotiating power is able to reduce the normal charges of a home to the local authority tariff rate.

But whatever the motives and reasons, the facts of the matter are that top-up fees are becoming increasingly necessary and it is important that everyone knows where they stand.

CRAG states very clearly that first party top-ups should not be made when funding is provided by the local authority and social services can be expected to enforce this position through their contract. If care providers are unhappy with the situation they should either decline the placement or determine the availability of a third party top-up at the outset and incorporate this into the contractual arrangement.

There are however, two specific circumstances under which first party top-ups can legally be made, whilst local authority funding is being provided. The first is where the resident is subject to the Local Authority 12 week property disregard and during this period, the resident themselves is permitted to make any top-up payment that is required. However at the end of the disregard period, the standard CRAG provisions once again apply.

The second situation is as part of a Deferred Payment Agreement. Under this arrangement, all funding support is paid by the local authority and simply accrues as a debt against the property. As it is ultimately repaid to the local authority it could be argued that this is not technically a top-up position but since it enables the individual to meet the actual charges of a home without reference to a third party, it could be viewed as a further exemption.

Under the alternative funding system with the Department for Works and Pensions (formerly the Benefits Agency), the top-up restrictions do not apply since these funding arrangements do not fall within the remit of CRAG. This only applies if funding is being provided via the DWP without any input from the local authority.

From the perspective of residents and families it is crucial to appreciate that top-up fees are not a surcharge or a premium but simply a balancing charge because the local authority rate is not adequate to meet the actual cost of care. However, the need for the payment can create a significant burden for the family and it is now more important than ever that the financial options to meet this cost are clearly established at the outset and incorporated into the formal terms. To assist and support families, care providers and home owners must engage in greater dialogue to explain the position and encourage families to explore the funding options for top-ups, such as immediate need care plans. In some cases, financial assistance can be sought in the form of a charitable grant. These are provided by a wide variety of organisations and individuals may be entitled to assistance by virtue of their previous occupation or other qualifying attributes.

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