NAFAO Conference

18 October 2012

David Hayward – Department of Health

Universal Deferred Payments:Designing the new scheme

DH template2

Cost of average length stay in a

care home

Few people can afford residential care without selling their home• 60% have less than £25k in savings (around 1 year in care)• 80% have less than £75k (around 3 years in care – the average stay)• 40,000 homes are sold each year to pay for care

Perc

entil

e of

ove

r 65s

(Eng

land

)

Amount of savings (liquid assets)

Total amount of Liquid assets (i.e. savings)

English Longitudinal Survey of Ageing, Wave 4, 2010

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Selling the home is a major step at a difficult time People may want to defer for practical, financial or emotional reasons.

Practical

Selling a home is difficult at short notice

Home may need doing up, possessions moved etc.

People may lack capacity

Financial

It can take time to obtain a reasonable sale price

Family members may want to own / occupy the home

Home could be rented out to help pay for care

Emotional

People are attached to their homes

Last tie to family, community and independence

A sale can be distressing

“Although the family know their mother will never return to her home, she said that it has been important for her mother to know that the house is still there. Ms. C said that her mother often talks about the house and it is a comfort to her knowing that her son still lives there.” (from a 2010 focus group on DPAs)

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Since 2001, support has been available for people who face selling their homes to pay for care

12 week property disregard

Availability

Universal – all local authorities

Anyone with <£23,250 in savings

What it does

Provides 12 weeks pause to give time to transition, arrange affairs and start selling the home.

Deferred Payment Agreements

Availability

Discretionary – some authorities

Voluntary Agreement with resident

How it works

Authority allows person to defer paying contribution from assets

Legal Charge placed on the property to secure repayment at later time.

What it does

Allows person to defer sale of home

Used by some as “breathing space” e.g. for 1-2 years

Used by others to defer for longer, e.g. repaying after death

How it works

Person pays care fees from income

Authority pays excess so person does not have to use savings or housing wealth for first 12 weeks.

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Provision of Deferred Payments is Patchy

• Authorities have discretion whether and when to offer deferred payments• Government does not fund deferred payments and authorities cannot charge interest• 2007/8 FOI and more recent surveys suggest provision is patchy

• Some authorities have hundreds of deferred payments• Some offer them less frequently, or as an exception• Some may not offer deferred payments at all

Based on FOI and Surveys (DH does not collect its own data)

Some authorities also use HASSASSA to help people defer care fees

Around £80m (total) is currently loaned out to individuals

Around 4,000 deferrals are made each year (DPA or HASSASSA)

Provision of Deferred PaymentsBased on 2007/8 FOI data

0

5

10

15

20

25

30

35

40

45

0 15 30 45 60 75 90 105

Authorities (of 120 responses)

Nu

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f D

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adm

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Government has committed to Universal Deferred Payments

• Availability of DPAs is ‘patchy’

• Government should extend the deferred payments scheme to be a full, universal offer across the country.

• Anyone unable to afford care without selling their home should be able to choose a DPA

• Allow Councils to charge interest to recover costs

• We agree with this recommendation

• Deferred Payments will operate in LAs from April 2015.

• No-one will have to sell their home in their lifetime

• People can defer ‘reasonable’ care fees

• Interest and charges should apply

• Govt will fund authorities to offer the deferred payments

The draft Care and Support Bill contains the legal powers to introduce deferred payments in all authorities

Dilnot Commission (July 2011) Caring for our Future (July 2012)

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July 2012 Easter 2013 2014 April 2015Autumn 2012

Timeline for the next three years

White Paper Care and Support BillEngagement All Councils

offer DPAs

Announced Universal DPAs

Work with Care Sector to design

the scheme

New legal framework

Implement new systems,

information etc

Enabled by Govt funding and new legal

duties

Preparation

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Deferred Payments – The Future

• Built on the current system

• Operated by local authorities (all authorities)

• One legal mechanism for deferral agreements

• Clear and consistent legal rules – we will work with the sector on what these will be

• Funding from Government to help authorities finance the loans

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Major Design Questions

Eligibility

Lending

Interest

Demand

• Which residents should be eligible for a DPA?

• Are any restrictions necessary to manage risk?

• What are ‘reasonable’ care fees? (in the market context)

• What contribution should people make from income?

• Setting an interest rate or admin fee that is fair to individuals but helps authorities cover their costs

• How many people will take up a deferred payment?

• How long will people want a loan for?

These issues all affect the overall cost of the scheme to authorities and the funding Government would provide

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DH / NAFAO / ADASS survey

• We are surveying authorities on deferred payments and use of HASSASSA charges

• Survey will launch in late October

• Your responses will help us design the scheme

• Key issues we want to understand– Council policies on allowing people to defer care fees– Costs to Councils – How quickly are loans repaid– Practicalities

• Confidential (we will keep your responses private)

• Please take part

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We would like your views on four questions…

FOR GROUP DISCUSSION AND FEEDBACK

Demand:

• What do you think the demand will be for deferred payments?

• What proportion of people will want short-term “breathing space” and what proportion will want a longer / lifetime loan?

Implementation:

• Could we improve the process for setting up a deferred payment? What works well now and what does not?

• What are the biggest challenges to local implementation of universal deferred payments?

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Thank You