Deferred payment agreements
A deferred payment agreement is an arrangement with the council that will enable people to use the value of their homes to help pay care home costs. If you are eligible, we will help to pay your care home bills on your behalf. You can delay repaying us until you choose to sell your home, or until after your death.
We offer a deferred payment scheme in Norfolk which allows us to charge interest on the amount owed to us. There is also an administration fee for setting the arrangement up. The fees do not apply to those people who arranged a deferred payment agreement with us before April 2015 as they will continue with the previous scheme.
A deferred payment agreement is only one way to pay for care. To find out more about the options available, you can speak to a financial adviser or seek advice from an independent organisation.
Deferred payment agreements will suit some people’s circumstances better than others’ and not everyone will be eligible. You should be eligible for a deferred payment agreement if:
- You are receiving care in a care home (or you are going to move into one soon) or Supported Living Accommodation (this includes Housing with Care)
- You own your own home (unless your partner or certain others live there)
- You have savings and investments of less than £23,250 (not including the value of your home or your pension pot).
The amount you can defer will depend on the value of your home, which determines your ‘equity limit’. The government recommends that we should use the value of your property and deduct 10% (for selling costs) and £14,250 (the lower capital limit) when working out the equity in your property. The limit on equity is to protect you from not having enough money to pay sale costs of the property (like solicitor’s fees), and to protect us against a drop in housing prices and the risk that we may not get all of the money back.
The money owed to the council from care home bills paid on your behalf during the deferred payment agreement will need to be repaid eventually. This is normally repaid by selling your house, but there are other ways of repaying the money. For example, someone else could pay the money owed, or your family could use any pay-out from life assurance after your death.
A deferred payment agreement will end automatically following your death, and your executor will have 90 days to arrange payment of the money owed. If someone else (like a friend or relative) chooses to pay the bill, then the home will not have to be sold.
If you need care in a care home but your partner lives in your home, then we may exclude the value of your home when we assess your finances to work out how much you will have to pay towards the costs of your care.
A deferred payment agreement is designed for people who are most at risk of selling their home to pay care fees. If you are still living in your own home, you should not need a deferred payment agreement, and there are other ways for them to pay for care (including council support if they have less than £23,250 in savings and investments).
No. We need to make sure that we can invest in the scheme so that people can benefit from it for many years to come. The interest rate and administrative fee will cover our costs, and we won’t make a profit from them.
Your home must be maintained and insured for as long as the deferred payment agreement exists. You could choose to rent your house out – which can be cheaper and/or easier. If you do this you should use the income to reduce the amount you are asking us to defer.
Yes, if you have savings and investments of less than £23,250 and the property is not being disregarded in the financial assessment (you do not have a partner or dependent living in your home) you should be eligible for a deferred payment agreement.
We charge interest on the amount owed to us while we are helping to pay care home bills on someone’s behalf. The interest rate is currently 1.65% (until 31 December 2017) and is set nationally. This is reviewed every six months.
A deferred payment agreement means you should not have to sell your home in your lifetime unless you decide you want to.
Your home and your money still belong to you if you have a deferred payment agreement, so you can of course make gifts to your children. But a deferred payment agreement for care costs will always need to be repaid – either by the sale of your home after your death, by someone else, or by something like the pay-out from a life assurance policy.
If we believe that a person’s home or their money has been given away deliberately to avoid paying care charges, then we have the power to recover any money that we are owed.
During the first twelve weeks you are in a care home, your home is ignored for the purposes of calculating what you might pay and a DPA would usually start after that period. If you are eligible, we should be able to set up a deferred payment agreement within twelve weeks of you moving to a care home but some will be arranged more quickly than this and on the rare occasion, some may take longer.
We will arrange to have your property valued and you can also request an independent valuation if you disagree with that valuation.
The maximum amount of costs that we will pay on your behalf, along with the interest rate and any administrative fees, will be set out at the start of the agreement. These will be reviewed regularly and can be changed.
Any other conditions – for example how the property should be maintained – will also be written down in the agreement.
The executor of your estate should arrange repayment of the money owed to the council, either by putting the home up for sale, or by arranging for another person, such as your heir, to pay. This will usually need to be done within 90 days. If the money you owe is repaid without the home being sold, then the property will be dealt with according to any instructions you have left.
Carers and families can help people to make decisions about their care and how to pay for it. If we are concerned that the person applying for the deferred payment agreement does not have the capacity to understand, or won’t have capacity to understand in the near future, then another person may need to represent them. Only a person who is properly authorised, like someone with legal power of attorney, can represent someone in applying for a deferred payment agreement.