Social Security
Ministerial Decision Report
In December 2013, the States Assembly approved various propositions in respect of the long-term care scheme. P.99/2013 set out the details of the scheme and was accompanied by 7 items of primary legislation and regulations required to implement various aspects of the Long-Term Care Law.
Preparations for the introduction of the long-term care benefit are well underway and the new scheme will start on 1 July.
As noted in P.99[1], the long-term care scheme will only be available to adults who have lived in Jersey continuously for at least 10 years and for the year before they make a claim. Support for individuals with long-term care needs who do not satisfy this condition, but do meet the residency requirement under the Income Support Law, will continue to be provided through the Income Support Law.
The Income Support (Special Payments) (Long-Term Care) (Jersey) Regulations 201- provide fully means tested support with long-term care costs to this group of claimants.
This support will be available to people who:
- are aged 18 or above
- have lived in Jersey for at least the last five years, or for a continuous period of 10 years in the past[2]
- have high-level care needs
- are receiving care in an approved care home, or through an approved care package in their own home
- have assets (excluding the value of the family home) below the income support capital disregard level of £13,706 for a single person, or £22,719 for a couple.
- Are unable to afford their care costs from their household income, having made allowances for other essential household expenditure.
- Are not eligible to receive support under the Long-Term Care Law.
In the event of a home owner needing support with long term care costs through the Income Support Regulations, this will be available as a loan secured against the value of any property owned in Jersey by the claimant and/or their partner. The loan will be covered by the Social Security Hypothecs Law, or the Security Interest Law, and will be repayable if the claimant chooses to sell the family home, or following the death of the claimant. However, if the claimant’s partner or their long-term carer continues to occupy the family home, the loan is not repayable until that person leaves the home.
The value of the support available will depend on the care level of the individual, with four separate care levels available. The rate for each level will match that used in the long-term care scheme. In addition to care costs, a standard amount is provided in respect of living costs in a care home, with an additional amount available for personal spending.
For people receiving care at home, these Income Support regulations will assist with the cost of care, with the main income support scheme supporting other household expenses such as rent and day-to-day living costs.
The income of both the claimant and their partner is taken into account in calculating the level of support available, with allowances made for the living costs of the partner, and other essential costs, such as liability for income-tax, social security and long-term care contributions.
Comparison with the Long term care scheme
Most of the benefit rules used to calculate the value of benefits under these Regulations follow those of the main LTC scheme with the following two exceptions:
- Claimants will continue to contribute towards their total care costs for the full duration of their time in care. Under the Long-Term Care Law, the LTC benefit is available once the standard care costs of an individual have met the care cost cap.[3] There is no care costs cap for Income Support claimants.
- The asset disregard is set in line with other income support claimants. Under the long-term care scheme an asset disregard of £419,000 will be used to protect the value of the family home and other household savings of claimants. Individuals receiving support with long-term care costs under the Income Support Law will be subject to an asset disregard of £13,706 for a single person, or £22,719 for a couple. Claimants will be required to use up the value of any savings or other assets above this level before they qualify for any financial assistance. Home owners will also be able to receive support with long-term care costs through the income support scheme using a loan secured under a Social Security hypothec, but there will be no protection of the value of the family home.
In all other aspects, the calculation of financial support under the Income Support Special Payment Regulations will follow the calculations under the LTC Law.
Details of Income Support (Special Payments) (Long-Term Care) (Jersey) Regulations
Regulation 2 identifies the eligibility criteria to receive support for long-term care costs under the Income Support (Special Payments) (Long-Term Care) (Jersey) Regulations. The following table summarises the main criteria against those of the Long-Term Care Law itself.
Test | Long-Term Care Law | Income Support Regulations | IS regs reference |
Age | 18 or above | 18 or above | 2(1)(a) |
Residency condition | 10 years as an adult; including /plus 12 months before the beginning of the claim* | Five years immediately before the claim; or 10 years at any age* | 2(1)(b) |
Care needs | The person has established permanent care needs | The person has established permanent care needs | 2(1)(c) |
Provision of care | The person is receiving care in an approved care home or through an approved care package | The person is receiving care in an approved care home or through an approved care package | 2(1)(d) |
Means test | A universal benefit is available under the LTC scheme which is not subject to any means test; Additional LTC support and LTC loans are based on a means test which includes an asset disregard of £419,000 | All benefits are subject to a means test. The asset disregard is limited to £13,706 for a single person and £22,719 for a couple. | 2(1)(e) 2(2) 2(3) |
* Additional rules apply in certain situations
Regulation 3 provides for means tested assistance and loans in respect of long-term care costs. If the family home (the principal residence) is not owned by the claimant or their partner and the other assets of the claimant and/or their partner fall below the relevant asset disregard (£13,706 or £22,719), then weekly special payments are available to support the cost of long-term care that the claimant cannot meet from their income.
If the claimant and/or their partner own the family home, then support is calculated in the same way but is provided in the form of a loan which is secured against the property owned by the claimant and their partner. Support continues to be provided as a loan whilst value remains in the principal residence.
The repayment of a loan made under these Regulations follows the same rules as the Long-Term Care Law - the loan is due for repayment if the claimant sells the family home or on the death of the claimant. However the loan does not need to be repaid whilst the claimant’s partner or their previous full-time carer continue to live in the family home.
Regulation 4 relates to home-owners who have already received support (i.e. up to 30 June 2014) through the existing income support legislation for long-term care costs by way of a loan.
One of the legal changes that has been approved by the States as part of the overall long-term care scheme is the introduction of the Social Security Hypothecs Law. This new law allows the Minister for Social Security to register a charge against property to secure a loan that does not have a fixed value but builds up over time in respect of the care costs to be met by the claimant.
There are approximately 50 claimants who are currently receiving support through the Income Support Law for their long-term care costs through loans. These claimants have confirmed through a written agreement that the loan will be repaid but, until now, there has been no simple process available to secure this commitment (as the value of the loan increases during the time spent receiving care).Regulation 4 allows the existing amounts borrowed to be covered by the new Social Security Hypothecs Law.
Subject to States approval, these Regulations will come into force on 1 July 2014 at the same time as the full extent of the Long-Term Care Law comes into operation.
Details of Long-Term Care scheme
The States approved P.99 on December 11, 2013 and endorsed Sections 1.1 to 1.8 of the report accompanying P.99 which summarised the details of the benefits that are planned under the long-term care scheme. The Long-Term Care (Benefits) (Jersey) Order 2014 sets out these details. The Income Support Regulations use many of these details and some accompanying notes are included as an appendix to this report. The Long-Term Care (Benefit) (Jersey) Order - R & O.43/2014 made on 1 May 2014 refers.
Financial and manpower considerations
The Social Security Department currently provides support for long-term care costs through the income support scheme and staffing and budget is included within the departmental business plan and tax-funded cash limit.
Following the implementation of the Long-Term Care Law, most of the existing budget will be transferred into the new long-term care fund. 10% of the existing budget will be retained within the income support budget to provide funding for individuals who require assistance under Regulations 2 or 3 but do not qualify for the long-term care benefit itself.
As set out in P.140/2013 Addendum, the retained budget for these costs in 2014 amounts to £1.0 million (6 months) and £2.0 million for 2015.
Appendix
Overview of Long-Term Care Benefits Order
Article 1 provides definitions of words and phrases used in the Order.
In particular, the principal residence of the claimant is the family home that they occupy, or used to occupy before moving into care. It can also include a new property that is purchased with the proceeds from the previous family home, after the claimant moved into care.
A partnership under the LTC Benefits Order includes partners who are married or in a civil partnership or have a relationship that is similar to marriage or civil partnership. If a claimant begins a relationship after they have started to receive care, that relationship is not recognised under the LTC Benefits Order. This is relevant as the assets and income of the partner are taken into account when calculating the amount of means tested grant or property loan that the claimant may receive.
Article 2 provides a detailed definition of asset for the LTC Benefits Order. Assets include all types of property, capital, investments and savings, held anywhere in the world. This Article also deals with the divesting of assets.
- If an asset worth more than £5,000 is sold for less than its true value or given away during the 10 years before the claimant applies for an LTC benefit, or
- if the claimant has transferred the ownership of the family home, but has retained life enjoyment, at any time in the past,
then the full value of the asset/home is included in the calculation of any financial support, unless the claimant can show that the reason for the gift was not connected in any way with increasing the claimant’s eligibility for receiving an LTC benefit. Note that this does not affect a claimant who has been given the life enjoyment of a property.
Article 3 provides a definition of a carer. If a carer is living with the claimant in the family home, or continues to live in the family home after the claimant has moved into a care home, the carer is given certain rights under the LTC Benefits Order.
Article 4 provides a definition of deemed income. One of the major features of the LTC scheme is to provide a generous disregard in respect of family assets. When the scheme starts in July 2014, an individual will be able to claim support from the LTC fund, even if they have assets of up to £419,000. However, this support will be means tested and claimants will be expected to produce a reasonable income from the assets that have been disregarded. This could be rental from the family home that is now empty or income from savings and investment or a combination of both. In some cases, individuals may choose not to produce an income from their assets and, in this case, a deemed income will be included in their benefit calculation. The deemed income will be set at a reasonable market level to reflect the actual income that could be achieved from the asset. If the claimant, claimant’s partner or carer remain living in the family home, there is no need to produce any income from the value of the home, whatever its value, and no deemed income is calculated.
Article 5 provides a definition of dependant. Whereas the majority of people claiming LTC benefits will be elderly, the LTC scheme also covers younger adults who may need care following an accident or a serious illness. The calculation for financial support includes allowances for other family members, including children and young adults still living in the family home. The definitions used are in line with the income support definition of household. If a claimant is receiving care at home and is living with his or her family, it is possible to receive income support to assist with day-to-day living costs and long-term care benefits to assist with care costs at the same time. It is therefore helpful to use the same definition of household members.
Article 6 provides a definition of income. In order to qualify for financial assistance through a weekly benefit payment or a property loan, the claimant and the partner must provide details of all their income. Having established the gross income of the household, various deductions are made to ensure that the claimant can continue to meet a range of basic costs. The deductions include allowances for:
- Social Security contributions, long-term care contributions and income tax payments
- property costs associated with a property that has been rented out
- property costs associated with a property that is being lived in by the claimant or their partner
- living costs for the claimant if they are being cared for in their own home
- living costs for the claimant's partner and any dependents
If the claimant or the claimant’s partner is receiving earned income, an allowance is made for this and any amounts received from charities or as fostering allowances are fully disregarded.
An additional allowance can be provided, depending on the household circumstances. For example, this could be to meet the cost of a maintenance agreement in respect of an ex-partner, or to cover the cost of school fees for a limited period, to allow a student to complete external exams.
If both partners are receiving care at the same time, their joint income is calculated and used to pay towards the care of partner 1[4] first, with any excess then being allocated to partner 2.
Article 7 provides a definition of loan. For properties that are bought and sold through the Royal Court, the loan is secured under the Social Security Hypothecs Law or for properties purchased using share transfer agreements, the loan will be secured under the Security Interests Law. In both cases the property used as security must include the family home (the principal residence).
Article 8 sets out the weekly values of the LTC benefit for different care levels. Four care levels are included, with level 1 being the lowest level of care that is included in the Long-Term Care Law, up to level 4. For each care level a separate standard care cost is defined in respect of care provided in a care home. In the first version of the LTC Benefits Order the rates quoted are those set out in P.99. A revised version of the LTC Benefits Order will be approved prior to 1 July, setting out the benefit rates that will apply when the scheme comes into effect. A single rate is quoted in respect of all care levels for residents of group homes run by Les Amis and the Health and Social Services Department. Separate rates will be established in this area by 2016.
Article 9 sets out the basic conditions to receive the universal long-term care benefit. Three types of cost associated with care are identified and the claimant is responsible for paying towards these costs. The costs are:
- 9(b): the cost of standard care (as shown in the table in Article 8) – this liability is limited by the care costs cap
- 9(c): for individuals receiving care in a care home, a standard contribution towards the weekly costs of living in the home plus a standard amount for incidental expenses
- 9(d): additional costs associated with receiving care.
The LTC benefit is paid at the rate set out in Article 8 and does not depend on the income or assets of the claimant. However, it is only available once the claimant has incurred care costs up to the care costs cap (see Article 10).
Article 10 gives details of the care cost cap. The amount of £50,000 will be updated in line with the increase in the benefit rates in advance of 1 July. For a couple, the care costs cap is also reached if the total accrued by both partners reaches £75,000 before the individual cap of £50,000 is achieved.
Article 11 sets out the conditions for a claimant to receive financial support in the form of weekly grants. This support only covers the cost of standard care and standard weekly costs in a care home. Assets that are below the asset disregard are not included in the calculation, but any assets above the asset disregard must be used towards these costs, before any financial support is provided.
Article 12 sets out the conditions for a claimant to receive financial support in the form of a property loan. The loan will accumulate as care costs build up. Loans are provided in two separate situations:
- If the value of the claimant's principal residence is above the property disregard, a loan is available to meet any of the care costs set out in Article 9.
- If the value of the claimant's principal residence is below the property disregard, or a loan has built up to take the net value below the disregard, a loan can be provided to cover deemed rental income (if the property has been left empty) and/or any additional costs, over and above the standard costs. In this case, a loan is only provided if the claimant can sustain these costs for at least five years using their income and assets.
Article 13 considers the value of the principal property and the other assets of the claimant and identifies asset disregards. If the capital assets of the claimant (and partner) are valued at less than £419,000, all these assets are completely disregarded in the benefit calculation. Where assets exceed £419,000, Article 13 determines the value of the principal property that is disregarded, and the value of the other assets that is disregarded.
Article 14 deals with the valuation of assets and income, and requires the claimant (and their partner) to advise the Department of any change in their circumstances that could affect the value of their claim.
Article 15 sets out the time at which a loan becomes repayable. This will be if the claimant sells the family home whilst they are still alive, or at the date of their death. However, if the claimant's partner or carer remain living in the family home, the loan is only repayable when that person leaves the property. This Article also confirms that any loan bears interest at 0.5% above the Bank of England base rate at that time, with the total compounded on an annual basis.
Article 16 confirms that the Order will come into effect on 1 July. However, as noted above, the intention is to revise this Order before then to establish the initial benefit rates for the scheme.
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