Deferred Payment Scheme

A deferred payment scheme gives flexibility as to how and when you pay for your care and means you will not be forced to sell your home during your lifetime to pay for care.

The Deferred Payment scheme is a legal arrangement with the Council to enable you to defer or delay paying the costs of your care. 

The Council will pay for your care but will secure the amount being deferred by placing a legal charge against your property as security for the debt. 

Any money which the Council pays out in these circumstances is repayable when the property is sold or when the care is no longer required.

The scheme is available to:

• an individual who has capacity or by someone who is their legally authorised representative, i.e. someone with a lasting power or attorney or a financial & property deputy under the Court of Protection.
• individuals who own a property
• individuals who have been assessed as requiring residential or nursing care in a care home and the council has arranged the placement for them
• individuals whose savings and/or other assets are below the maximum capital threshold (less than £50,000 2024/25)
• individuals who do not have sufficient weekly income to meet the full cost of their care
• Individuals who are unable to sell their home quickly enough to pay for their care.
• those who have a beneficial interest in a property they have been living in which is worth enough to cover the assessed charge
• those who pay a weekly contribution based on an assessment of income and assets

The following conditions apply:

• the property has not been disregarded as part of the financial assessment process.
• your other capital assets (not including your property) are below the maximum capital threshold and you do not have sufficient weekly income to pay the full charge.
• you are in agreement with all the terms and conditions of the deferred payment agreement offered.
• any other person who has an interest in the property consents to the deferred payment agreement.
• the Council is able to create the first charge on the property as security for the debt. When we refer to a first charge, we mean that the local authority's charge will take priority over any other legal charges, for example often mortgages will be secured by a legal charge against the property. 

After being assessed as requiring residential or nursing care in a care home everyone is offered a financial assessment to determine how much they will pay towards the cost of their care.   This will be undertaken through the Financial Assessment Team.

As part of the financial assessment, for the first twelve weeks your previous main residence is disregarded from the calculation. Any other property or land that you have an interest in is included in the financial assessment from day 1 of your care home placement.

From the 13th week your previous main residence will be included in the financial assessment and the amount you are required to pay per week for your care may be higher than your income.

You will be expected to pay the income element of your charge, i.e. the part of your charge that will be covered by the income you receive/are entitled to receive (e.g. DWP benefits, Occupational Pension, rental income) to the Council and the balance of the charge which relates to your property will be deferred.

Following the financial assessment this will give you the opportunity to consider the best way in which to meet the cost of your care, you could choose:

• to sell your property
• to enter into a Deferred Payment agreement
• to pay the full charge from your disregarded liquid capital (i.e. the liquid capital you hold, up to the capital threshold, currently £50,000.00) or disregarded income (i.e. any income you receive that cannot be taken into consideration when calculating your charge)
• to rent your property to tenants and pay the charges from your rental income
• for a third party to contribute towards your care costs
• to keep less of your Minimum Income Amount in order to reduce the amount deferred (NB Minimum Income Amount is an element of your weekly income that you are entitled to keep to spend on things that are not provided by the care home, such as hairdressing)

By entering into a Deferred Payment Agreement, it means that you will have the opportunity to defer part of the payment of your care until a later date.

In order to do this the Council will arrange to value the property and you will need to agree to Carmarthenshire County Council placing a legal charge on your property as security for the debt.

In return the Council will pay the balance of care costs up to an agreed rate that would have been met from the sale of the property. The total amount you can defer will be determined by the value of your property and the level of the care costs being deferred.  You will receive a statement on a 6 monthly basis showing the amount deferred.

If you enter into a deferred payment arrangement, you could also use the scheme to pay for more expensive accommodation depending on the net value of your property.

You may wish to seek independent financial advice before entering into a Deferred Payment agreement.

If you decide to sell your property you will need to notify the Council and you will be required to pay the amount deferred in full, from the sale proceeds and the Council will be required to relinquish the legal charge on the property.

Currently the authority does not charge any fees for valuing the property and does not charge interest on any debt until 91 days after the date the resident passed away or is discharged from the residential/nursing care home, however this policy will continue to be reviewed periodically.

The authority does charge an administration fee, currently £200.00 for arranging the Deferred Payment agreement.

You should be aware that as care home fees usually increase each year, or can change if there is a change in your needs, then the amount being deferred will also change in accordance with the full cost of the placement and the amount of income received (the difference between these two figures is the amount that will be deferred).

The amount deferred must be repaid when the Deferred Payment agreement is terminated.  This is:  

• within 91 days of your death
• when the property has been sold
• when you terminate the agreement

An invoice will be issued for the amount owed, which will include details on how the amount due can be paid.  If the invoice is not paid, then this will be dealt with under the Council’s debt recovery process.

Interest will be charged if the debt is not repaid at the end of the agreed period. The interest rate will be 0.15% above the Market Gilt rate and this rate will be reviewed 6 monthly.

The Council will relinquish its legal charge on the property once the amount owed is repaid.

If you are being admitted into a residential or nursing home permanently following a social care assessment, you will receive a financial assessment. 

As part of the assessment, and on completion of a Financial Assessment Declaration of Mean form a Financial Assessment Officer will write to you with details of what you need to do to join the scheme, if they believe you are eligible to join it.

We will arrange for a valuation of your property and following receipt of the valuation a contract letter and terms of the agreement will be sent to you which will indicate the assessed weekly payments to be made under the scheme and the terms of the agreement.

Due to Land Registry requirements, we will need to verify the identity of the person who owns the property against which the charge will be registered and also verify the identity of the person making the application for a Deferred Payment Agreement on behalf of the resident (e.g. the resident’s Power of Attorney or Deputy).

The Council can refuse a deferred payment agreement in some circumstances:

• where the Council is unable to secure the consent of any other person who has an interest in the property
• where the Council is unable to obtain the first charge on the property
• where your capital (other than your property) exceeds the maximum capital threshold, or you have sufficient weekly income to pay the full charge of the care home
• where you do not agree to the terms and conditions of the Deferred Payment agreement

The Council may also stop deferring care costs/terminate a Deferred Payment agreement on a permanent or temporary basis, in some circumstances such as:

• where there is not enough equity in the property once the amount already deferred is taken into account
• where the property subsequently becomes disregarded from the financial assessment process
• where the property is sold, and the outstanding care costs have been paid in full (including interest and fees if applicable)
• where the resident passes away
• where the outstanding care costs have been paid in full (including interest and fees if applicable)
• that your other capital assets (not including your property) are more than the maximum capital threshold and/or you have sufficient weekly income to pay the full charge
• where you no longer have an assessed need for care in a care home
• where the terms and conditions of the Deferred Payment agreement are breached, and this cannot be successfully resolved

You can also choose to terminate a Deferred Payment agreement. Payment of any amount deferred will then be due in full (Within 90 days).

If you have been offered a Deferred Payment Agreement but choose not to enter the scheme, the authority will arrange for a Legal Charge to be placed on your property, this will secure the debt that will be due to the authority when the property is sold. If the debt is still outstanding after your death an interest charge will apply. The interest rate will be 0.15% above the Market Gilt rate and will apply from the 91st day after your death.

If a legal charge is placed on your property, you will be notified, and you are advised to seek your own legal advice

This is subject to Section 59 of the Social Services and Well-being Act (Wales) 2014.

If you have already moved into residential care but have only just heard of the Deferred Payment Scheme you may still be eligible. Contact the Financial Assessment team for more information.

To find out more about the scheme contact:

The Financial Assessment Team

Email: SCHfinancialassess@carmarthenshire.gov.uk

Telephone: 01267 228977

You are strongly advised to seek independent financial and legal advice before arrangements are finalised. Some of the reasons for getting independent advice

• To be clear about the legal implications of having a legal charge placed on your home.
• To find out what other costs may be involved.
• find out how it affects the benefits you do or could receive.
• To find out whether there are any other implications.
• You will need to maintain the empty property such as paying for insurance and heating bills to save the property from damp and frost