Deferred Payment Agreement Care Home Fees: Everything You Need to Know
When it comes to caring for an elderly loved one, the financial aspect can often be overwhelming and confusing. One of the options that families can consider is a deferred payment agreement (DPA) when it comes to paying care home fees.
What is a Deferred Payment Agreement?
A deferred payment agreement is an arrangement between the local council and a person who is receiving care in a care home. The agreement allows the care home resident to delay paying their care home fees until they can afford to do so. Essentially, the local council pays the care home fees on behalf of the resident and then recovers the cost from the resident’s estate after they have passed away.
Who is Eligible for a Deferred Payment Agreement?
Deferred payment agreements are available to those who are receiving care in a care home and have been assessed as needing financial support from the local council. The arrangement is designed to help those who do not have enough income or savings to pay the full cost of their care but have assets, such as property, that they do not want to sell during their lifetime.
How Does a Deferred Payment Agreement Work?
When a person is approved for a deferred payment agreement, the local council will pay their care home fees on their behalf. The resident will then pay a weekly contribution towards their fees, which is based on their income and assets. This means that they only pay what they can afford, and the local council covers the rest.
The deferred payment agreement is essentially a loan from the local council, which is secured against the resident’s property. Interest is charged on the loan, but it is deferred until the resident has passed away or until they sell their property. At this point, the loan is repaid from the sale of the property or from the resident’s estate.
What are the Benefits of a Deferred Payment Agreement?
A deferred payment agreement can help families to avoid selling a loved one’s home to pay for their care home fees. It can provide peace of mind knowing that their home is safe and will not be sold during their lifetime. It can also help to manage the cost of care, as the resident only pays what they can afford, and the local council covers the rest.
Additionally, DPAs can be a useful alternative to equity release schemes, which can be expensive and can reduce the amount of inheritance that a person can leave to their loved ones.
A deferred payment agreement can provide a lifeline for families who are struggling to pay for their loved one’s care home fees. It can offer a solution that allows the resident to delay payment until they can afford to do so and can help them to preserve their assets, such as their property.
If you are considering a deferred payment agreement, it is important to seek advice from a financial advisor or solicitor to ensure that it is the right option for your individual circumstances.