Care home costs and ‘top-up fees’

Lisa Morgan looks at the steps local authorities must take before they request ‘top-up fees’ to cover care home costs.

Local authorities are paying a heavy price for falling short of their legal duties in relation to those in need of residential care homes and their families. Despite laws which exist to compel councils to provide affordable accommodation for those with few assets, councils like Derbyshire and Birmingham have found themselves faced with severe financial penalties for their failure to observe these obligations.

Local authorities become legally responsible for fully financing the care home needs of anyone in possession of less than £23,250 of capital. The escalating costs of care homes is having a huge impact on budgets. Nevertheless, those councils who fail to meet their legal obligations are discovering how costly this failure can be, with many being ordered to pay out thousands of pounds in redress. The issue revolves around ‘top-up’ fees that have wrongly been requested from the family members or others of the person in care. A top-up fee becomes payable when the budget provided by the local authority for an individual’s care is insufficient to pay the fees for that individual’s preferred care home.

Councils have a base funding for those who qualify for their costs to be paid, but it is frequently the case that these ‘top-up’ fees become payable. A top-up fee equates to a third-party contribution, and represents an additional payment, over and above whatever a council is prepared to pay. Changing circumstances which might drive the top-up fee include care homes increasing their costs. Top-up fees can amount to hundreds of pounds a week, exceeding the local authority’s base limit of payment.

It is highly unlikely that the care home resident will be in a position to pay hundreds of pounds a week, otherwise they wouldn’t have qualified for local authority funding in the first place. The top-up fee, a voluntary payment, is therefore often sought from relatives, friends or charitable organisations. One of these parties can be charged so long as two things have happened: the council has provided clear and accurate information about affordable alternative care placements, and the agreement to fund the top-up is made after careful consideration and transparency, and therefore from a fully-informed basis.

So then, if a person’s situation in their care home changes and top-up fees are required, the council has a legal obligation to offer genuine alternative, cheaper care home options, ones that fall within the local authority rate, before turning to family members to request payment. Only when a proper choice of funded accommodation has been offered and rejected is a top-up fee applicable. This whole issue was considered by The Local Government and Social Care Ombudsman in 2015. Guidance was provided in a report which confirmed that, where there is an assessed need, an affordable placement and one that is within the base rate the authority will pay, must be offered.

Local authorities, then, need to prove that, should a top-up fee at a person’s care home become due, a cheaper alternative care home has been offered. The information provided must be clear and accurate. More recently, the Ombudsman investigated a complaint against Derbyshire County Council and found that the council had failed to produce evidence that it had offered a “genuine choice” of accommodation. There was no provision of suitable alternative accommodation at the local authority rate, resulting in the council failing to meet its obligations. For the council, this meant paying a significant top-up fee, with the Ombudsman requiring the council to waive the fee in relation to the placement, payable from the date of admission.

Last year, the Ombudsman found against Birmingham City Council. Not only had the council failed in its duty to provide even one suitable and affordable care home, but it had also failed to provide the accuracy and clarity of information about top-up fees that would have enabled the family to make an informed choice about their relative’s care placement. This resulted in Birmingham City Council having to refund 11 years of top-up fees.

These examples show what a costly mistake it is for councils to fail in their duty to provide affordable care homes. Their requests for funding from family members, friends or others to pay ‘top-up’ fees is a result of this failure. These individuals are being asked to pay hundreds of pounds a week, placing an enormous financial burden on their shoulders when, legally, at least part of that burden should have been borne by the local authority.

Lisa Morgan is head of the nursing care fee recovery team at Hugh James Solicitors.