10.7 Interest and administration charges
Interest will be added to the amount you defer from the start of your Deferred Payment Agreement (DPA), at the maximum rate of interest set in the Care and Support (Deferred Payment) Regulations 201485 by the Department of Health. The Department of Health reviews this rate every 6 months effective from 1 January and 1 July in each year. If the amount you defer includes your administration fees, interest will be applied to those also.
Interest is charged at compound rates. This means that interest is added to the total debt including previous interest charges. Compounding will take place daily. In the event that the equity limit is reached (see 'Equity Limit') interest will continue to be added to the deferred debt until the total outstanding is settled.
Interest will continue to be charged after you die and/or after the service ends until the total outstanding is settled.
Interest will continue to be charged after you die and/or after the service ends until the total outstanding is settled. Administration fees will be charged when a DPA is set up and during the lifetime of your DPA86 – including an annual administration charge. The schedule of administration fees is shown at Appendix A – Schedule of Fees and Charges and will be subject to annual review to take account of inflation.
We add your administration fees will be added to the amount deferred unless you request for these to be invoiced to you separately for immediate payment. You would need to request this when you apply for your DPA. Note that unless you pay the administration costs immediately these will be added to your deferred debt and you will be charged interest on the administration costs at the same rate as that applied to your deferred payment.
The DPA starts to run from the date notified in your DPA Offer letter (see 'The DPA Application Process').
Statements will be produced in May for the period up to the 31 March and November for the period up to the 30 September each year. These statements will be sent to you or your representative.
The statements will show:
- The original property valuation
- The equity available or maximum amount which can be borrowed under DPA
- Any revised property valuation
- The revised equity available resulting from this change in the property value
- Payments received in settlement of the assessed charge
- The amount of any interest charges and administration costs added to the debt
- The total deferred debt outstanding including these interest and administration costs
- Balance of equity still available (after deducting the amount of total deferred debt)
- Approximate period this equity is expected to last
You may request a statement at other times, and we will provide such a statement within 28 days of receipt of such request.
If you have placed the property for sale on admission to long-term care, or you have chosen to sell at a subsequent date, the accrued debt will be due for repayment upon the sale of your property. We will calculate the accrued debt, and, on receipt of the outstanding monies, we will apply to the Land Registry to remove the legal charge against your property.
In this event your DPA will be terminated and you may become responsible for paying the full costs to your care home (‘self-funding’) - depending on the balance of funds available after clearing the deferred payments.
If your property has not been sold at the date of your death, we will contact your executor, if known, within six weeks after your death. If the executor is not known and if you had previously identified a third party to help us reclaim the amount deferred, we will contact that third party within the same timescale. If neither is known, then the person who was acting as your representative will be contacted. We will advise the person responsible that settlement should be made within 90 days of the date of death or a report provided on progress made and a likely date for settlement.
When making contact we will notify the amount outstanding and how this is made up and whether any further charges may accrue, for example further interest.
Should the executor or administrator of your estate decide to settle the debt without, or before, selling your property, we will accept such settlement and apply to the Land Registry to remove the legal charge or release any alternative security provided.
The DPA is a contract between us (the Council) and you (the applicant).
We will agree to pay the full cost of your placement to your care provider and you will either agree to allow a Legal Charge to be placed (and agreement by the other property owners in the case of jointly owned property) or provide sufficient acceptable security. This security ensures that the Council can recover its outlay on your behalf for the period that your savings and assets, net of the level of deferred contribution, are greater than the upper capital limit.
Assessed charges during your DPA period: you agree to pay your assessed charge in a timely way. We will send you regular invoices for this purpose
Failure to pay your assessed charge for three months may lead to the Council refusing to continue deferring your ongoing care home payments. We will look at each case on its own facts and will not apply this clause if there are genuine reasons for non-payment, e.g. difficulty in accessing bank accounts, and will agree an alternative timescale.
We will give 30 days’ notice of intention to apply this clause explaining how your care needs should be paid for from that date.
|Reaching your equity limit||We will also give 30 days’ notice of the date that you are likely to reach the equity limit. In this case we will contact your care home and attempt to negotiate a rate that we would usually expect to pay to meet your needs, and will reassess your financial charge due.|
|Should your property for which the DPA was arranged become occupied by a relative for whom a statutory disregard may apply||We will establish the reasons behind this change and decide whether it is appropriate to allow the property to be disregarded. If a disregard is agreed we will write to confirm the end date of the deferred payment, confirming the Deferred Debt outstanding, and that interest will continue to accrue until the debt is settled. The DPA may re-commence if the property becomes ceases to be disregarded.|
|Insuring and Maintaining your property||In the event that we judge that your property is not being properly maintained and/or insured, we will consider whether to refuse to defer future payments for your care. In this event we will give 30 days’ notice and explain how your care needs should be paid for from that date. During this 30-day period you may appeal if you believe we have acted unfairly. Your appeal should either demonstrate why the insurance or state of maintenance are in fact satisfactory or what steps are being taken to remedy the failing(s).|
|CHC funding||If you become eligible for Continuing Health Care (CHC) funding your costs of care will be paid in full by the Clinical Commissioning Group (CCG) therefore your DPA will be suspended.|
|Out of area||If you chose to move to home outside of Bath and North East Somerset Council your DPA will be suspended.|
- 85This maximum rate is set in the Regulations as the weighted average interest rate on conventional Gilts plus .015% . The rate is reviewed every six months (after the Office of Budget Responsibility publishes its report of Gilts). Clause 9.71 and 9.75 of the Care and Support Statutory Guidance and Paragraph 9 of the Care and Support (Deferred Payment) Regulations 2014.
- 86Paragraph 10 of the Care and Support (Deferred Payment) Regulations 2014