Loss Of Mental Capacity: Mitigating The Financial Impact For Care Providers

Year Published: 2017

We all know that care home places are in high demand due to an ageing population, yet many are struggling to stay afloat. Government funding, or rather the lack of it, is causing ongoing pressure on local authority funded adult social care. As well as this, the introduction of the National Living Wage has caused wage bills to rise by about 5%. The impact of these factors has resulted in many care homes being forced to close.

For those care providers managing to remain profitable in these tough economic times, it’s more vital than ever for cash flow that self-funding residential fees are paid promptly and payment delays are minimised.

An assessment of a resident’s mental capacity should of course be a priority for any residential care home provider. A resident with the requisite mental capacity can choose to manage their own financial affairs and pay their own fees or, becoming increasingly common, may choose to appoint an Attorney (or Attorneys) to help them with their finances.

It is advisable to ensure that this is fully discussed between a resident and care provider at the outset to avoid any issues further down the line for the continuity of payment of care fees, in the event that a resident subsequently loses the ability to make financial decisions.

If a resident does not have suitable family or friends who can undertake the role of Attorney, they could consider appointing a professional such as their Solicitor, Accountant or Financial Advisor.

What if a resident with no appointed Attorney has lost capacity?

In theory there will be no-one with the legal authority to authorise payment of the care provider’s fees. In this circumstance, a suitable person will need to apply to the Court of Protection to be appointed as a Financial Deputy. This is most commonly a close family member or a friend, but could also be a professional if there is no other suitable person.

The Mental Capacity Act 2007 provides the legal framework for making decisions on behalf of those who lack mental capacity. Section 7 of the Mental Capacity Act does allow for the payment of a ‘reasonable price’ for ongoing ‘necessary’ expenses and could be used to justify the ongoing payment of care fees in order to avoid a resident losing their placement.

This should, however, only be seen as a temporary option whilst a suitable Deputy is being appointed – a process which can take several months to complete.

What about occasions when the care provider has concerns about the resident’s Attorney or Deputy?

Financial abuse of the elderly is rapidly escalating. Sometimes this is due to Attorneys and Deputies simply mismanaging the older person’s finances and misunderstanding their role, but on other occasions there are more sinister motives.

A care provider will usually be the first to suspect something is amiss if, for example, fees are being paid late or not at all; funds are not being made available for the older person’s benefit or family members are having inappropriate conversations with the older person about money.

A resident’s funds should be used for their benefit, primarily to fund their care needs and everyday expenses. If this is not being facilitated by an attorney or deputy then this is a primary indicator of financial abuse and should result in an immediate safeguarding referral to minimise any further dissipation of the resident’s funds. It may also be worthwhile obtaining legal advice to see what further steps can be taken to protect the resident and ensure the payment of fees can continue unimpeded. An urgent application to the Court of Protection can provide swift protection for the victim of abuse.

For more information on mitigating the financial impact of mental capacity for care providers, please contact our Elderly, Care & Mental Capacity team on 0161 475 7676.

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