Topic 4 - State Benefits

Question 1

What are means tested benefits? Give some examples?

What is pension credit and how is it calculated?

Answer 1

Benefits where eligibility may be affected by individual’s income or savings.

Pension Credit - Pension Credit is a benefit for pensioners on low income and consists of two parts:

Pension Credit - Guarantee Credit

• Tops up income to specified amount. Standard levels are £167.25 per week for individuals or £255.25 for couples.
• Qualifying age - State pension age or older. Partner can be younger.
• First £10k of savings disregarded. Every £500 or up £500 above £10k is treated as a notional income of £1 per week.
• Example £125 income and £11.2k in savings, will provide £3 per week notional income. Therefore Guarantee credit will be £39.75 per week to top up income from £128 to £167.25.

Pensions Credit - Savings Credit

• For those over SPA before 6 April 2016.
• Provides extra payment for those who have saved for retirement. Payable when income exceeds £144.38 for individuals and £229.67 for couple.
• Example - Provides 60p per week per £1 between threshold and Guarantee Credit Limit. Income of £150 per week, savings credit will be (£150 – £144.38) x 60p = £3.37.
• Therefore maximum savings credit is 60% of the difference between threshold and guarantee credit, ie £13.72 for a single person and £15.34 for a couple (2019/20).
• If income exceeds the Guarantee Credit, amount of Savings Credit reduced by 40p for every £1 of excess. Example, single person with income of £170 would be entitled to savings credit of £12.62. Calculated as maximum £13.72 – ([£170 – £167.25]) x 40p), reduced by £1.10.
• If their income exceeded £201.55, the Savings Credit would be reduced to nil.

Question 2

Pensions Credit Calculations:

1. Kieran, who is single, was born in January 1952. He is not entitled to a full state pension. He receives annual income of £2,240 from an annuity, together with a state pension of £98.12 per week. Kieran has £12,200 in savings.
2. Emma, who is divorced, was born in May 1950 and receives a state pension of £129.20 per week and Attendance Allowance of £58.70 per week. She has savings of £20,400.

Answer 2

1. Kieran

• Kieran’s Guaranteed Credit: £21.05
• No entitlement to Savings Credit as he reached SPA after 6 April 2016.
• His savings of £12,200 will be assessed as giving a notional income of £5 per week.
• Weekly income from his annuity = £2,240/52 = £43.08.
• Assessed income = £98.12 + £43.08 + £5 = £146.20.
• Guarantee credit £167.25 – £146.20 = £21.05.

2. Emma

• Emma’s Guaranteed Credit: £17.05 and Savings Credit: £3.49
• Attendance Allowance is not taken into consideration.
• Her savings will be assessed as giving a notional income of £21 per week.
• Assessed income = £129.20 + £21 = £150.20.
• Guarantee Credit = £167.25 – £150.20 = £17.05.
• Savings Credit: £150.20 – £144.38 = £5.82. £5.82 x 60p = £3.49.

Question 3

What health costs can someone with Pension Credit automatically qualify for help for?

Answer 3

• free NHS dental treatment;
• Glasses/contact lens voucher
• Costs travelling to hospital
• Recieve NHS treatment if referred by consultant or when referred for certain types of treatment.
• free NHS wigs and fabric supports.
• (People aged 60 or over are automatically eligible for free NHS prescriptions and an NHS sight test.)
• Someone who is not eligible for the Guarantee Credit, but is on a low income and has capital of less than £16,000, may still get some help towards health charges through the NHS Low Income Scheme.

Question 4

Income Credit

Answer 4

• Those under state pension age and not eligible for Pension Credit.
• Must be working 16 hours or less a week.
• Reduced for anyone with £6k or more in capital. Normally not payable if capital exceeds £16k.
• Weekly income compared to fixed weekly level government considers amount to live on. Known as applicable amount.
• Differs for each person as it’s made up of 3 elements: Personal allowances, premiums and payments to cover certain housing costs.
• Not taxable and not dependent on NI contributions.
• From October 2013 replaced by Universal Credit which also replaced Jobseeker’s Allowance, ESA, Working Tax Credit, Child Tax Credit.

Question 5

What is Carer’s Allowance and the eligibility criteria?

Answer 5

• Paid unable to work as they are caring at least 35 hours per week recieving Attendance Allowance, DLA Care Component or Living component of PIP.
• Taxable. The rate is £66.15 per week.
• Claimants must be 16-years-old or over. Not in full time education.
• If claimants work, they must not earn more than £123 per week (2019/20 rate) after certain deductions have been made, such as income tax.
• NI Contribution added automatically to their NI record each week.

Question 6

Attendance Allowance - Not Means Tested.

What is it? Who is eligibile? How much does it pay? What are the other rules?

Answer 6

• Aged 65+ who need supervision to help with personal care due to illness or dasability.
• Not means-tested or taxable.
• Lower rate - Those who need care day or night. £58.70pw
• Higher rate - Who need care both day & night. £87.65pw
• Living alone or with another person.
• Must normally meet conditions for 6 months.
• Terminally ill subject to special rules.
• May be entitled to higher amount of Housing Benefit, Council Tax Reduction, Pension Credit if severe disability.
• If self-funding care home then will continue to recieve benefit. If local authority funded then paid for 4 weeks after moving in.

Question 7

What is Personal Indepence Payment?

Who is eligibile?

How much does it pay?

What are the activities of daily living?

Answer 7

• Tax free benefit.
• For those aged 16-64 years.
• Assessment made to see how disability affects them. Disability must have difficulty performing certain ADLs or mobility for at least 3 months or more and expected to last more than 9 months.
• To help with additional costs arising from illness or disability.
• Replaced DLA.
• Made up of Daily Living Component and Mobility Component.
  
  • DLC Standard Rate = £58.70 per week
  • DLC Enhanced Rate = £87.65 per week
  • MC Standard - £23.20 per week
  • MC Enhanced - £61.20 per week

ADL - Activities of Daily Living are:

1. preparing/eating food;
2. washing and bathing;
3. dressing/undressing;
4. communicating;
5. managing medicines/treatments;
6. making decisions on financial matters.

Question 8

What is Disability Living Allowance?

What is the eligibility requirements?

How much are the rates?

Answer 8

• Tax Free Benefit.
• Unlike PIP can continue beyond state pension age.
• Being replaced by PIP for new working age claimants.
• Mobility and Care elements are paid.
  
  • Mobility - £23.20 per week if supervision or guidance required outside.
  • Mobility - £61.20 per week if severe walking difficulties.
  • Care - £23.20, £58.70 and £87.65 per week. Middle and higher rates rules same for Attendance Allowance.
• Conditions met for 3 months before benefit is paid.
• May recieve increased benefits such as Income Support, Pension Credit, Housing Benefits.

Question 9

What is the Basic State Pension?

What is the rate?

What is the qualifying criteria?

Answer 9

• Changes to rules means no entitlement to Basic State Pension for those reaching SPA after April 2016.
• Now entitled to new state pension - single-tier version.
• Rate is £129.20 per week.
• Rate for Category B Pension is £77.45. This applies where individual has inadequate NIC record and can claim additional pension based on their partner’s NI record. Applies to old Basic State Pension, not New State Pension.
• Old State Pension is earned if have NI record for at least 30 years. Taxable but not liable to NICs.
• Increased annually by highest of either:
  
  • Earnings - Average increase in UK Wages in year
  • Prices - Increase in cost of living - CPI
  • 2.5%

Question 10

What is the New State Pension?

Who is eligibile?

What is the rate?

Answer 10

• No additional state pension element to the new version.
• NICs must have been paid for at least 10 years and to qualify for maximum benefits must have been paid for 35 years.
• Rate is £168.60 per week
• Increases in same way as old state pension. Higher of wages increases, prices or 2.5%.

Question 11

What is Council Tax Reduction / Council Tax Support?

Who is eligible?

Answer 11

For those on low income or state benefits.

Maximum benefit is reduction of 100%. Depends on:

• Where they live
• Personal circumstances - income, benefits, children, residency status.
• Household income.
• Not paid if capital of over £16,000.
  *

Question 12

How else can council tax be reduced?

Answer 12

Also reduced through disability reduction scheme or discounted scheme.

Disability Reduction - Substantially & Permanently disabled. Ensures higher council tax isn’t paid if a larger property is needed like extra living space. Reduced by one valuation band or 1/6th if lowest band.

Discount scheme - if fewer than two adults live in home. 25% for those alone or 50% if no one in house. If two people in home and one is disregarded due to CTR then other will be eligible for 25%.

Other similar benefits to help those are Winter Fuel Payment, Cold Weather Payment, Christmas Bonus.

Question 13

What benefits are affected when moving into a Care Home both on a temporary and permanent basis?

Answer 13

Staying in care home can affect benefits. Noteably Care Component of DLA and Daily Living Component of PIP.

1. If local council helping with care home fees - Paid for 4 weeks after moving in.
2. Self Funding - Continues as long as eligibility does.
3. First 12 weeks of pernanent stay in care home and property not counted as capital - Paid for 4 weeks, stops and then continues on 13th week or when self-funding recommences.
4. Council helping with care home fees for 12 week period after which will be self funding. - Same as above.
5. Council helping with fees on temporary basis while assets are beign sold or during deferred payments agreement. - Paid as long as eligible.
6. If clamining Income Support or Pension Credit and partner moves into care home permanently then must claim as individuals. If temporary then paid for up to 52 weeks and same as for Housing Benefit and Council Tax Reduction.