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Chapter 19: How income affects health benefits
This chapter explains how your income is treated when working out your entitlement to health benefits under the NHS low income scheme (see here).
If you are not exempt from healthcare costs (see Chapter 5) and have less than £16,000 a year in property, savings or other assessed income or capital, you are eligible to apply for at least some assistance.
Basic facts
    The NHS low income scheme helps with health costs if your income is low enough.
    Student loans and most grants count as income.
    Other income, such as earnings, some benefits and tax credits, is taken into account in the assessment.
1. Working out your income
The way that student income is taken into account for health benefits is broadly the same as for means-tested benefits.1NHS(TERC)(S) Regs, as amended (most recently in 2015 by SI No.333)
 
Step one
Add together the annual income from your grants and loan.
Include the maximum for which you are eligible.
Step two
Apply annual disregard.
Deduct the disregarded amount of £693 for books, equipment and travel.
Step three
Divide income throughout the year.
Divide the annual amount of loan and grant income by 52 weeks, unless you are in the final or only year of your course, in which case you should divide by the number of weeks (Sunday to Saturday) from 1 August to the last day of your course.
Step four
Weekly disregard.
Unlike the means-tested benefits assessment, there is no weekly disregard of £10 on the student loan, unless you receive a premium in your applicable amount, a disabled students’ allowance because of deafness, or you are not a student but your partner is. If you fall into any of these categories, disregard £10.
Step five
Add other income to weekly loan and grant amount. This total is the amount of income used in the health benefit calculation.
Add together any other weekly income (eg, from discretionary funds or a professional and career development loan), earnings (see here), tariff income from capital (see here), and benefits and tax credits (see here). Ignore any amount that is disregarded.
 
1     NHS(TERC)(S) Regs, as amended (most recently in 2015 by SI No.333) »
2. Grants and loans
Grants
In general, grants intended for living costs are taken into account and grants for other costs are disregarded. For details of how discretionary funds are treated, see here.
If you are not eligible for a student loan, the disregards for books, travel and equipment are deducted from your grant (see here).
The following further education (FE) grants are disregarded:
    education maintenance allowance;
    additional support needs for learning allowance for disability costs;
    study expenses allowance if paid for books and equipment;
    travel expenses allowance;
    lone parents’ childcare grant.
The following FE grants are taken into account:
    bursary maintenance allowance;
    care-experienced bursary maintenance allowance;
    dependants’ allowance.
The following higher education (HE) grants are disregarded:
    young students’ bursary;
    independent students’ bursary;
    lone parents’ childcare grant;
    disabled students’ allowance;
    travel expenses;
    tuition fees;
    childcare allowance.
The following HE grants are taken into account:
    care- experienced students’ bursary;
    care- experienced accommodation grant (counts as capital if paid as a lump sum);
    dependants’ grant;
    lone parents’ grant;
    paramedic, nursing and midwifery bursary, single parent’s allowance and dependants’ allowance.
If you are a postgraduate student, take into account any research council or other maintenance grant and dependants’ allowances. Grants for living costs are treated in the same way as those for undergraduates.
Example
Ramla is on a one-year FE course and gets a bursary of £4,667.65 for a 43-week course. Her income is her bursary minus the £693 disregard, divided by 43. This is £92.43 a week.
Student loan
Student loan income includes the maximum loan available, not including any hardship loan.1The National Health Service (Travelling Expenses and Remission of Charges) (Scotland) (No.2) Amendment Regulations 2013 No.327 This is taken into account as your income whether or not you apply for it.
Examples
Madhu is 20 and is a second-year undergraduate. She gets a student loan of £5,750 and a young students’ bursary of £2,000. The bursary is disregarded, and £693 is disregarded from the student loan and the result is divided by 52 weeks. Her total weekly income is £97.25.
Lewis is 26 and is a second-year undergraduate. He gets a student loan of £6,750 and an independent students’ bursary of £1,000. He also works part time, earning £55 a week. The bursary is disregarded, and £693 is disregarded from the student loan and the result is divided by 52 weeks, giving a weekly income from his student loan of £116.48. Five pounds of his earnings is disregarded (see here) and £50 a week is taken into account. His total weekly income is £166.48.
 
1     The National Health Service (Travelling Expenses and Remission of Charges) (Scotland) (No.2) Amendment Regulations 2013 No.327 »
Discretionary funds
Discretionary support provided when you are in financial difficulty is treated differently from other student grants and loans. This support includes:
    higher education (HE) discretionary fund;
    further education (FE) discretionary fund.
 
In general, if the payment is for certain living costs, it is taken into account in full if it counts as capital, or with up to a £20 a week disregard if it counts as income. If the payment is for other costs, it is disregarded. Ask your college/university for a letter saying what the payment is for and how it is paid.
Lump-sum payments count as capital. Regular payments count as income.
The FE and HE childcare funds are disregarded.
Lump-sum payments
Lump-sum payments are taken into account as capital if they are intended and used for food, ordinary clothing or footwear, household fuel, rent met by housing benefit (HB), housing costs met by income support (IS), income-based jobseeker’s allowance (JSA) or income-related employment and support allowance (ESA), council tax or water charges. Payments for anything else are disregarded. Although taken into account as capital, this only affects your entitlement if it brings your capital above the lower limit. See here for details.
Regular payments
Regular payments are taken into account as income if they are intended and used for food, ordinary clothing or footwear, household fuel, rent met by HB, housing costs met by IS, income-based JSA or income-related ESA, council tax or water charges. Up to £20 a week is disregarded. You cannot get the £20 disregard in full as well as the full disregards available on a student loan or voluntary and charitable payments (or on widowed parent’s allowance or war pensions). If you get one of these other payments as well as a discretionary fund payment, your maximum weekly disregard is £20.
For example, if you have a student loan (and are eligible for the £10 disregard) and regular payments from the HE discretionary fund, £10 a week is disregarded from each. If you also receive regular payments from a charity, these count in full because you have already used up your £20 disregard on the loan and the discretionary fund payment.
Regular payments intended and used for anything else, such as childcare expenses, are completely disregarded.
Voluntary or charitable payments
Regular voluntary or charitable payments are treated as income, with a disregard of up to £20 a week.1The National Health Service (Travelling Expenses and Remission of Charges) (Scotland) Amendment (No.3) Regulations 2007 No.391 One-off or lump-sum voluntary or charitable payments are treated as capital.
 
1     The National Health Service (Travelling Expenses and Remission of Charges) (Scotland) Amendment (No.3) Regulations 2007 No.391 »
Professional and career development loans
Professional and career development loans are always treated as income, not capital, irrespective of how they are paid. The loan is taken into account if it is intended and used for food, ordinary clothing or footwear, household fuel, rent met by HB, housing costs met by IS, income-based JSA or income-related ESA, council tax or water charges. Once the period of education supported by the loan is completed, the loan is disregarded altogether, whatever it was originally intended for.
4. Earnings
Your earnings and the earnings of your partner are taken into account in the health benefits assessment. Your net weekly earnings are taken into account – ie, after deducting:
    income tax;
    class 1 national insurance contributions;
    half of any contribution you make towards a personal or occupational pension.
There is also an earnings disregard of £5, £10 or £20 per week, as for income support (see here), with a modification that allows a £20 disregard if you get a disability premium or if you or your partner are over 60. The earnings disregard is increased to the whole of the earnings if you are on contributory employment and support allowance and doing permitted work.1The National Health Service (Travelling Expenses and Remission of Charges) (Scotland) Amendment (No.3) Regulations 2008 No.390
 
1     The National Health Service (Travelling Expenses and Remission of Charges) (Scotland) Amendment (No.3) Regulations 2008 No.390 »
5. Benefits and tax credits
If you receive income support, income-based jobseeker’s allowance (JSA), income-related employment and support allowance (ESA) or child tax credit (CTC) and have a household income of no more than £15,276, you automatically get free health benefits (see Chapter 5). You may also qualify if you get universal credit (see here).
Housing benefit is effectively disregarded, as the NHS Business Services Authority only takes into account the rent paid by you directly when determining need.
Benefits and tax credits taken into account in full include:
    carer’s allowance (CA);
    contribution-based JSA;
    contributory ESA;
    incapacity benefit;
    most industrial injuries benefits;
    retirement pension;
    working tax credit.
Benefits and tax credits completely disregarded include:
    attendance allowance;
    Best Start grant;
    CA supplement and young carer grant;1The Social Security (Scotland) Act 2018 (Consequential Modifications) Order 2018 No.872
    child benefit;
    CTC;
    disability living allowance;
    personal independence payment;
    adult disability payment;
    funeral support payments;
    Scottish child payment.
Benefits and tax credits partly disregarded include widowed parent’s allowance, which has £10 a week disregarded. Note: you do not receive this disregard if you already have £10 disregarded from a student loan or £20 disregarded from discretionary fund payments.
 
1     The Social Security (Scotland) Act 2018 (Consequential Modifications) Order 2018 No.872 »
6. Maintenance
Regular child maintenance payments are disregarded and lump sums are treated as capital.
7. Savings and other capital
There are limits on the amount of savings and other capital you can have and still claim health benefits.
You cannot get health benefits if your savings and other capital are above £16,000.
If your capital is £6,000 or less, it does not affect your claim at all. If your capital is between £6,000.01 and £16,000, you are treated as though you have an income from this capital of £1 a week for every £250 (or part of £250) between these amounts. This is referred to as ‘tariff income’. For example, if you have savings of £6,525, your tariff income is £3 a week.

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