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Pros and cons of claiming ns-ESA as well as UC.
Pros and cons of claiming ns-ESA as well as UC if claimant is too ill to work.
In my office we have been discussing whether claimants who have the choice should claim ns-ESA alongside UC even though it is deducted pound for pound from UC. These are the points that have arisen so far. Would welcome thoughts (and corrections).
Claimants who will have no choice:
Claimants above the capital threshold only have the option of claiming ns-ESA (if they meet the other qualifying conditions).
Claimants who don’t meet the NI contributions requirements cannot claim ns-ESA.
Claimant in receipt of SSP can claim UC but cannot claim ESA until SSP ends.
Things to consider:
Backdating: If claimant has delayed claiming for any reason they have easy option to backdate ESA up to 3 months without reason. Limited options on UC and reason has to be given.
WCA: The WCA should start regardless of which is claimed but there is more scope for things to go wrong under UC and for the WCA not to be initiated. I have had one client where UC, despite doing a home visit, simply failed to record that he had a Fit Note so WCA didn’t happen.
Payment: ESA is paid fortnightly. UC is paid monthly. Fortnightly ESA payments may help a client with their cashflow.
Most benefits, including ESA, are treated as unearned income (which is why there is no taper). Unearned income has to be converted into a monthly amount (weekly rate x 52 /12). So, by my calculation, ESA claimant on basic rate will have a monthly deduction from UC of £316.77 and a claimant in ESA support group will have a monthly deduction of £479.92. Presumably where ESA rate changes part way through an assessment period there has to be a pro rata adjustment.
* Note - Although generally benefits are treated as unearned income the following are counted as earned income and therefore fall to be taken into account for UC purposes as they are paid - Statutory Sick Pay, Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay and Statutory Shared Parental Pay. However because they are treated as earnings they are subject to the earnings taper so there isn’t a pound for pound loss.
National Insurance:
On UC you get Class 3 NI credits which count towards State Pension only.
On ESA you get Class 1 credits which count for State Pension, Bereavement Support Payment, ns-JSA and ns-ESA and Maternity Allowance.
Given that entitlement to Bereavement Support can be gained by just 25 weeks of NI contributions this doesn’t seem to be an issue for claimant who has previously worked and earned above the lower earnings limit for this period of time.
Credits for future ns-JSA or ns-ESA could be important for someone who may be in and out of work and whose circumstances may change.
Maternity Allowance will obviously not be of concern to male claimants or to women who do not intend to have children.
Future changes in circumstances: For a claimant in a household with variable income (or which might come into capital) then claiming ESA secures a baseline benefit. Delaying claiming ESA into next calendar year could result in loss of eligibility depending on NI contribution history as different tax years fall to be taken into account.
Tax: UC is not taxable. ESA is taxable.
For someone who has already used their personal allowance in the current tax year there will therefore be a financial loss if they claim ESA because they will have a tax bill at the end of the year. They may therefore want to consider delaying a claim for ESA until the following April (provided they will still meet the qualifying NI conditions) - but even then if they expect to be able to return to work it may still be tax advantageous to confine themselves to UC.
Work and benefits: ESA permitted work rules restrict the work that can be done with threshold at which benefit is stopped. UC has no such threshold although obviously award reduces with earnings.
Passported Benefits:
For someone in the ESA Support Group who is credited with ‘earnings’ of £479.92/week this takes them over the earnings threshold of £435 for passported health costs (unless they have a child element in which case the threshold is higher). In households with a second income even an earnings credit at basic rate may also take them over the threshold.
This also means that for claimants who will get more money on ns-ESA than they would from UC the choice may not be as obvious as it appears. On the face of it they will probably want to claim ns-ESA but, if the difference is small, getting passported benefits through UC may be more cost beneficial than the extra money on ns-ESA - see notes below).
I haven’t even attempted to work out what difference the choice might make to Council Tax Reduction awards (if any)!
On balance it seems to me that for claimants in low income households, in most cases, there isn’t much point in claiming ns-ESA. For higher income households who are going through a ‘bad patch’ claiming ns-ESA may make more sense, particularly if there is a second earner whose income fluctuates and might trip them off UC.
Good list!
WCA: The WCA should start regardless of which is claimed but there is more scope for things to go wrong under UC and for the WCA not to be initiated. I have had one client where UC, despite doing a home visit, simply failed to record that he had a Fit Note so WCA didn’t happen.
I think it’s worth emphasising this point. It’s not just that a med cert may be overlooked, it’s that a UC work coach may be well aware of the health difficulties and evidence, but just decide not to refer for a WCA because they consider it a temporary period of sickness, or think that it only merits an adjustment to the claimant commitment. I think claiming ESA may help remove doubt that a WCA should be carried out.
(On the con side, we have seen where a client claims both benefits, and is asked to return both a UC50 and ESA50 at the same time, which is an administrative chore.)
I’m not a hundred percent sure about this so am happy to be corrected but…
UC doesn’t treat some as satisfying the test during the assessment period, so initially they have to meet jobseeking conditionality requirements. But *i think* ns ESA still treats you as satisfying the test during this period. If I’m right that’s another reason for claiming ns-ESA as well as UC.
is there an issue here…..client claims esa and uc. they have dla or pip. prior to wca happening the client finds part time work thats over esa permitted work earnings limit.
if triggered under ESA does the WCA process halt?
if triggered under UC, then surely the claim can stay open and if passes wca then earnings allowance/component applies
?
I’m not a hundred percent sure about this so am happy to be corrected but…
UC doesn’t treat some as satisfying the test during the assessment period, so initially they have to meet jobseeking conditionality requirements. But *i think* ns ESA still treats you as satisfying the test during this period. If I’m right that’s another reason for claiming ns-ESA as well as UC.
Even in this situation I assume that claimant still has to rely on discretion of work coach to turn off work search conditionality.
Work coach discretion within UC seems to be a huge issue in UC. On the one hand it could allow greater flexibility and responsiveness to a claimant’s particular circumstances. On the other hand two identical claimants with different work coaches may be treated differently.
ADM includes this:
F5034: Where medical evidence is provided, the DM should clarify whether the claimant is
1. applying for
1.1 a determination that they have LCW or
1.2 the LCWRA element to be included in their UC award or
2. exempt from the work search requirement for a limited period.
So the DM/work coach is supposed to specifically ask the claimant how they want their Fit Note treated (but I don’t suppose they explain the implications and your usual claimant will not know what they are).
[ Edited: 6 Aug 2018 at 04:37 pm by Ianb ]is there an issue here…..client claims esa and uc. they have dla or pip. prior to wca happening the client finds part time work thats over esa permitted work earnings limit.
if triggered under ESA does the WCA process halt?
if triggered under UC, then surely the claim can stay open and if passes wca then earnings allowance/component applies
?
ADM says that a WCA cannot be carried out If the claimant is earning above 16 x NMW (so they will not be referred for a WCA under UC) unless they are receiving AA, DLA, PIP or AFIP. I infer therefore that, even under UC, if a WCA is started but a claimant then gets work above this limit the WCA will be stopped anyway (unless in receipt of the secondary benefit). See ADM G1032.
is there an issue here…..client claims esa and uc. they have dla or pip. prior to wca happening the client finds part time work thats over esa permitted work earnings limit.
if triggered under ESA does the WCA process halt?
if triggered under UC, then surely the claim can stay open and if passes wca then earnings allowance/component applies
?ADM says that a WCA cannot be carried out If the claimant is earning above 16 x NMW (so they will not be referred for a WCA under UC) unless they are receiving AA, DLA, PIP or AFIP. I infer therefore that, even under UC, if a WCA is started but a claimant then gets work above this limit the WCA will be stopped anyway (unless in receipt of the secondary benefit). See ADM G1032.
yip. that’s exactly the situation I described where the person has dla or pip.
under uc the wca process can continue
under esa it wouldn’t
im unsure though what happens if technically the wca was triggered by the esa claim rather than the uc one.
that’s exactly the situation I described where the person has dla or pip.
Sorry, overlooked that in your post!