Earnings replacement benefits and cancer

A second in a series of four working through the key benefits for people affected by cancer. In this part, the focus is on Step 1: the non-means tested earnings replacement benefits and “statutory payments”

Welcome back to Part 2 of a 4 part Benefits and Cancer series, introducing the key benefits that can help with extra costs and the hit to income that cancer can bring..

In the first part – see links at the end – we looked at the extra costs cancer can bring, how benefits - while helpful - are often underclaimed, some basic benefits jargon and suggested a “three steps” approach to navigate your way through the benefits maze to track down all the benefits that you might be entitled to.
In this part, we look at Step 1 made up of the basic earnings replacement benefits and statutory payments from an employer, focusing on those most relevant to people affected by cancer, whether on receiving a diagnosis or taking time out as a carer. As we go through the benefits a link will take to further articles relevant to that benefit.

1. What was Step 1 again?

Step 1 is made up of perhaps the two most well-known groups of benefits

earnings replacement benefits– basic benefits to help replace earnings . Names may have changed over the years, but these have been around since the modern social security system was founded alongside the NHS
Statutory payments which are the legal minimum that an employer might offer in terms of sick pay and maternity pay to qualifying employees.

Earnings replacement benefits

These are mostly the original benefits in the modern, system of post-World War II vision of non-means tested “cradle to the grave” social security for all. It emerged from the same wartime Beveridge Report – and sense “we are all in this together” - that gave rise to the NHS, and significant education and housing reform and economic management.

The new social security brought together a piecemeal system of separate schemes and local Poor Law discretionary provision, that had been seen to fail the test of the 1930s Great Depression. The central idea was to build on the partial National Insurance concept and apply it to all: so, everyone pays an additional tax when in work out of which came your insurance policy to offer non-means tested pay outs – regardless of income- should misfortune strike or in the eventuality of old age strike.

Everyone had a stake – and potential cover – without the need for what was seen as the harsh and humiliating means tests of the 1930s. The system was strict in its criteria and the need to call on it was to be minimised by the hope of maintaining full employment. But the idea was certainly to reduce the stigma of claiming and the confusion by having a range of simple, easily understood benefits with names that says what it does on the tin.

The idea was also to encourage self-help and thrift, by providing a secure platform on which to build savings and other provision. The hope then was to prevent people falling into poverty with a helping hand, rather than catch them in a safety net as they fell.

These benefits are also often termed “overlapping benefits”. There may be several reasons why your ability to earn is restricted: you may have retired. Or you may be of “working age” but are: between jobs, not very well with e.g. a cancer diagnosis, busy as a carer or expecting a baby. More than one can apply at the same time and similarly you can apply for as many as you fit the criteria. However, you can only receive one earnings replacement benefit – the highest you claim- at the same time.

Statutory payments

These are the minimum legal payments that employers must pay to qualifying employees as sick pay or maternity pay. Many employers offer more than the legal minimum as part of their contracts e.g. some periods on full pay and for a longer period than the statutory minimums.

They overlap with each other – so it’s either Statutory Sick Pay(SSP) or Statutory Maternity Pay (SMP) and also with their opposite numbers within the equivalent earnings replacement benefit, so it will be either SSP or its benefit equivalent Contributory ESA.

However, every good rule must have its exception, so you can receive a statutory payment for one cause while claiming a benefit for another. So, an older person who stayed on in work can still get SSP with their Retirement Pension or a carer can get SSP from an employer alongside Carers Allowance.

2. Benefits in Retirement

The State Retirement Pension (SRP) is the biggest single benefit of all. It takes up over £90 billion a year. This is because there are so many people able to claim it, it is well understood and easy to claim meaning take up is close to 100% and pays at a more generous rate than other Step 1 benefits.

2.1 Who can get state retirement pension?

One of the simplest benefits – you have to be of pension age and paid in enough National Insurance (NI) contributions over your working life. You will need a minimum of 10 years to get the lowest pro-rata reduced pension and 35 years to get the full basic pension.

Pension age is now almost equal for men and women. The current phasing in of higher pension age for women – from the age 60 that it was in 2010 – has almost reached an equality of 65 for both. When it does in November 2015, the phasing process will continue to reach 66 by 2020.

2.2 How much is the State Retirement pension?

That depends on:

whether you have enough years for the full basic Retirement Pension (if not a pro rata reduction may apply or none may be payable)
various historic additions, some tiny and some rather large ones such as Additional State Pensions

It’s a new scheme for those newly retiring after April 2016 that merges and simplifies the historic scheme. In practise it will take many years for all to be assessed entirely under the new scheme, as all contributions before April 2016 will be assessed under both old and new rules and you will receive whichever gives you the best outcome.

So, the answer remains, it all rather depends. But to give an idea the full basic pension rates are set (at April 2019 to 2020 rates) as:

£129.20 plus any additional pension and other extra, under the old rules and
£168.60 inclusive, under the new rules.

The value of the pension is protected by a “triple lock guarantee” with annual increases linked to the best of price inflation, earnings rises or 2.5%. Your actual Retirement Pension though may be more or less than the full basic figure

2.3 Help from other benefits when of 'pension age'

Retirement Pensions itself may be paid “in sickness and in health”, so that a cancer diagnosis will have no direct effect on your Retirement Pension as such. It is mentioned here – and covered in more detail elsewhere - simply because a majority of people affected by cancer will be getting Retirement Pension as part of their income.

It’s the same with various associated benefits that come with senior status: bus passes, free prescriptions in all nations, Winter Fuel Payments, free TV licenses for the over 75s and so on.

But that does not mean that you should forget about looking at benefits altogether following a cancer diagnosis. A check may reveal benefits that you should have been claiming before or new entitlements related to extra difficulties and costs associated with living with cancer. In particular, these might include:

From step 1 - Earnings replacement benefits

Carer’s Allowance- claimable at any age – see further down
Statutory Sick Pay – if you carried on working for an employer – again see further down

From step 2-Means tested benefits

Pension Credit– an income-related top up, you may have been missing out for a while or the extra amounts related to health issues may either increase an existing entitlement or mean that you become entitled to PC for the first time.
Other help with specific costs like rent, council tax, travel to hospital, health costs etc, where your entitlement may increase as a result of a cancer diagnosis

From step 3 - Additional non means tested benefits for children and disability

Attendance Allowance– an extra non-means tested benefit from Step 3 that as well as giving you extra help regardless of your income and savings, can increase your entitlement back at Step 2

See the below for links to further blogs on Benefits for Older People and how to claim / check your future Retirement Pension.

3. Benefits for carers

The main benefit in Step 1 is Carers Allowance (CA). Unusually, CA crosses the “working age” / “pension age” divide and can be claimed at any age from 16 with no upper age limit. This was added into the system in the 1970s. As its but the smallest token of appreciation for some hard work for the common good, there is no issue about National Insurance. Carers can continue to earn while receiving CA, but only up to £120 a week and working under 16 hours

3.1 What counts as caring?

It’s more about being there for someone not keeping a diary of hours putting in the hard graft of a social services home carer. It might involve some physical help, it might be chatting and verbal encouragement or it could be just being on hand if needed. So, the 35 hours is not a full working week but just being with the person for that time – if you are in the same house that could be over a weekend.

You don’t though have to be in the same house. You could be popping round often. The application is based on you honestly ticking a box and the person you help signing a statement that they know you and you are spending time with them.

3.2 caring and being cared for at the same time

It is also possible to – in benefit terms – be a carer and be receiving care yourself, just as it is in the real world and our emotional lives. There is no contradiction then in receiving PIP – which after all hopes to promote independence – while looking after someone else too. And receiving Carers Allowance. Often say, in a couple both partners may have different health issues but between them work as a team and play to each other’s strengths

Similarly, there is no contradiction between being too unwell to work and a carer so there is a potential to have both “routes to benefit” playing a part in your benefits mix.

Of course, there can be times when you feel so laid low, that any support you can offer is going to be very limited, and so claiming CA may not be appropriate.

3.3 How much is carers allowance?

Carers Allowance is paid at a basic rate - in April 2019 - 2020 of £66.15 a week. This amount has been exempt from caps and freezes on annual increases for many other benefits

Carer’s Allowance in Scotland is passing over to a new agency : Social Security Scotland and will eventually become Carer’s Assistance in early 2022. The intention is to bring the amount up to the standard rate for many other Step 1 benefits - currently £73.10 a week. In the meantime, there will be Carer's Allowance Supplement - from April 2019 - to make up the difference , by means of a six monthly backdated amount until a smooth transition is set up to move everyone safely over to a new Carers Assistance. This extra – a 13% increase - will not be taken away as income in the sums for any of the Step 2 benefits.

3.4 Carers claiming conundrums

On the face of it carers allowance (CA) is simple enough: spend 35 hours a week with someone on the right disability benefits and you qualify. No issues around N National Insurance issues, income or savings; claim it and the job is done. However:

CA is one that though overlapping with other Step 1 benefits and so you know you might not get it, can still be worth getting. You will get a letter saying that you qualify but can’t actually receive it, but the gain would come from extra amounts for carers in Step 2 benefits.
In some circumstances, not receiving CA can be quite a good thing. Actually, getting CA can – only in certain circumstances only – adversely affect the Step 2 benefits of the person you are caring for. Do get advice or read more before just giving up on the idea. In many cases a carer can receive it with no such worries.

See the separate blogs on Benefits for Carers to find out more.

3.4 Other benefits for carers

Carers Allowance itself is non-means tested and can be paid regardless of other income or savings or that of any other partner.

Step 1 - Earnings replacement benefits

CA can work very well in combination with other Step 1 benefits Even if it can’t be paid with an overlapping benefit it can still be worth claiming alongside Retirement Pension or Contributory ESA as it will help in Step 2
But it can be paid if this is all you claim under Step 1 and it can be paid with statutory payments

Step 2- Income related benefits

If you are on a low income, you can get a top up from Income Support under pension age and Pension Credit if you are over
And help with specific bills such as rent, council tax prescriptions etc in England, costs of children as with all working age benefits, the new Universal Credit will be replacing a lot of these with one payment.

Step 3 Additional non means tested benefits

If you have children, you can get Child Benefit on top of anything else
If you experience difficulties with your own health problems, you may qualify for your own “disability benefit”

4. Benefits for sickness

For those who have received a cancer diagnosis the most likely benefits in Step 1 are those are those relating to unwellness for work i.e. being “off sick”. These are:

1. Statutory Sick Pay (SSP) paid by an employer for up to 28 weeks; or

2. Contributory Employment and support allowance (C-ESA) which you can claim either:

straightaway if you cannot qualify for SSP or
after your SSP runs out after 28 weeks, regardless as to whether your employer or an insurance scheme continues to pay you any sick pay.
New claims for C-ESA are usually foer a version called known as 'New style' ESA

4.1 Older workers and benefits for sickness

Some people choose to carry on working past pension age. However, Contributory ESA stops at age 65, and you are paid Retirement Pension in sickness and in health.

However, if you are working for an employer after pension age, then you can still receive statutory sick pay from them – along with any other contractual sick pay on top of your pension.

But if you can’t get anything extra under Step 1 and your Retirement Pension is not directly affected by receiving a cancer diagnosis, please don’t think there is no extra support related to health issues. It will be well worth hopping gently on to Steps 2 and 3 – and back to Step 2 again.

4.2 Statutory Sick pay (SSP)

This is the legal minimum that an employer must - in most cases - pay you when you are off sick from work. Many employers pay more e.g. topping up your SSP to full pay for a period, then half pay. This top up is often referred to as contractual or works sick pay.

Statutory Sick Pay is paid at a flat rate of £94.25.a week - at April 2019 -20 rates for a maximum of 28 weeks, regardless of other income and circumstances.

If you are on a contract that offers you full pay during some or all of this period, you may not have even noticed you are getting SSP. It may just be a new mysterious line on your pay slip.

If you don’t have much other money coming in, then you might qualify for a top up from Income Support (IS) or Universal Credit (UC) under Step 2. You will also find other help there for rent, council tax, children, health costs. You should also look at Step 3 as well.

You qualify based on self-certification for the first 7 days and sick notes from your GP after that.

SSP lasts for a maximum of 28 weeks and your employer should give you an SSP1 claim some 5 weeks before the SSP is due to end.

Once you have that SSP1 you can use it to claim Contributory ESA with effect from the day after SSP stops. You can make that ESA claim in advance, so it’s all set up and ready to replace your SSP

You can receive ESA regardless of whether your employer is continuing to pay you something under works / contractual arrangements. The only thing that stopped you claiming ESA until now will have been the fact that you were receiving SSP and you can’t get these two at the same time.

For more details see the links to separate blogs on SSP and how to claim SSP below.

4.3 Contributory Employment and support allowance ( C-ESA)

Until recently, ESA has come in two flavours:

Contributory ESA - here in Step 1 – the non-means tested, earnings replacement benefit; and
Income related ESA - see under Step 2– which is acts as either the means tested safety net back up if you can’t get Contributory ESA or to top it up if you happen not to have much other income.

However, both are in the process of changing as a result of Universal Credit:

Contributory ESA will remain a separate benefit, but will be renamed “New Style” ESA for most new claims. This marks the fact that this version of Contributory ESA stands as a separate benefit , no longer linked to Income-related ESA
And usually you will no longer be able to start a new ESA claim that involves Income-related ESA , as that and other parts of Step 2 support - will come from a claim for Universal Credit (UC) instead.

What is the difference between Contributory and “New style” ESA?

They are largely the same thing, just depending on when you start your claim. Both are non-means tested Step 1 benefits and so are not affected by most other income or any savings that you or a partner may have.

You claim individually in your own right. You must have a full National Insurance record in the two complete tax years, before the benefits year (january to January) year in which you claim.

The difference lies in how you claim them and how they with income related alternatives or top ups. Whatever the name, it could be that either:

you don’t have enough NI contributions in the right years to receive them or :
that you do have enough NI to claim, but other circumstances mean that you are also entitled to a top up from their step 2 equivalents.

for old style Contributory ESA:

The top up / or alternative is Income-related ESA (Ir-ESA) which is part of the same combined benefit of ESA. There may be other amounts from Step 2 such as Housing Benefit
You can claim Ir-ESA at the same time - on the same phone call or ESA1 claim form – as you claim Contributory ESA. Or you can ask for it to be added later, if things change so that you become entitled later or just didn’t realise at the time that you could get a top -up.
If you know that you are not entitled to Income-related ESA when you claim – e.g. because of partners income or savings - then you can just apply for Contributory ESA and thus can miss out lots of questions about any partner or financial matters.

For New style ESA

The top up / alternative is rolled into a separate benefit Universal Credit (UC). Help with rent and children is also within UC, so it is perhaps more likely that you might need to claim UC as a top up than was the case for Income-related ESA
Although ESA and UC are quite separate, you can claim them within the same UC claims process. Or it might be that you claim UC later if you only later become entitled
The DWP at first forgot and have since been struggling with – a clear way for people who know their circumstances will not be bringing them near Step 2 means tested benefits to just make a claim for New Style ESA on its own.
It took the DWP a while to remember that many people might only be interested in claiming New Style ESA on its own as they might not be entitled to Universal Credit. There is now a separate process for claiming New Style ESA only

How is sickness assessed under ESA?

The test of your sickness - for both kinds of ESA and for a sickness claim entirely within Universal Credit - is exactly the same. So, if you have been assessed under ESA that applies equally under UC – you do not have to repeat the test if you move from ESA to UC.

Initially ESA – or UC - will accept your GP’s opinion on a Fitness for Work note aka known as “sick notes / lines”. Thereafter, they will start to apply their own “Work Capability Assessment”., but many people with a cancer diagnosis may bypass all or most of the assessment process.

The full WCA process involves:

a self- assessment questionnaire - an ESA50 or UC50 form - about the effects of all your health conditions on a range of activities that ESA look at and offer points for – issued 4 weeks into a claim
typically followed up by an assessment session with a Health Professional at around 3 months

However, many people with a cancer diagnosis may bypass all - or most of- this process:

some people with more advanced cancers, the WCA can be bypassed altogether by your consultant or GP issuing a DS1500 certificate

you would not then receive an ESA50 / UC50 at all, nor any need to attend any medical assessment
you would be allocated to the ESA Support Group – and/or it’s UC equivalent – but receive the extra amounts from the start of your claim.

others – regardless of how advanced their cancer may be – can bypass most of the test because of “awaiting, receiving or recovering from”major cancer treatments - such as chemo- or radiotherapy.

you will still receive the ESA50/UC50 form, but need only fill in the cancer-related pages, leaving the rest blank and you will not need to attend any medical
you will then be allocated to the ESA Support Group - and/or its UC equivalent – see below - and receive extra amounts from week 14 of your ESA claim (and a similar time under UC.

The ESA groups and extra payments that come with them

For the first 13 weeks of ESA

the basic amount of Contributory ESA or New Style ESA - at April 2019 to 2020 rates - is £73.10 a week, reduced to £57.80 during the first 13 weeks if you are aged under 25.
annual increases in this amount have been subject to changing of the index used, a 1% cap and now. Without these the £73.10 rate would now be £81.09 a week.
For those with more advanced cancers who bypass the process, the Support Group below – applies from the start of their claim

From week 14

the basic rate becomes £73.10 regardless of age.
the WCA will allocate you to one of two groups: Support and Work-Related Activity

The support group

The two quick routes through the process - mentioned above - put you in the Support Group. You may also come into this group after a full WCA
this brings with it an additional Support Component worth £38.55 at 2019 -2020 rates
there is no requirement to engage in any work activity, but you are free to explore any support and training on offer.
there is no time limit on Contributory/New Style claims in this group

The work related activity group

There are some other treated as passing the test that can bring you into this group but for people living with cancer it is more likely to be as a result of the full WCA
It used to come with a lower, frozen WRA Component worth £29.15 a week, which in turn replaced long term additions with an earlier payment in exchange for some work-related activity.

However, this was stopped for entirely new claims since April 2017. Some may still retain a right to receive the WRAC or switch to it from the Support Group
The group though remains with its light touch work requirements of engaging with some appropriate activity to keep you in touch with work – or develop new skills. Failure to do so can lead to sanctions
Entitlement to payment of Contributory/New Style ESA is now limited to 1 year. There is no time limit in the Step 2 equivalents, so you may get help there
It is though still worth keeping the ESA claim going even if you don’t receive any money.

Other help from the steps

Step 1 Earnings replacements benefits

Contributory / New Style ESA can be paid regardless of other income or savings., including any ongoing contractual sick pay from work. They do overlap with other Step 1 benefits so can’t be paid at the same time as say SSP. But if you are also a carer you can claim Carers Allowance which may help in Step 2

Step 2 Means tested benefits

If you are left with a low income you may well be entitled to a cash top up from either Income-related ESA or Universal Credit.
Other Step 2 benefits may help as well e.g. with rent, council tax, health costs, children. Under UC many of these are rolled into the same UC payment.

Step 3 Extra non means tested benefits for children and disability

ESA is about giving you a basic income to replace earnings from working and like SSP it is a “sickness” benefit. But regardless of whether you feel able to work or not, you can also claim a “disability benefit” from Step 3.
These are less to do with a basic income and more about helping with the extra costs that living with a long-term health condition can bring. So, you can receive Personal Independence Payment on top of ESA and indeed on a return to full time work – regardless of any other income or savings.

For more details see the my other blogs on on “Benefits when too unwell to work” and How to Claim ESA

Next time

The next instalment in this series will continue our cooks tour by looking at Step Two – the income-related or means tested help. While this includes basic safety net protection, help can be available quite a bit higher up the income scale than you might think and not all Step 2 benefits have savings limits. So, don’t rule yourself from Step 2 benefits too easily

After that we’ll move on to Step 3, where once again savings, other income and partner’s incomes become even more irrelevant than under Step 1. Anyone with a cancer diagnosis should at least take a serious look at “disability” benefits.

Links and further reading:

Getting face to face support from a benefits advisor near you

Visit your local Maggie's Centre and talk with one of our benefits advisors. Find your local centre here
See if there is a Macmillan advice service near you here
Find your local Citizens Advice office: in England & Wales - here. In Scotland - here

More introductory overviews:

Find out more about.... Benefits and Cancer
Find out more about befits for... Difficulties with day to day living and getting around
Benefits and Cancer an Overview - a shorter summary version of the four blogs in this series - here

Other blog in this series

Benefits and Cancer 1: An Introduction: Costs and benefits, myths, basic jargon and three steps to full entitlement - here
Benefits and Cancer 3 : Step 2 - Means tested benefits and tax credits - here
Benefits and Cancer 4: Step 3 - Extra non-means tesed benefits for children and disability - here

Blogs exploring these benefits in more detail

Benefits in Pension Age – a look at Retirement Pensions old and new and extra help from disability benefits and Pension Credit - starting here
Benefits for Carers – Carers Allowance and other support for carers – starting here
Benefits for Sickness – a look at SSP, ESA and Universal Credit when unwell and the assessment processes involved - starting here
Disability Benefits - starting with AA, DLA, PIP and Cancer - starting here

How to claim key Step 1 benefits – forms, online and by phone - from.gov.uk

Retirement Pension – here
Carers Allowance – here
Statutory Sick Pay - here
Contributory and “New Style” ESA - here