The families of low-paid frontline NHS and social care workers who die from coronavirus will be stripped of eligibility for welfare benefits if they receive a payout under the government’s Covid-19 compensation scheme, it has emerged. Under the NHS and Social Care Coronavirus Life Assurance Scheme, the £60,000 lump sum breaches capital limits rules for most benefits, meaning that the recipient would unable to claim universal credit, housing benefit or pension credit. Labour has called for families who successfully apply for the payout to be exempted from capital limits rules, in line with other compensation schemes, such as those set up for victims of the Windrush scandal and the Grenfell Tower fire. At least 540 frontline health and social care workers are estimated to have died from coronavirus in England and Wales alone since the beginning of the pandemic, including doctors, nurses, porters, care home workers and paramedics. Jonathan Reynolds, Labour’s shadow work and pensions secretary, said: “Health and social care workers are putting their lives on the line to care for coronavirus patients, often without the proper equipment, and many have sadly lost their lives as a result. “The government was right to say we must honour those who have made the ultimate sacrifice. So it is shocking that families are being forced to choose between accessing social security they are entitled to or the compensation they need.” The Royal College of Nursing (RCN) called for “urgent clarification” saying that the payments “should not impact grieving recipients’ eligibility for welfare and other benefits”. The RCN said: “The loss of nursing staff due to Covid-19 is tragic. Each one was a huge loss to our profession, to their communities and most of all to their loved ones. The government must address this issue immediately.” Unison’s general secretary, Dave Prentis, said: “Taking away the income of families in need makes no sense. These payments are meant to provide financial security when it’s needed most, not be an excuse to make savings elsewhere. Ministers must fix this to ensure the loved ones of health and care workers who lost their lives are provided for properly.” Under universal credit rules, anyone with capital or savings of over £16,000, not including the value of their main home, is ineligible to claim support. Claimants with savings of over £6,000 face tapered deductions from their benefit payments at a rate of £4.35 a month for every £250 over the lower limit. A House of Commons library note says: “The DWP has agreed with HM Treasury and the Department for Health and Social Care that these payments will not be disregarded. Therefore, if a recipient of a payment from this … scheme is on one of these benefits, it will fully be taken into account as capital.” The scheme, which opened on 20 May, was announced in April by health secretary Matt Hancock amid increasing concerns over the lack of personal protective equipment (PPE) available to frontline health and care workers. At the time Hancock said he felt “a deep personal sense of duty” that the government must care for the loved ones of NHS and care staff who lost their lives. There is already concern over the few numbers of applications so far to the UK-wide scheme, which opened on 20 May. The latest figures, from 8 July, show just 51 claims for the bereavement scheme had been received. None had been rejected at that point, with 32 then still under consideration. Capital limits rules have caught out a number of recent applicants for universal credit, including couples who had been saving for a mortgage who found they were ineligible for benefit support after losing their job as a result of the Covid-19 crisis. Labour has previously called for capital limits to be lifted during the pandemic. A government spokesperson said: “The death of any healthcare worker is a tragedy. Since it began in May, the life assurance scheme has already provided additional financial security to families of frontline NHS and social care workers in England who have died due to coronavirus. “It has always been one the central principles of Universal Credit that decisions on awarding the benefit should take into account individuals’ existing ability to meet their basic needs, so that we maintain our focus on supporting families in most need.”