Do you have to pay for nursing homes in the UK? A comprehensive guide

Over 400,000 people reside in care homes across the UK, and understanding the financial obligations is a critical concern for many families. The simple question, 'Do you have to pay for nursing homes in the UK?', reveals a complex system of local authority and NHS funding that depends heavily on individual circumstances.

Quick Summary

Whether you pay for nursing homes in the UK depends on your assessed care needs and financial situation, involving a local council means test and potential NHS funding for healthcare requirements, ensuring everyone gets a needs assessment regardless of their finances.

Key Points

• Means-tested funding: Whether you pay depends on a local council financial assessment (means test) of your income and capital.

• Capital limits vary: Upper capital limits differ across England, Scotland, and Wales, affecting eligibility for council funding.

• NHS Continuing Healthcare (CHC): If you have a primary health need, the NHS will cover all your costs, regardless of your financial situation.

• NHS-Funded Nursing Care (FNC): If you require nursing care but don't qualify for CHC, the NHS provides a flat-rate contribution towards nursing fees.

• Deferred Payment Agreements (DPA): These allow you to use your home's value to pay for care later, delaying the need to sell the property.

• Location matters: Funding rules and capital thresholds are different in England, Scotland, Wales, and Northern Ireland.

• Needs assessment is first: Everyone is entitled to a free care needs assessment from their local council, which is the starting point for determining the right type of care.

The Financial Assessment (Means Test)

For most people, the amount they contribute towards nursing home fees is determined by a financial assessment, or 'means test', carried out by their local council. This assessment looks at your income and capital to calculate what you can afford to pay. If you have significant savings or assets, you may have to cover your costs entirely, but the rules are different depending on where you live in the UK.

How Capital is Assessed

Your capital includes savings, investments, and in some cases, the value of your home. The capital limits vary by UK country:

• England and Northern Ireland: The upper capital limit is £23,250. If you have capital above this amount, you are a 'self-funder' and must pay your fees in full. If your capital is between £14,250 and £23,250, you will receive some council help, but a 'tariff income' will be assumed from your savings. Below £14,250, your capital is not taken into account, though you will still contribute from your income.
• Wales: The upper capital limit is currently £50,000 for residential care. If your capital is above this, you pay your fees in full. Below the limit, the council will contribute, depending on your income.
• Scotland: Personal and nursing care is free. However, accommodation costs are means-tested. The upper capital limit is £35,500.

The Value of Your Home

The value of your home is not always included in the financial assessment. It is disregarded if:

• Your spouse or partner still lives there.
• A relative over 60 or who is incapacitated lives there.

NHS Continuing Healthcare (CHC) and NHS-Funded Nursing Care (FNC)

Beyond the means test, there are two key types of NHS funding to be aware of. Both are not means-tested and depend entirely on your health needs.

NHS Continuing Healthcare (CHC)

If you have a primary health need—meaning the majority of your care is for complex and significant health needs—the NHS will fund all your care, including accommodation fees, regardless of your wealth. Eligibility is determined through a detailed assessment by a multi-disciplinary team using a Decision Support Tool.

NHS-Funded Nursing Care (FNC)

For those who don't qualify for CHC but require nursing care in a nursing home, the NHS pays a flat-rate contribution towards the nursing part of the fees directly to the home. This reduces the overall cost you need to cover.

Funding Options for Self-Funders

If the means test determines you must pay for your care, several options can help you manage the costs.

Deferred Payment Agreements (DPA)

A DPA is an arrangement with your local council that allows you to delay paying care home costs until later, often when your home is sold. The council pays an agreed part of your fees as a loan, secured against the value of your property. You will still need to use most of your income towards the fees, and interest will be charged on the deferred amount.

Other Financial Products

Some people use financial products like care annuities or equity release. An independent financial advisor specialising in later-life care can help you explore these options.

A Comparison of Funding Routes

Feature	Local Authority Funded Care	NHS Continuing Healthcare (CHC)	Self-Funded Care
Funding Basis	Means-tested (income and capital)	Needs-based (primary health need)	Private funds
Who Pays?	Council, individual contributes based on means test	NHS covers all costs (health, personal, accommodation)	Individual pays all costs from own funds
Eligibility	Capital below country-specific limit; assessed care needs	Complex and significant health needs	Capital above country-specific limit
Cost	Part-funded by council, part by individual's income/capital	Free of charge	Full cost paid by individual
Property	Included in assessment unless partner/dependent lives there	Not relevant; care is free	Can be used via DPA or equity release

What If Your Funds Run Out?

If you are initially a self-funder and your capital drops below the upper limit, you should inform your local council several months in advance. They will then conduct a financial assessment to determine if you are eligible for funding assistance. The council must then offer you a placement at a rate they are willing to pay, though a third-party top-up may be possible if you wish to stay in a more expensive home.

Conclusion

While the prospect of paying for nursing home fees in the UK can be daunting, a clear understanding of the various funding routes is essential. A free care needs assessment is the first step for everyone, regardless of financial status. If you have significant health needs, the NHS may cover your costs through CHC. If not, the local council will means-test your finances to determine your contribution. For more official guidance and information on social care policies, visit the GOV.UK website.

Frequently Asked Questions

Question: What is a financial assessment and who does it? Answer: A financial assessment, or means test, is carried out by your local council to determine how much you should pay towards care home fees. It looks at your income and capital, including savings and property.

Question: Will I definitely have to sell my home to pay for a nursing home? Answer: Not necessarily. If a partner or certain relatives still live in the property, its value is usually disregarded. You may also be able to get a Deferred Payment Agreement, which delays the need to sell your home.

Question: What is the difference between residential and nursing care costs? Answer: Nursing care homes provide a higher level of medical care from qualified nurses and are therefore more expensive than residential homes, which assist with personal and daily living activities.

Question: Can the NHS pay for my nursing home fees? Answer: Yes, if you have a 'primary health need' and are eligible for NHS Continuing Healthcare, the NHS will cover all your care costs. If you need nursing care but don't qualify for CHC, the NHS will make a flat-rate contribution called NHS-Funded Nursing Care.

Question: What happens if I move into a care home and my money runs out? Answer: If you are a self-funder and your capital falls below the upper limit, your local council must conduct a financial assessment and determine if you are eligible for funding assistance.

Question: Is it true that care is free in Scotland? Answer: Personal care and nursing care are free for eligible residents in Scotland. However, accommodation costs are still means-tested, and residents must pay if their capital is above the relevant threshold.

Question: What is a Deferred Payment Agreement (DPA)? Answer: A DPA is a loan from the council that delays payment of care home fees. It is secured against your property, allowing you to pay the debt back later, usually when the property is sold. It lets you avoid selling your home to pay immediately.

Frequently Asked Questions

What is the capital limit for care home funding in England?

In England, the upper capital limit is £23,250. If you have more than this, you will be expected to pay for your own care. If you have between £14,250 and £23,250, you will contribute some funds, while your council pays the rest.

Does my home count towards my capital during a financial assessment?

It may be included, but not if your partner, a relative over 60, or a dependent relative still lives there. If the property is counted, a Deferred Payment Agreement can be used to avoid selling it immediately.

What are the rules for paying for nursing homes in Scotland?

In Scotland, personal and nursing care is free. However, accommodation costs are means-tested based on your income and assets. The upper capital threshold is £35,500.

Who is eligible for NHS Continuing Healthcare?

Eligibility for NHS Continuing Healthcare is based on whether you have a 'primary health need'. This is for adults with complex and significant health needs, and it is not means-tested.

Can I choose my own nursing home if the council is paying?

Yes, you have the right to choose your home, but the council is only obliged to fund a placement up to a certain rate. If you choose a more expensive home, a third party, like a family member, may need to pay the difference via a 'top-up' fee.

What is a Deferred Payment Agreement, and how does it work?

A Deferred Payment Agreement is a loan from the council to cover care home fees, using your property as security. It allows you to defer the payment until the property is sold, or until after your death, so you are not forced to sell your home immediately.

What should I do if I run out of money while in a nursing home?

If your capital falls below the relevant threshold, you should contact your local council. They will conduct a financial assessment and, if eligible, will begin to fund your care, though you may still need to contribute from your income.