Understanding the Care Home Funding System in the UK
For many, the prospect of needing residential care raises significant financial questions. In the UK, the system for funding care homes is complex and depends on a means test, known as a financial assessment. This guide breaks down how the system works, your potential financial responsibilities, and the various options available.
The All-Important Needs and Financial Assessments
Before any financial decisions are made, two assessments must be carried out. The first is a care needs assessment, performed by your local council. A qualified professional will evaluate your health and social care needs to determine if a care home is the right option for you.
If the needs assessment confirms residential care is required, a financial assessment (or means test) is conducted. This process evaluates your income and capital to calculate how much you are expected to contribute towards your care fees.
What counts in the financial assessment?
- Income: This includes your State Pension, private pensions, certain benefits, and other regular sources of income. Some disability benefits, such as the mobility component of Personal Independence Payment (PIP), are disregarded.
- Capital: This includes savings, investments (like shares and bonds), and any property you own, unless certain criteria are met.
The Three Key Funding Scenarios
Your financial assessment will place you into one of three main categories for care funding:
1. Self-Funder (You Pay Full Fees)
If your capital exceeds the upper capital limit (£23,250 in England, though this varies across the UK), you are classified as a 'self-funder' and must pay your care home fees in full. You can choose any care home that meets your needs. If your capital later falls below this threshold, you should contact the council for a new assessment.
2. Local Council Support (You Pay a Contribution)
If your capital is below the upper capital limit, your local council will contribute to your care costs. You will still need to pay a contribution based on your income and a 'tariff income' calculated from capital between the upper and lower limits (£14,250 in England). The council will arrange your care, and you will receive a weekly Personal Expenses Allowance for your personal use.
3. NHS Continuing Healthcare (CHC) (Free Care)
For individuals with a primary health need that is complex, intense, and unpredictable, the NHS may fund all care costs under a package known as NHS Continuing Healthcare. This funding is not means-tested. If you have been assessed as needing residential care, you should be considered for CHC funding first.
The Role of Your Property and the Deferred Payment Scheme
For many, the family home is the most valuable asset. The rules regarding property are particularly important when considering care home funding.
When a property is disregarded:
Your home's value will be ignored in the financial assessment if certain people still live there, including:
- A spouse or partner.
- A close relative who is over 60 or incapacitated.
- A child under 16 who you are financially responsible for.
What is a Deferred Payment Agreement?
If your home is included in the financial assessment but you don't want to sell it immediately, you might be eligible for a Deferred Payment Agreement (DPA). Under a DPA, the council pays your care home fees as a loan, which is secured against your home. This allows you to delay repaying the council until a later date, such as when your house is sold or after your death. Interest and administrative fees may apply.
A Deeper Look into Deprivation of Assets
Attempting to give away or get rid of your savings or property to avoid paying care fees is known as 'deliberate deprivation of assets'. The council can and will investigate this, and if found, can still assess you as if you still held the asset.
Funding Comparison Table (England)
| Your Capital (Savings, Investments) | Your Property | Who Pays? | Your Contribution | Key Considerations |
|---|---|---|---|---|
| Over £23,250 | No Protected Occupant | You (Self-Funder) | Full fees until capital falls below limit | You have full choice of care home. Plan for fees carefully. |
| Between £14,250 & £23,250 | No Protected Occupant | Local Council + You | Contribution from income + tariff income | Limited choice of care home, potential for 'top-up' fees. |
| Under £14,250 | No Protected Occupant | Local Council + You | Contribution from income only | Maximum council support, limited care home choice. |
| Over £23,250 | Protected Occupant (e.g., spouse) | You (Self-Funder) | Income contribution until capital falls below limit | Property is disregarded, fees paid from other assets first. |
| Any amount | CHC Eligibility | NHS | None | Not means-tested; full costs covered by the NHS. |
What to do if you are running out of money?
If you begin as a self-funder and your capital approaches the upper limit (£23,250 in England), you must contact your local council. They will re-assess your finances and, if eligible, start contributing to your fees. It's crucial to initiate this process before your funds run out, as council funding will only be backdated to when you made the first contact.
Conclusion
The question, do you have to pay to go in care home in the UK?, has a nuanced answer. While many people are required to self-fund or make a significant contribution, there are systems in place for those who cannot afford it. The process starts with a dual assessment of your care needs and finances. Options such as Deferred Payment Agreements and NHS funding are available in specific circumstances to ease the financial burden. To navigate this complex landscape, seeking professional advice is highly recommended. For more comprehensive guidance, visit the Age UK website which offers detailed information and support.
Summary of financial responsibilities
- Financial Assessment: Your contribution to care home fees is determined by a council-led financial assessment of your income and capital.
- Self-Funder Status: If your capital is above £23,250 in England, you are a self-funder and must pay your own fees in full.
- Council Assistance: If your capital is below the upper limit, the council will help with fees, but you will still contribute based on your income.
- NHS Continuing Healthcare (CHC): If your primary need is healthcare-related, the NHS may pay all costs, regardless of your finances.
- Deferred Payment Agreements: Homeowners can use a DPA to delay selling their property to pay for care fees.
- Deprivation of Assets: Giving away assets to avoid fees is prohibited, and the council can still treat you as if you still owned them.
- Family Contribution: Your family's finances are not assessed, but they can voluntarily contribute via 'top-up' fees.
- Running Out of Money: If a self-funder's capital falls below the threshold, the council can step in and help with funding after a re-assessment.
Next Steps
- Request a Care Needs Assessment: Contact your local council to start the process and confirm that a care home is needed for you or your relative.
- Gather Financial Information: Compile details of all income and capital (savings, investments, property) in preparation for the financial assessment.
- Explore All Funding Options: Consider your eligibility for NHS Continuing Healthcare, council funding, and Deferred Payment Agreements.
- Seek Independent Financial Advice: For peace of mind, consult a specialist financial adviser who understands care home funding to guide you through the process.
- Look for Non-Means-Tested Benefits: Check for benefits like Attendance Allowance, which can still be claimed while in a care home and can supplement care costs.
Getting the right financial and legal advice
Navigating the care system can be daunting. It is highly recommended to seek independent legal and financial advice to ensure all options are explored and your rights are protected. Organisations such as Age UK, Independent Age, and MoneyHelper offer free, confidential guidance.
The crucial Personal Expenses Allowance
If the local council is contributing to your care, they will ensure you are left with a minimum weekly Personal Expenses Allowance (PEA) from your income. This money is for your own use, for things like clothes, magazines, or other personal items, and cannot be used for care home fees.
What happens if you need to go into a care home suddenly?
In a crisis, such as after a hospital stay, you may need to enter a care home quickly. The system allows for temporary placements, and special funding might be available for a short period, such as the '12-week property disregard' for homeowners. However, long-term arrangements must still follow the standard assessment procedures. It's vital to inform the council of your financial circumstances as soon as possible, as funding starts from the date of contact.
