The Local Authority's Role in Care Home Funding
Before a local authority can decide if it will pay towards your care, you must undergo two formal assessments: a care needs assessment and a financial assessment. The care needs assessment determines if a care home is the most appropriate way to meet your eligible needs. If it is, the financial assessment, or means test, then works out what you should contribute towards the cost.
The Financial Assessment: Income and Capital
Your local authority will calculate your contribution based on your income and capital. Only your finances are assessed, not those of a partner, although jointly held assets may be factored in. For most, this means contributing most of your income, including state pensions, occupational pensions, and certain benefits. A key consideration is the capital limit, as different amounts of savings and assets trigger different levels of support.
UK Capital Thresholds for Care Funding
Across the UK, different financial thresholds apply, determining whether you are eligible for local authority funding or must pay for your own care, known as self-funding. It's crucial to understand the rules for your specific location.
| Country | Upper Capital Limit | Lower Capital Limit |
|---|---|---|
| England | £23,250 | £14,250 |
| Wales | £50,000 | £50,000 |
| Scotland | £35,000 | £22,000 |
England Specifics
- If your capital exceeds the upper limit of £23,250, you are considered a self-funder and must cover all care costs until your capital drops below this figure.
- If your capital is between £14,250 and £23,250, the local authority will provide some funding. You will be expected to pay a weekly 'tariff income' of £1 for every £250 (or part thereof) in capital above the lower limit, in addition to contributing from your regular income.
- If your capital is below £14,250, it is disregarded in the financial assessment. You will still contribute from your income, but with no assumed 'tariff income'.
How Your Income is Treated
If you qualify for council funding, most of your income will be used to pay your care home fees. However, the council must leave you with a small sum for personal use, known as the Personal Expenses Allowance (PEA). In England, this is currently £30.65 per week. Certain disability benefits like Attendance Allowance (AA) or Personal Independence Payment (PIP) for daily living can be included in the income assessment, though mobility components are typically disregarded.
Property and Care Home Fees
For permanent care, your home's value is usually counted as capital. This often means selling the property to pay for fees. However, there are significant exceptions where your home is disregarded, including if:
- Your partner continues to live there.
- A close relative aged 60 or over lives there.
- A child under 18 lives there.
- A relative who is incapacitated lives there.
Deferred Payment Agreements
If your home is not disregarded and you don't want to sell it immediately, you may be eligible for a Deferred Payment Agreement (DPA). A DPA allows you to defer your care home costs against the value of your property, with the council essentially lending you the money. The loan is then repaid, with interest, from the proceeds of the property's eventual sale, either during your lifetime or after your death. This can offer crucial time to plan and manage your finances.
Understanding the Personal Budget and Top-Up Fees
Your local authority calculates a 'personal budget' for your eligible care needs. This is the maximum weekly amount they are willing to pay for your care. If you choose a more expensive care home, a third party—such as a family member or charity—can pay the difference through a 'top-up fee'. You cannot pay your own top-up fee, except in limited circumstances like a 12-week property disregard or a DPA.
NHS Funding: Continuing Healthcare and Funded Nursing Care
It's important to differentiate between local authority and NHS funding. If your needs are primarily health-based and complex, you might be eligible for NHS Continuing Healthcare, which covers all care costs and is not means-tested. If you need nursing care in a nursing home but don't qualify for Continuing Healthcare, the NHS will pay a contribution towards the nursing care component, known as NHS-funded nursing care.
What to Do When Funds Run Low
For self-funders, it's vital to plan for the possibility of capital falling below the upper threshold. You should contact your local authority a few months before your funds reach this level to ensure they can conduct a needs and financial assessment in a timely manner. They will then take over funding responsibility, with you contributing from your income as assessed.
For more detailed, official guidance on financial assessments and paying for care, visit the Age UK website: Financial Assessment for Care Explained.
Conclusion
Navigating the social care system is complex, but understanding how much a local authority will pay towards a care home is the first step. The amount is never fixed and is always contingent upon a detailed financial assessment of your individual circumstances. From capital thresholds and income contributions to property rules and top-up fees, a clear grasp of these factors is essential for effective financial planning. By following the assessment procedures and seeking independent financial advice, you can better prepare for the financial aspects of residential care.
