Who Pays for Care Home Fees?
The cost of care homes in the UK is a major concern for many, but funding is not a simple case of paying for it all yourself. Whether you pay all, part, or none of your care home fees is determined by a series of assessments. The primary routes for funding are through your local authority (council), the NHS, or through your own private resources. It is crucial to understand these different pathways to ensure you receive all the help you are entitled to.
The Local Authority Financial Assessment
For most people needing residential care, the journey begins with a local authority assessment. This process has two main parts: a needs assessment and a financial assessment.
The Needs Assessment
First, a care needs assessment must be carried out by your local council to establish if you require a care home. This is mandatory for anyone seeking council support and is available regardless of your income or savings. The assessment will evaluate your physical, social, and emotional needs to determine the most suitable type of care. Even if you plan to self-fund, getting this assessment is wise, as it could identify eligibility for non-means-tested support.
The Financial Assessment (Means Test)
If the needs assessment concludes that residential care is the best option, the local authority will conduct a financial assessment to determine your contribution. The rules and financial thresholds for this vary slightly across the UK. For England, the key financial thresholds are:
- Capital over £23,250: You are considered a 'self-funder' and must pay the full cost of your care until your capital drops below this limit.
- Capital between £14,250 and £23,250: Your council may provide some financial support. You will contribute to your care from your income, plus a 'tariff income' based on your capital in this band.
- Capital under £14,250: Your capital is disregarded. Your council will provide financial support, and you will contribute from your income only.
The financial assessment takes into account your income (e.g., pensions, benefits) and capital (e.g., savings, investments) but disregards certain assets. For permanent care home residents, your property may be included, but there are important exceptions, such as if your partner or a dependent relative still lives there.
NHS Continuing Healthcare (CHC)
In some cases, the NHS will cover all care home costs. This applies if your care needs are primarily due to a health condition rather than a social care need. The eligibility criteria for NHS Continuing Healthcare (CHC) are very specific and are assessed by a multidisciplinary team of healthcare professionals using a Decision Support Tool. If you are eligible for CHC, your care home placement is free. The assessment process is notoriously complex, but a positive result means all assessed care costs are paid by the NHS.
Self-Funding and Other Options
If your capital is above the local authority threshold, you are a 'self-funder.' Even in this situation, you have options to manage the cost.
Deferred Payment Scheme
If the majority of your wealth is in your property and you don't want to sell it immediately, you might be eligible for a Deferred Payment Agreement (DPA). This is an arrangement with the local authority where they pay your care home fees for you as a loan, secured against your property. You repay the loan later, often from the proceeds of the property sale, or from your estate after your death. Interest and administrative fees usually apply.
Other Funding Methods for Self-Funders
- Renting Out Your Home: You could choose to rent out your property and use the rental income to help pay for care, reducing the amount you need to defer.
- Care Annuities: This involves paying a lump sum to an insurance company in exchange for a guaranteed, lifelong income to cover care costs.
- Savings and Investments: Many people use their existing savings, investments, and pension income to cover their fees.
Understanding Top-Up Fees
If you are receiving local authority funding but choose a more expensive care home than the council's standard rate, a 'top-up' fee may be required. This is the difference between the council's allocated budget and the actual cost of the home. Usually, a third party, such as a relative, must pay this fee. The council must still show that a suitable and affordable home is available within its standard rate.
Comparison of UK Care Funding Options
| Feature | Self-Funding | Local Authority Support | NHS Continuing Healthcare (CHC) |
|---|---|---|---|
| Payer | Individual | Individual contributes, council pays balance | NHS pays in full |
| Eligibility | Capital above upper threshold (£23,250 in England) | Capital below upper threshold after needs assessment | 'Primary health need' determined by MDT assessment |
| Financial Assessment | Not means-tested (for initial payment) | Yes, means-tested | No, health-based assessment only |
| Property Considered? | Yes, valued as an asset | Yes, unless exemptions apply. Can be deferred | Not relevant for eligibility |
| Who Arranges Care? | Individual, with direct contract | Local council | NHS Integrated Care Board |
| Top-Up Fees | Not applicable | Possible, paid by third party for more expensive home | Not possible, as all assessed needs are fully funded |
The Need for Professional Advice
Given the complexity of care home funding, seeking independent financial and legal advice is highly recommended. The system can be overwhelming, and an adviser can help you understand your specific situation, potential entitlements, and the best way forward. For up-to-date and authoritative information, consulting with organisations such as Age UK is a valuable step.
Conclusion
The question of whether you have to pay for a care home in the UK depends on a comprehensive assessment of your care needs and financial situation. While the high cost of care is undeniable, it is not always a private expense. By undergoing a care needs assessment and understanding the financial thresholds, you can determine if you are eligible for local authority or NHS funding. For those who need to self-fund, a range of options exists, including deferred payment schemes, which can prevent the immediate sale of your home. The key is to seek information early and explore all avenues to ensure that you or your loved one receives the best possible care, affordably.
Age UK offers extensive resources on paying for care, including local-specific guidance.
