Understanding the Care System and Funding
When it comes to assisted living—often referred to as residential care homes or extra care housing in the UK—there are three main routes for paying for care: self-funding, local council support, and NHS funding. A comprehensive assessment process, starting with a care needs assessment, determines an individual's eligibility for state support. This is a vital first step, as it establishes the type of care required and opens the door to potential financial help.
The Financial Assessment (Means Test)
For most social care services, including assisted living, your local council will conduct a financial assessment, or means test, to determine how much you must contribute. This test considers your income and capital, such as savings, investments, and property.
Capital Thresholds in England
The capital thresholds are the key deciding factor for local authority support, though these can vary by nation within the UK.
- Over £23,250: You will be required to pay the full cost of your care. You are classed as a 'self-funder' until your capital falls below this limit.
- Between £14,250 and £23,250: The local council will contribute towards your fees, and you will contribute the rest from your income and a 'tariff income' based on your capital.
- Under £14,250: Your capital is not included in the financial assessment. The council covers the care costs, though you may still need to contribute from your income, like a pension.
What Counts as Capital?
Your capital includes assets like bank and building society accounts, investments, and second properties. However, the value of your main home is disregarded in certain circumstances, such as if a partner or a close relative over 60 still lives there. This is a crucial point for homeowners worried about having to sell their property.
NHS Funding: Eligibility and Types
For individuals with severe or complex health needs, the NHS may cover the full cost of care, regardless of their financial situation. This is not means-tested and is entirely dependent on health requirements.
NHS Continuing Healthcare (CHC)
CHC is a package of care for those with a 'primary health need'. A multidisciplinary team of healthcare professionals carries out a comprehensive assessment to determine eligibility. If you qualify, the NHS funds all care and accommodation costs.
NHS-Funded Nursing Care (FNC)
If you reside in a nursing home and require care from a registered nurse but do not qualify for full CHC, the NHS will pay a flat-rate contribution towards the nursing part of your fees. This payment is made directly to the care home.
Alternative Funding and Payment Arrangements
Even if you are a self-funder, there are options to help manage the substantial costs of assisted living.
Deferred Payment Agreements (DPAs)
If you own your home but lack the immediate funds to pay for care, a DPA may be an option. The local council pays for your care on your behalf, and the cost is repaid later, usually from the proceeds of the property's sale after you pass away. It is essentially a loan secured against your home.
Equity Release
For homeowners, equity release allows you to access the value built up in your property without selling it. This can provide a lump sum or regular payments to fund care costs. This decision should be made with careful consideration and independent financial advice, as it will affect the value of your estate.
Top-Up Fees
If the care home you prefer is more expensive than the rate the local council deems necessary for your needs, a third party—usually a family member—can pay the difference. This is known as a 'top-up' fee. The council must still prove there is a suitable, more affordable alternative available.
Benefits and Deprivation of Assets
Additional Benefits
Certain benefits are not means-tested and can help with daily living costs. For example, Attendance Allowance is available to those over State Pension age who need care due to a disability or illness, regardless of savings.
Deliberate Deprivation of Assets
To prevent people from giving away assets to avoid care fees, councils can still include the value of those assets in the financial assessment if they believe this was done deliberately. This is called 'notional capital'.
Who pays for Assisted Living: A Summary Table
| Funding Source | Eligibility Criteria | How it Works |
|---|---|---|
| Self-Funding | Capital over £23,250 (in England) | You pay the full cost of care from your assets. |
| Local Council | Capital below £23,250, after needs assessment | Council contributes based on means test; you contribute from income/tariff income. |
| NHS (CHC) | Primary health need and complex care requirements | NHS pays the full cost of care, regardless of wealth. |
| NHS (FNC) | In a nursing home, needing nursing care but not CHC | NHS pays a flat rate directly to the home for nursing costs. |
| Third Party | Resident wants a more expensive home than council's rate | A family member or friend pays the 'top-up' fee. |
Getting the Right Advice
The UK's care funding landscape can be complex and overwhelming. A crucial first step is to contact your local council's adult social services department to arrange a care needs assessment. Following this, seeking independent financial advice is highly recommended to explore all available funding options, such as those covered by the Society of Later Life Advisers (SOLLA). Understanding your financial and care needs thoroughly is the best way to ensure the most suitable and sustainable funding path for assisted living.
Conclusion
In the UK, payment for assisted living is not straightforward and typically involves a combination of personal funds, local council contributions, and NHS support. The financial assessment determines the level of private and public contribution, while specific health needs can unlock full NHS funding. With careful planning and professional advice, families can navigate this complex system to find the best care solution. Starting with a care needs assessment from your local council is the first and most important step towards understanding your options.
