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There are more than 430,000 people in the UK living in residential and nursing care homes. Of these, almost half pay for care themselves and the rest are supported, either wholly or partly, by their local authority or the NHS.

Our research shows that it can be difficult understanding the system for who pays for care and under what circumstances, so here we set out the basics for the ways in which care home fees are paid.

On this page you can read the essentials about:

1. When a local authority pays the fees for a care home
2. Third-party top-up fees
3. NHS funding for care
4. Self-funding a care home

This information applies to paying for care in England. There are differing variations to the rules in Northern Ireland, Scotland and Wales, which we explain in the more detailed guides to each of these subjects.

When does a local authority pay the fees for a care home?

In order to establish if a person is eligible for financial support to pay for a care home, the local authority must first carry out a needs assessment.

If your relative is assessed as having ‘eligible needs’ that can only be met in a care home and he or she wishes to apply for financial help, the council will then carry out a financial assessment.

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If your relative owns his or her home, its value is likely to be taken into consideration for the means test unless a spouse, civil partner or partner is living in the home.

The result of the assessment determines how much the local authority will pay for care to meet those defined eligible needs.

If your relative’s total savings and assets is:

  • Less than £14,250 (2017-18): they will be entitled to maximum support from the local authority, although your relative will have to contribute to the care costs from their income, which includes any pension(s).
  • More than £14,250, but less than £23,250: the local authority will partially pay their care home fees and your relative will need to pay the rest on a sliding scale. This is known as the ‘tariff income’.
  • More than £23,250: your relative will be fully responsible for paying their care bills.

The level of your relative’s eligible needs will also determine how much the council will pay for their care. 

More information

  • Getting local authority funding for a care home: find out more about the thresholds applied by local authorities across the UK,  how to calculate your relative’s capital and income and how much a local authority will pay for a place in a care home.

Third-party top-up fees

A third-party top-up fee is an amount of money that a relative, friend or charitable organisation might pay in addition to your personal budget from the council.

The ‘top up’ is the difference between the amount a council pays a care home and the chosen care home’s fee.

Instances when this might happen are if your relative:

  • would prefer to live in a room in a recommended care home or another care home that costs more than the council is prepared to pay
  • wants to live in a more expensive area to be closer to family or friends and this wasn’t identified in the needs assessment
  • was self-funding but is now eligible for local authority funding and wants to stay in the same home, which isn’t contracted to the council.

A person cannot be forced to pay a third-party top-up and your local council should not request that a top-up payment is made if no other care home can be found that will meet your relative’s care needs for a lower cost.

More information

  • Paying third-party top-up fees: read more about when your relative can pay their own top-up, organising a top-up fee and occasions when a personal budget might be increased, negating the need for a top-up fee.

NHS funding for care

In certain circumstances, the NHS will pay all care costs and nursing home fees. In particular, NHS continuing healthcare funds people who need ongoing health care outside of hospital if they have complex medical care needs due to disability, accident or a major illness. This funding is not means tested.

The criteria for this funding are complicated and can be difficult to access, but it can be worth pursuing if you think your relative may qualify.

More information

  • NHS funding for care: our guide to the different types of NHS funding, who is eligible and how to get assessed.
    Self-funding a care home

If your relative is living alone and owns his or her home, it needn't necessarily be the case that their home will have to be sold to pay for any care home bills.

More information

  • Care home fees: we outline the average care home fees across the UK.
  • Self-funding a care home: from letting a home to taking out an immediate needs annuity, we explain other options to help cover the cost of a room in a care home.
  • Care home contracts: In this guide we explain what should be in a good care home contract, things to look out for and what to do if you spot any problems.

Page last reviewed: September 2017