How are care homes paid for?
There are almost 400,000 people in the UK living in residential care homes and nursing 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.
Care homes are paid for in the following ways:
- Local authority funding: the local authority funds some or all of the care. A relative or friend of a resident can also contribute an additional voluntary payment, known as a top-up fee.
- Self-funding: the person being cared for (or their family or a friend) pays all the costs of their care.
- NHS funding: in some circumstances the NHS will cover the cost of the care.
These options are explained below, along with links to more detailed information about each type.
When will my local authority pay for a care home?
To decide if you’re eligible for financial support for a care home, your local authority will first carry out a free needs assessment to work out what level of care you require.
If you’re assessed as having ‘eligible needs’, the authority will then carry out a financial assessment to decide how much you should pay towards the cost of your care and how much should be funded by the council. This is sometimes referred to as a ‘social care means test’.
There are thresholds for savings and assets, known as ‘capital limits for care’. If the value of your savings and assets is higher than the capital limit in your area, then you’ll need to pay for your own care.
The upper capital limits for care home funding in 2021-22 are:
- England and Northern Ireland: £23,250
- Scotland: £28,750
- Wales: £50,000.
Read more about council funding and the financial assessment for care homes.
If you’re eligible for financial support from your local authority, you should be offered a choice of care homes to suit your needs. If you want to live in a care home that’s more expensive than the ones you’ve been offered, a relative or friend can volunteer to pay the difference between what the council is willing to pay and the fees that your preferred home charges to self-funders. This is known as a care home top-up or a third-party top-up fee.
Read more in our article on Care home top-up fees.
When will you be a self-funder?
You will have to arrange and pay for a care home if you:
- have savings and assets in excess of the capital limits for care (see above)
- have a regular income that’s sufficient to cover your care fees
- don’t qualify for local authority funding because your needs weren’t found to be eligible following a needs assessment.
Even if you don’t expect to qualify for financial support, it’s still a good idea to get a needs assessment, because the social services team will make a record of your care needs and provide information about the types of support that are available to meet your needs.
If you expect to be a self-funder, read our article about the different ways you could raise money to help pay for your care – and what to do if you run out of money:
When will the NHS cover the cost of a care home?
In some circumstances, the NHS will cover the care home fees for people with complex health needs.
- NHS Continuing Healthcare funds care for people who need ongoing health care outside of hospital because they have complex medical care needs due to disability, accident or a major illness.
- NHS-funded Nursing Care may also be available to help pay nursing home fees, if you’re assessed by the NHS as needing nursing care.
Neither of these forms of funding is means-tested, but there are strict eligibility criteria.
Paying for care in later life: download our free guide
Our guide provides straightforward information to help you navigate the challenges of paying for care in later life. It explains how care is funded across the UK, how much different care services typically cost, and how to find out if you’re eligible for financial support.
The guide is free to download.