Who Pays for Care Homes?
The decision to move into a care home is undoubtedly an important one. It’s one people understandably have lots of questions about – whether you’re looking at care homes for yourself or for a loved one.
Some of the most frequently asked questions are around outlining who pays for care homes, the cost of residential care and the potential support available to help fund the move.
Everyone’s individual circumstances – both care needs and financial situation – are so vastly different, meaning there’s no single answer to these questions.
However, determining if you’ll have to pay for a care home or whether you can expect to receive support can help you get a better understanding.
Self-Funding Care or State Funded Care?
When it comes to determining who pays for care homes, people usually reside in one of two categories: self-funders and state-funded.
State funding is means-tested. Once you or your loved one’s needs have been assessed by the local council, it’ll be followed up by an income and capital assessment.
This may also include the value of any owned property if the care home is going to become a permanent residence. It won’t be included if it’s still occupied by a partner or former partner, a relative aged 60 or over, a relative with a disability, or a child of the applicant who is under 18 years of age.
It currently works like so:
- If your capital is over £23,250 – you aren’t eligible for state support and must self-fund your care.
- If your capital is between £14,250 and £23,250, you’ll contribute from an income included in your means test (a pension, for example), plus an assumed income based on the capital you have between these two figures. The additional care home costs will be covered by your local council or authority.
- – If your capital is less than £14,250, you’ll contribute from any income included in the means test, but not on an assumed additional income. Your local council or authority will cover the rest of the costs.
Knowing which of these two categories you or your loved one might be in will go a long way toward determining who pays for care.
Paying for a Care Home Via Self-Funding
Someone who is a self-funder will cover the cost of their residential care through their own savings or selling their home or renting it out.
Alternatively, some decide to sell their home to pay for care and invest the proceeds in a high-interest bank account.
Paying for Residential Care with State Funding
Those who’re eligible for state-funded route will receive support from their local council or authority. However, the cost will be covered, in part, by some of your benefits – such as a state person, or for those who have one, a private pension.
That doesn’t mean that the entirety of that pension pot will go towards funding.
Anyone relying on the state-funded option will still have a Personal Expense Allowance (PEA).
A PEA is a set income amount someone is left with to live on. The amount is dependent on where you are within the UK – the rules vary from country to country. And local authorities can increase this amount if they deem the circumstances to warrant it.
For those with capital between £14,250 and £23,250, it’ll also include an assumed income from this amount. Those with less capital than this don’t have to pay from this assumed income.
In some circumstances, where someone has health-based needs, funding may be available via the NHS – through Continuing Healthcare (CHC). When assessing the needs of an individual, councils or local authorities are required to refer them to the NHS if they think there might be a health-based need.
Those who aren’t eligible for NHS CHC, but do have a nursing care requirement, may still be able to get support from the NHS. With NHS-Funded Nursing Care (FNC), the NHS contributes to the cost of any required nursing care, paying it directly to the care home.
Further Information on Paying for a Care Home
Looking for more information about the cost of residential care or paying for care home fees? You can find more information by visiting our care funding and finance page.