Care Home Costs
Understanding care home fees
1. How to fund your care – self-funders v state funded
Nearly half a million people in the UK live in a care home and around half of these fund themselves (self-funders) and the other half receive local authority funding (with a quarter of these paying top-ups).
If you live in England and have assets of more than £23,250, you will have to pay the full cost of your care and are referred to as a self-funder. Anyone with capital below this amount will qualify for some financial support. In England if you have capital below £14,250 you should get maximum support.
If your savings or income fall below the threshold, the local authority should start paying for some or all of your care. You can ask the local authority to carry out a review while you are in residential care if your savings drop below the threshold or are about to, so it can take over paying the care costs.
The value of your assets is calculated by adding up your investments, savings and the equity from your property. Your property won’t be included as an asset if a husband, wife, civil partner, a close relative over the age of 60 or a dependent child or disabled relative lives with you.
In the means test only 50% of any jointly held capital, such as a savings account, is counted. Some types of capital and income, such as certain disability benefits or pensions are not included and also personal possessions are ignored. The means test will assume that you are in receipt of all of the benefits that you are entitled to, so you want to ensure that you are claiming them.
If your home is included in your means-test, it is disregarded for your first 12 weeks in a care home. Therefore if other capital assets and income are low, you may only become a self-funder after 12 weeks.
If you deliberately transfer ownership of a property into someone else’s name or money into someone else’s bank account to avoid paying for your care, it may be seen as a deprivation of assets and the local authority could refuse to fund your care.
It is advisable to register a Lasting Power of Attorney to give someone you trust control over decisions regarding your health, welfare and finances in case you lose the capacity to make these yourself in the future.
What is the maximum you have to pay for care home fees?
There is currently no cap on care home fees in the UK. However, if your capital falls below the lower threshold, your local authority may cover the full cost of your care.
The UK government announced on 7 September 2020 that from October 2023, no one in England will have to pay more than £86,000 in care costs during their lifetime. Once you have reached the cap, the ongoing care costs will be paid for by your local authority. This will be funded by a 1.25 per cent increase in National Insurance, coming into effect in April 2022.
However, daily living costs at a care home such as accommodation, food and energy bills will not be covered.
The savings threshold for care homes or receiving support from local authorities will also change, and if you have capital between £20,000 and £100,000 you will receive some form of support. If you have less than £20,000, you will not have to pay for care from their assets but may have to contribute from their income.
This video will give you a brief overview of when you may get support from your local authority and in what scenario you must cover your care home fees yourself.
2. Self-funders
It is important for self-funders to establish how much the care home will cost each year, the benefits that you are entitled to, how much income you require and how best to generate this income from your assets.
It is very important to ensure that you plan properly to ensure that you do not have to move to a different care home at a later stage.
How much the care home will cost each year
If you or a relative are making your own financial arrangements with the care home, you need to make sure you have a contract spelling out the home’s obligations and fees. Find out if anything is an extra and how much notice the care home needs to give, if it wishes to increase the fees.
Which benefits are self-funders entitled to?
When you go into a care home, you can still claim a number of benefits and there are potential additional state benefits available. The two most common additional state benefits available are the Attendance Allowance and Funded Nursing Care (FNC) for Nursing Care Costs. You can still claim State Pension and other State Benefits. Also, some care and support in the care homes are free of charge.
State Pension & Other State Benefits
If you are of state pension age you will still be able to get a State Pension. The basic State Pension is £141.85 a week. You can claim the basic State Pension if you’re a man born before 6 April 1951 or a woman born before 6 April 1953.
If you were born after these dates, you will be eligible for the full new State Pension, which is £185.15 per week. The actual amount you will get depends on your National Insurance record.
You will not have to pay council tax, if you move into a care home and there is no one living in your property.
Other state benefits might be available such as Pension Credit, Incapacity Benefit, Severe Disablement Allowance, Widow’s Pension, Bereavement Allowance, Widowed Parent’s Allowance, Industrial Injuries Disablement Benefit, Statutory Sick Pay, Employment and Support Allowance.
To find out more about how moving into a care home affects your pension, click here.
What makes up care home costs?
The cost of care depends on a number of factors, including:
- The type and level of care that is needed
- The location of the home
- The style, and facilities offered in the care home
- The size, and facilities in the bedroom
- The level of additional services offered
assessed as needing it), as well as accommodation, meals, laundry, some bills
and some of the services offered in the home.
Care Needs Assessments, Financial Assessment & Personal Budget
If you feel you may be eligible for state funded care, the first step to take is to get your local authority to carry out a care needs assessment. This will identify exactly what support and how much help you need. The needs assessment should look at your physical care needs, as well as your emotional, mental, social, psychological, religious and cultural needs.
See NHS guidance on Care Needs Assessments for further details.
The local authority will then carry out a financial assessment which is a means test based on national guidelines and calculate how much you have to pay towards your care home fees.
If you are eligible for local authority funding, then the local authority will set a personal budget. This comprises of the total cost of meeting your needs, the amount that you have to contribute and the outstanding amount that the local authority has to pay.
The amount you must pay will include money you receive from most of your benefits, such as State Pension and income you have from any assets. If the local authority does pay your care home fees, then any payments you receive for Attendance Allowance, Disability Living Allowance (DLA) or Personal Independence Payment (PIP) will stop after you have been living in the care home for 28 days.
It may feel like your privacy is being invaded when someone is asking details about your finances. However, if you refuse to answer questions about your finances, you may be charged automatically for your own care.
If you wish you can get a written statement from the local authority detailing their calculations and how much you should contribute.
How much will a local authority pay?
There is usually an upper limit on how much a local authority will pay for someone’s residential care costs. This is often called the usual or standard rate. The local authority may give you a list of local care homes and they must offer you at least one care home that is suitable for your care needs.
If there are no places in care homes available at your personal budget level, the local authority should organise a place in more expensive care home and increase your personal budget to cover the additional cost.
If your local authority is currently funding your care and you wish to move to a care home in another county to be closer to family, you can do this and it will still be responsible for paying for your care.
If there are no vacancies in your preferred care home, the local authority should place you on a waiting list for this home and then organise alternative arrangements in the interim period for another care home or care in your home with a high level of care.
Paying top-up fees
If you or your relative sets their heart on a more expensive care home, the local authority may agree to pay for it, providing a third party, such as a family member, friend or charity pays the extra. You, as the resident, cannot pay this extra amount, which is often referred to as a top-up fee.
Local authorities can only ask for a top-up fee if you refuse a care home that meets your assessed needs and choose a more expensive home instead.
Whoever is paying the top-up fee will have to sign a contract with the local authority agreeing to pay the fee. The agreement will state what will happen if the fees change or if the top-up fees can no longer be paid.
The top-up fee can be paid either to the local authority or to the care home. If the top-up fee can no longer be paid, the local authority has the right to move the person to a cheaper care home that meets their assessed needs.
Important points to note
for and what isn’t included in the fees.
Important questions to ask
- What is covered by the fees (eg, accommodation, meals, personal care,
laundry, bills etc)? - Are there any extra costs (eg, activities, chiropody, hairdressing, newspapers, toiletries)?
- How often are the fees reviewed?
- How much notice will you be given of any increase in fees?
- How much notice do you have to give if you want to move to another home?
- What charges are made if you go into hospital or on holiday?
- Do you have to take out your own contents insurance?
