Care home fees

Care home fees are means-tested, so you or your loved one will not have to pay all of your money to fund your care if your capital or income is below a specified level. As well as basic fees, you may also need to pay for personal care. Fees will also vary depending on the facilities provided, such as an en-suite bathroom.

For those with long-term and complex health needs, their fees may be funded by the NHS through NHS Continuing Healthcare (CHC). CHC is not means-tested, meaning you should not answer questions about your financial situation if you believe you or your relative are entitled to CHC. To obtain CHC funding, an individual will need to be assessed by a local Clinical Commissioning Group (CCG).

The initial step is asking a social worker, GP, or other healthcare professional to fill in a checklist which will determine whether an assessment is warranted. CHC funding is not automatically available for conditions such as dementia or Alzheimer’s Disease; it must be established that the individual has complex, substantial, and unpredictable healthcare needs.

The cost of care varies according to region. In England, the average cost of a week’s residential care is around £680. Nursing homes are more expensive than care homes as they have a qualified nurse in attendance 24 hours a day and provide more care and assistance to residents. The average cost of a week’s nursing care is around £980.

Care home fees are paid by the patient from their income and capital, provided these remain above a set level. Income could be from investments or pensions, while paying from capital may involve selling your home to fund care.

In England, if you have capital over £23,250, you will be self-funding, meaning you will need to pay your care home fees in full. If you have between £14,250 and £23,250, you will be required to pay a tariff towards the cost of your care. When your capital falls below £14,250, you may be required to pay some money from any income you have, with the council meeting the remaining costs. You or your relative must be given a personal expenses allowance (PEA), currently £23.50 per week, to buy items such as toiletries, treats, and gifts.

In October 2023, a cap on care home fees payable by individuals will come into force. This means that once someone has paid £86,000 for personal care, they cannot be asked to pay any more. Personal care refers to help with day-to-day tasks such as dressing, washing, and eating, but does not include other costs, such as accommodation and food.

The capital limits will also be increased so that no one will be required to contribute to their personal care fees once their assets fall below £20,000. Some assistance with fees will be available to those with less than £100,000.

Once the funds of you or your relative fall below the savings threshold for care home costs, you can request a means test from the local authority, who should start paying for basic care needs. The local authority will set up a personal budget. They may provide care by dealing directly with the care provider, or you can ask for direct payments to arrange care where necessary and handle payments yourself.

Giving away your assets to avoid care home fees is not permitted. It is referred to as deprivation of assets, and if the local authority believes that you have tried to avoid paying for care in this way, it has powers to investigate, charge for care, and reverse transfers where necessary. In looking at deliberate deprivation of assets, the local authority can go back in time as far as it wishes. If it concludes that at the time you could reasonably have expected that you would need care and support, it can reach a conclusion of deliberate deprivation.

This does not mean that you cannot take steps to protect your assets, however. For example, if you jointly own a property with your spouse, you can protect your share in the property from being used to pay your spouse’s care home fees in the future. The law in this area is complicated, and it is highly recommended that you speak to an expert in care home fees advice to ensure that you take the right course of action for your situation.

If you do not wish to sell your home to pay for care home fees, there are other options available, such as:

• Deferred payment: Some local authorities allow individuals to defer payment to a future date so that their property does not need to be sold in their lifetime.
• Equity release: It is possible to raise funds against your home without selling it, but this may not be the best option financially, so it is essential to take independent legal advice if considering this.
• Immediate needs care annuity: This is an insurance plan that can be used if you are likely to need long-term care. Again, you should take independent advice before selecting this option.

You cannot put your house into a trust to avoid paying care home fees as this is classed as deliberate deprivation of assets.

You will not be made to sell a jointly owned property to fund care fees if your partner is still living in the property, nor will the value of the property be taken into account when carrying out a means test. The exception to this is where you and your partner are no longer living together but still own part of the property. In this event, the value of your share will be taken into account in the means test, and there is a possibility that the property will need to be sold.

An £86,000 cap on the amount anyone would have to pay towards their personal care was proposed and legislated, originally due to come into force in October 2023 and then delayed to October 2025. However, in 2024 the government confirmed that these reforms would not go ahead, so there is currently no cap on care home fees, and the capital limits remain at £23,250 (upper) and £14,250 (lower). Because care funding policy can change, we recommend taking up-to-date advice on your options.

Giving your home to your children to avoid care fees is treated the same as any other gift: if the local authority decides you did it deliberately to avoid paying for care that you could foresee needing, it can treat you as still owning the asset (deliberate deprivation), and there is no time limit on how far back it can look. Gifting your home can also create other problems, such as inheritance tax, capital gains tax, or risk if your child divorces or is made bankrupt. Always take legal advice before making any gift of this kind.