Paying for Long Term Care – A Guide

Focus on Disability - For Disabled People, the Elderly and their Carers in the UK

A guide to your contribution towards the cost of residential care home and nursing home fees. Your local council will work out how much you may have to pay by doing a financial assessment.

see also:
Care Homes – A Guide
Care Homes – Benefits and Hospital

Your financial assessment

Before you move into a care home, you’ll have a financial assessment with your local council. The council will look at your
income and capital and decide how much you may have to pay towards your care home fees.

Examples of income include:

  • interest on your savings
  • private and/or State Pension
  • some benefits like Pension Credit, Attendance Allowance or the care component of Disability Living Allowance

Your capital might include:

  • savings
  • investments
  • any property you might own (like your home or holiday home, for example)

Before your financial assessment, make sure you’re getting all the benefits you’re entitled to. This is important because your
contribution to your care home fees will be worked out as if you’re receiving all relevant benefits.

No matter how much you have to pay towards your care home fees, you must be left with a personal expenses allowance (PEA) of £24.90 a week
to spend as you choose. If you get the mobility component of Disability Living Allowance, you will keep getting it.

Your capital and the value of your home

If you live in England and have over £23,250 in capital you’ll be assessed as being able to meet the full cost of your care.

If you live in other parts of the UK, the following amounts of capital apply:

  • in Scotland: lower limit £16,000 – upper limit £26,000
  • in Wales – Set standard limit of £24,000 – Your capital will be ignored in calculating how much you have to contribute to the cost of your care

Your capital will be counted as generating an income according to the following table:

Amount of capital you have if you live in England or N. Ireland How your capital is used to calculate your contribution to your care home fees Over £23,250 (upper limit) You will be assessed as being able to meet the full cost of your care Between £14,250 and £23,250

Capital between these amounts will be calculated as providing you with an income of £1 per week for every £250 of your savings

£14,250 (lower limit) or under Your capital will be ignored in calculating how much you have to contribute to the cost of your care

If you own your home then it will usually be counted as capital 12 weeks after you move permanently into a care home.
The value of your home will not be counted as capital if certain close relatives still live there.

  • See also Your home, assets and care home fees below.

Getting your needs assessed

Usually you will have a needs assessment before a financial assessment. Your local council will be able to tell you how much
they usually pay for a care home that will meet your needs.

They can then arrange a care home for you or you can choose one yourself that charges the same sort of price that they usually pay.
This is important if you are paying your own fees to start with but think you might need to ask your council for help later on.

What if you want a more expensive care home?

You can choose a care home that is more expensive than your local council usually pays for a person with your assessed needs,
but you may need to find a way to pay the difference.

If the council can suggest a place that meets your needs and you still want to move into a more expensive care home then they
can ask a third party (usually a relative or friend) to pay the extra. This is called a ‘top-up fee’. You are not able to pay this yourself
as you have been financially assessed to pay what you can afford.

If your local council cannot suggest a place that meets your needs in your local area then they should be prepared to pay
more than their usual amount.

Nursing care funded by the National Health Service

If you live in a care home that provides nursing care, the National Health Service (NHS) would normally contribute £101 per
week towards the fees to cover the cost of the nursing element. Some people will have the full cost of their care paid for by
the NHS; this is called ‘continuing health care’.

People who qualify for this type of care usually need ongoing specialist medical treatment on a regular basis.

Hospital staff, or your local doctor (GP), can help arrange an assessment if you think you qualify. If you disagree with
the decision made after your assessment you can appeal. If you are assessed as needing some regular nursing care
you may receive a contribution towards your care home fees from the NHS.

Direct payments

Direct payments from your local council are intended to support adults in independent living and are not intended to
finance permanent residential care. However, you may be able to use direct payments to secure occasional short
periods in residential accommodation, if your local council agrees that is what is needed.

If you are in a care home

In some situations, people who are living in residential care can have temporary access to direct payments.
For example, this could enable them to try out independent living arrangements before deciding to move out of
residential care.

Your home, assets and care home fees

You don’t always have to sell your home or assets to pay for care home fees – find out what the alternatives are.

Also, find out how the local council assesses what you should pay towards your care home fees.

Assessing care home fees for home owners

If you move into a care home permanently, the local council may count your home as capital from 12 weeks
after you arrive there. However, your home won’t be counted as capital if any of the following people still live there:

  • your husband, wife, civil partner or someone you live with as a partner
  • a close relative who is 60 or over, or incapacitated
  • one of your children (including adopted children) who is under 18
  • your ex-husband, ex-wife, ex-civil partner or ex-partner if they are a single parent

Your local council may choose not to count your home as capital if your carer lives there.

Your home and temporary stays in care

If you go into a care home temporarily, you won’t have a financial assessment for the first eight weeks of your stay.
The local council will say what they think is a fair amount for you to pay for this time.

If your stay lasts longer than eight weeks, the local council will assess what you should pay from week nine onwards.
Your home won’t be counted as capital because your stay is temporary.

Find out about paying for a temporary stay in a care home by following the link below.

Keeping your home and assets

You may want to avoid selling your home to pay for care home fees so that you can move back if your condition improves.

Making a ‘deferred payments agreement’ with your local council

The local council may make a deferred payments agreement with you:

  • to try to avoid the sale of your home to pay care home fees during your lifetime
  • if you have to pay all your care home fees because your home is counted as capital
  • if you don’t have enough other capital or income to pay the fees

The agreement means that the local council calculates what you should pay towards care home fees on the
basis that your home is not counted as capital.

The council keeps a record of the difference between this amount and what you would have to pay if your home was
counted as capital. You’ll still owe this amount but it will only be collected at a date you choose or when you die.
The council will collect what you owe from the amount received for selling your home or from whoever inherits your property.

Setting up a family trust

Setting up a family trust is one way of transferring the ownership of your home or other assets to someone
else while you are still alive. You should get advice from a solicitor on this because the law on trusts is complicated.

Giving money or property to other people

You may choose to give money or assets to relatives. There is no limit on the value of these gifts,
but your relatives may have to pay tax on any interest or income they receive.

If you give money or assets to someone within the seven years before you die, Inheritance Tax may be owed on your gift.

If you deliberately give away or convert assets to put yourself in a better position to receive financial help from the Local Authority for your care, this is known as deprivation. This includes both giving away assets and deliberately spending large amounts of money immediately prior to the assessment.

Deprivation can also include selling off an asset for much less than it is worth. The Local Authority must prove that any deprivation is deliberate. If you gave away money or went on an extravagant holiday a while ago, before a care home was imminently on the cards, you won’t need to worry.

The council may try to recover any assets they claim you have deliberately deprived either from you, or from the person you gave them to.

Trying to avoid care home fee payments

Sometimes people deliberately transfer ownership of their assets to someone else in order to reduce what they pay in
care home fees. If the local council believes this has happened they may assess you differently than in the normal
assessment procedure:

  • if assets were transferred within the six months before you moved into care, the council can recover the cost
    of your stay from whoever received the gift
  • if the transfer happened more than six months before you moved into care, they can assess you as if you
    still own the assets

There is no time limit as to how far back the council can go to find out if you have given away assets to avoid care costs.

Renting out your home

One alternative to selling your home may be to rent it out and use the money to pay your care home fees.

Making a will

Before you move into a care home permanently, you should make a will.

Need more information?

Check out this handy guide from UK Care Guide: Paying for Care in 2020 – 12 ways to pay