Care Funding Essentials

If you’re caring for a loved one, and you think it may be time for them to move into residential care, navigating the associated costs can feel very overwhelming.

Thankfully, there are several options to explore when it comes to care home funding. These options vary in line with the financial circumstances of the person moving into care, and what kind of care they need. It’s vital that you have all the information you need upfront, so you can make an informed decision about the care your loved one will receive, and ensure that their care plan is financially sustainable too.

We prioritise transparency when it comes to care home costs, so keep reading as we unpack the key questions around funding in more detail below.

Does the local authority pay for your care home costs?

In the UK, you may be able to access financial support from the local authority to help with care home costs. If you’re looking into care home council funding, you’ll need to contact your local authority so they can carry out both a care needs assessment and a financial assessment (means test) on your loved one. This means test is designed to take stock of the individual’s financial situation, so it considers factors like savings, capital, property and any other forms of income.

After this test, you’ll be notified of whether the local authority can fund all of your loved one’s care, partially fund it while the rest is self-funded, or whether their care will need to be completely self-funded. It’s worth noting that there’s also local authority funding for care in your own home, if your loved one isn’t ready to move into residential care, or doesn’t need to.

NHS Funding for Care

If your loved one’s care is required because of their primary health needs, the NHS can provide funding under the NHS Continuing Healthcare plan (NHS CHC). The eligibility criteria for NHS CHC include conditions like muscle disorders, respiratory disorders, mobility issues such as paralysis caused by a stroke, and degenerative brain diseases like dementia.

With this type of funding, the individual health needs of your loved one are assessed, and if they qualify, the NHS will arrange and fully fund their care. However, if the person doesn’t meet the criteria for full-time care, but still requires professional healthcare from nurses, they may still be able to get funding for NHS-funded nursing care (NHS FNC), which can be paid to the care home.

Self-funding (Paying for Your Care)

Many people aren’t sure whether their loved one’s care will need to be self-funded — in this instance, you’ll need to arrange a care needs and financial assessment with your local council. That said, the threshold for financial capital that makes you ineligible for funding from the local authority is different across the UK.   

England and Northern Ireland — In England and Northern Ireland, anyone with income and capital worth over £23,250 has to pay for their care in its entirety. If they have between £14,250 and £23,250, they’ll need to partially pay for their care, likely with some contribution from the local authority.
Wales — In Wales, there’s only one threshold, but it’s higher — so anybody with capital or income that’s worth £50,000 or more will have to pay for all of their care.

Scotland — In Scotland, everyone is entitled to free personal and nursing care, up to a specific amount, providing the local authority has deemed that care necessary. That said, anyone who has over £35,000 in income and capital will still need to pay for their accommodation, whereas anyone with under £21,500 won’t be obliged to pay at all.

Attendance Allowance

What benefits can you claim if you’re in a care home? If your loved one is over 65 and paying for their own care, they’ll also be able to claim a benefit called Attendance Allowance. This works out to £72.65 per week, unless the individual terminally ill or needs round-the-clock care, in which case they can claim £108.55 per week. However, this benefit isn’t payable to Scottish residents, as over 65s in Scotland get access to free personal and nursing care, so long as the assessment finds that it's needed.

On top of Attendance Allowance, those who are over 65 and self-fund their residential care can continue to claim their state and private pensions.

What’s the cap on care costs?

In 2021, the UK government laid out a ‘Vision for Adult Social Care’ which included a proposition to cap the cost an individual could spend on their personal care at £86,000 over their lifetime. This cap applies to both residential care and in-home care.

As of 2024, the new government has renewed its commitment to introducing the cap, which is due to come into effect in October 2025. This cap would effectively protect individuals who are self-funding from spending more than £86,000 on their care, as once the threshold is reached, it will be funded by the government. Once in place, this policy should provide considerable financial relief to families who are faced with meeting long-term and often complex care needs for a relative.

It’s important to note that, if your loved one is in a residential home, the cap only applies to the fees for the actual care they receive. So even if the government funds their care, accommodation and other living costs will still need to be privately funded.

When you’re putting together a care plan for a friend or family member, it’s natural to have concerns and questions around the different types of funding available to your loved one, and how to access them. If you’d like further information about how we manage self-funding and funding from local authorities at Danforth Care, please don’t hesitate to get in touch.