Who pays for care home fees, and when the council helps

A residential care home in England typically costs £1,300 a week, or £67,600 a year. Nursing care costs more. Very few people have that in spare income, so the question of who pays comes down to what you own.

The council will only pay if two things are true: a needs assessment says you need the care, and a financial assessment says you cannot afford it. Both are carried out by the adult social care team at the council where you live. If you skip them and move straight into a home, you are self-funding by default and the council has no record of you, which matters later if your money runs down.

The rules are national. The council rate is local, and it is nearly always lower than the fee on the home’s price list.

The financial assessment adds up your capital: savings, investments, premium bonds, a second property, and normally the home you live in. It ignores personal possessions and the surrender value of a life insurance policy. It then places you in one of three bands.

Everything is assessed on the person needing care, not the household. If you are married, only your own savings and your half of joint accounts count. Your partner is never asked to pay towards your care, though they can choose to.

For most single people the house is the biggest asset, and it is what pushes them over the upper limit. It is counted at its market value, less ten per cent for selling costs and less any mortgage.

The value of your home is ignored if any of these people still live there:

• your husband, wife or partner
• a relative who is over 60, or who is disabled
• a child of yours under 18

It is also ignored for the first 12 weeks after you move into a home permanently. During that time only your other capital and your income are assessed, which gives you a breathing space to decide whether to sell, rent out or defer.

If you are only going in for a short stay, or the move is not yet permanent, the house is not counted at all. Say so at the assessment.

Whatever band you are in, the council expects your income to go towards the fee first. That means your state pension, any private pension, Attendance Allowance and most benefits. Half of a private pension can be passed to a partner who still lives at home.

You keep the personal expenses allowance of £31.80 a week for things the fee does not cover, and you may be allowed to keep more if you have costs such as a property to maintain during the 12 week disregard.

The council pays the difference between what you contribute and the rate it has agreed with the home. That rate is the sticking point: most councils pay less than the fee a home charges a self-funder for the same room. See what the fee includes for why the two figures differ.

The council must offer you at least one home that meets your assessed needs at its rate. If you would rather go somewhere dearer, someone else can pay the difference. This is a third-party top-up, and it is usually paid by a son, daughter or other relative. You cannot normally pay your own top-up, except during the property disregard or under a deferred payment agreement.

Before anyone agrees to a top-up, ask three questions: what happens when the home puts its fees up in April, what happens if the person paying can no longer afford it, and whether the council will genuinely offer a home at its rate if you say no. The last one matters. If there is no suitable home available at the council’s rate, the council must pay the higher fee itself, without a top-up.

If your house counts and you do not want to sell it straight away, the council can lend you the fees against it. This is a deferred payment agreement. The council pays the home, records what it has paid as a charge on the property, and is repaid when the house is sold or from your estate.

Interest is charged, at a rate set nationally, and there is usually a set-up fee. You must have less than £23,250 in other savings, and the council will not lend beyond a proportion of the property’s value. You can rent the house out during the agreement and use the rent towards the fees.

Every council in England has to offer this scheme. Some are quicker to explain it than others, so ask for it by name.

1. 01
   Ask the council for a needs assessment

   Ring adult social care at the council where the person lives, or use the form on its website. Anyone can ask, including a relative or a GP. It is free and it cannot be refused.
2. 02
   Have the financial assessment

   A finance officer goes through savings, income and property. Bring bank statements, pension letters and the deeds or a valuation. Ask for the calculation in writing.
3. 03
   Get the care and support plan

   This sets out what care is needed and what the council will pay. If it says a care home is needed, it will name what the council will contribute each week.
4. 04
   Choose the home

   You can choose any home in England that will accept the council rate, or a dearer one with a top-up. The council contracts with the home and bills you for your contribution.

If you are self-funding, still ask for the needs assessment. When your savings fall towards £23,250, tell the council about three months in advance so it can take over without a gap. Homes also charge self-funders more, and a council contract can bring the fee down.

If you live in a nursing home, or your needs are mainly medical, read about NHS funded nursing care and NHS Continuing Healthcare. Neither is means tested.