Paying for care home fees can be worrying. It’s made quite bewildering by the different rules and terminology around available financial support. Here we help you understand your financial options, specifically with explanation of the savings threshold for care home fees, and help you understand what help may be available and what you may need to pay.
Through frailty, isolation or dementia, it may be necessary for a loved one to receive support and care from those outside the family. The purpose of this care should be to ensure a high quality of life, and meet the individual needs of the person.
The Care Act 2014 establishes the legal obligations of councils in England to ensure care provision. It sets how the level of care needed is determined and how it may be financed. The rules are set nationally, but there can be local variation. The costs of care, and who is responsible for paying them, vary according to a number of different factors such as where the care is provided, what care is needed, and what care is available.
In a very broad nutshell, your local council may contribute to your care, but the level of assistance (if any) is dependent on your income and your assets, such as savings. Those who pay entirely for their own care are called self-funders. It may be a mix and match, with you contributing some and the council also contributing some.
It’s really important that you feel able to make informed and clear choices about the care and support you, or a loved one, receives. Bear in mind that you can always request written explanation from your council, and this can give time for reflection and for understanding. Sometimes the council won’t advise you themselves, but they should always point you to where you can get advice and help.
Before understanding the finances in more details, it’s important to understand your needs. These determine whether any financial help will be available.
A needs assessment should be carried out by your local authority and this determines if you are eligible for support, regardless of who will pay for it. From this, a care support plan should be created. It is only following this that the council will determine if you are entitled to financial support or if you will be a self-funder.
An important bit of terminology to understand about paying for care home fees is called ‘personal budgets’. This is simply the amount of money that the council has agreed to pay towards your care. This is so that you can then choose how to get the care you want and need.
The personal budget is established following a financial assessment, which follows the needs assessment.
The financial assessment works out how much money you need to meet your care needs and then establishes how much you can afford, and how much the council may contribute.
The financial assessment is partly determined by the type of care that the needs assessment has identified as being most appropriate. Most notably, it differs depending on whether you receive care at home, or in a care home.
The financial assessment is a forms based exercise. You may get help completing the forms if necessary. You will need to answer questions about your income (money that comes in regularly e.g. your pension) and capital (all other assets e.g. savings, investments, and for care homes, the value of your home). Your partner’s finances may also be taken into account.
There are some specific circumstances where a financial assessment isn’t necessary for low-level financial support, but in the vast majority of cases, if you require financial support, you’ll need to go through a financial assessment.
The financial assessment can feel intrusive and overwhelming. However, this will determine if you are eligible for financial help.
Remember, there are national standards for determining who is responsible for paying for care home fees set out in The Care Act.
The Care Act establishes two capital threshold limits:
If you have no capital, or it is less than the lower threshold, then your income is considered for paying for your care. The rules state that you must be left with a certain minimum amount. This is called the personal expenses allowance (PEA). You should always be left with the PEA, regardless of who is paying for the care home fees.
In cases where your capital falls between the thresholds, the council may contribute but it is now income dependent. A means-tested contribution in terms of your assets is determined using the formula of £1 a week for every £250 capital between the two limits.
It’s vitally important to take care to avoid deliberate deprivation of assets. This is when you try to reduce your capital so that you can achieve more financial help from the council. The most common way that people try to do this is by transferring the assets to someone else. The council can determine that the asset is still, effectively, yours and this attempt will be seen as a deprivation of assets.
Your own home may also be considered in the financial assessment when working out who pays for care home fees. However, there are some instances where your home will not be considered:
If your property is the home of someone who has been looking after you, and they will continue to live there following your move to a care home, the council uses their discretion as to whether or not to consider your home as an asset. If your carer gave up their home for you, then this is more likely. However, they may allow the individual to continue living there whilst also charging care fees against the property under what is called a deferred payment agreement (DPA). In the future, when the property is sold, the council will then receive the money.
For the first 12 weeks of living in a care home, the value of your home should be ignored in the financial assessment – known as the ’12 week property disregard’. This is considered to be a grace period, giving loved ones time to sell them home to meet the cost of care. Again, after 12 weeks, a deferred payment agreement (DPA) may then be applied so that when the property is sold, the council can claim back the care fees already paid.
DPAs allow you to put off paying the cost of the care home until a point in the future. Effectively, the council loans the care home fees (or their contribution) and they are paid back in the future when the property is sold. Be aware that DPAs will include an arrangement fee and interest. If you’ve had a financial assessment and your needs must be met in a care home, you have less than the upper threshold (excluding you home’s value), and no one listed above will remain in the property, then you must be offered a DPA.
DPAs are complex and we recommend getting independent advice, and advocacy, if needed.
Councils have an upper limit in place determining the maximum they will spend on care home fees. This is called the standard, or usual, rate. You can choose a care home which is more expensive than this but you will need to pay the difference. The council should also provide a list of suitable homes. Legally, the council must offer at least one care home that fits your needs as established in the needs assessment, ideally more.
Relatives or charities can pay the difference for you to go to a more expensive care home. These are called top-up fees. This requires a written agreement with the council.
The PEA is the minimum amount you should have left over each week during the time you’re contributing to your care home fees. You get to choose how you spend this money. At the moment, the PEA is £24.90 per week.
In addition, some benefits are not to be taken into account when carrying out the financial assessment, including the mobility element of Disability Living Allowance (DLA) and Personal Independence Payment (PIP), or only partly taken into account (e.g. the War Widow’s Pension).
Many individuals are, owing to the above limitations, self-funders. If you are entirely self-funding your own care, you have much more choice and don’t need to go through either a care needs assessment (unless you wish) or a financial assessment. You can work directly with your chosen care home. Nonetheless, a care needs assessment can help you work out what type of care you need.
Of course, your financial situation will change over time. If you begin to near the savings thresholds for care home fees then it will be important to begin the process above before it becomes a financial problem.
Reputable homes will always ensure clear and detailed contracts explaining fees as well as the services and care included. There should also be information about what things are charged as extra and how much notice you’ll be given should the fees increase.
Do please get in touch if you have any questions about our care home fees and your funding options.