What do you pay for care home fees?

In an ideal world, we’d all stay in our own homes forever (nearly 90% of over-65s want to stay in their own home). However this isn't always possible and there are times when you may need to help someone move into a residential care home. But how are you going to pay for it?

If living at home is no longer a viable option, it may be time to move into a care home. But once the decision is made, your thoughts will probably turn to how this type of care will be paid for. This will depend on the person who needs to move and their current financial situation – or their ‘capital’.

Local authorities have a national standard for charging care home fees, but this will depend on whether you live in England or Wales.

In England:

There are two threshold limits:
- If your capital is below £23,250 (current figure for 2015), you will be entitled to some if not all financial support from your local authority.
- If your capital is below £14,250, you’ll get the maximum amount of support from the local authority.
- If your capital is between £14,250 and £23,250, you’ll have to pay a tariff of £1 per week for each £250 between these figures.

In Wales:

There is just one threshold:
- If your capital is below £23,250, you will not have to pay for care home fees.
- If your capital is above this threshold, you will have to pay. (Much simpler!)

In Scotland:

Every year, local councils set standard rates that they'll pay towards care home fees. These are for people whose capital is below the lower limit. This applies to private and voluntary care homes. From April 2016, the capital limits are:

- Lower limit: £16,250
- Upper limit: £26,250

If you're assessed as having capital above the upper capital limit, you won't get help from your local council with paying care home fees over and above any assessed entitlement to free personal and nursing care. This is called self-funded. If you have capital below the lower limit, you'll get help with care home fees. This is known as publicly-funded.

You'll pay additional charges sometimes called top-up fees if your local council pays for your care home fees but you choose to stay in a care home that charges more than the council's standard rate. For 2016/17, the standard rates for publicly funded service users are:

- £624.54 a week with nursing care
- £537.79 a week without nursing care

Tariff income

If you have capital between the upper and lower limit, you'll be assessed as though you have an extra £1 a week income for every £250 or part of £250 between the lower and upper limit. This is called tariff income.

Tariff income applies at a rate of £1 for every £250 (or part of £250) on capital over the lower limit of £16,250.

For example:

Total capital of £22,250 equates to a weekly tariff income figure of £24.00 per week. This is worked out because you have £6,000 over the lower limit (of £16,250) which, in this case, you divide by £250 to give 24. This is multiplied by £1 to give £24.

This is added to any other income and compared to the applicable amount, affecting your benefit by £24 per week.

Assessing property as capital

In many cases, one of the biggest amounts of capital will be a property. If the person with dementia owns their own home, this will be included in the financial assessment UNLESS at least one of the following people still live in the property:
- A husband, wife or civil partner
- A close relative over the age of 60
- A dependent child
- A relative who is disabled or incapacitated

If that is the case, the property will be disregarded. If there is a carer living in the house (that isn’t one of the above), then the local authority will have discretion on whether or not they include the value of the home in their assessment.

When the local authority is paying your fees…

Each local authority will have what is known as a ‘standard rate’, which is the upper limit that they’re willing to spend on a person’s care home fees. They will be able to provide a list of care homes in the area that fall into this limit.

The local authority have a duty of care to provide a care home that meets the needs of someone with dementia. If there are no available care homes, they may have to place them in a more expensive care home and fund it.

Top-up fees

If you have picked a care home which is deemed too expensive to be covered by the local authority (and there are cheaper options available), the person with dementia may still be able to stay there so long as a third party (such as a relative) is willing to cover the difference in cost. These are known as top-up fees, and they cannot be paid by the person who actually has dementia.

Remember, if the top-up fees are stopped (for example, you can’t afford to pay them anymore), the person will be moved out of the care home and into a cheaper one, which could be extremely disruptive for them. If you decide on a care home that requires top-up fees, make sure you are able to keep paying them for as long as needed.

Self-funders: when you need to pay your own care home fees…

If someone has to pay their own care home fees, they’re known as a self-funder, and can approach a care home directly, sorting out the financial arrangements themselves.

Getting an assessment

However, it’s worth still getting an assessment from the local authority in case you need help in the future with fees – that is, if your capital runs below £23,250.

Plus, an assessment will give the information on care and services that someone with dementia might require, which could make it easier to pick out a suitable care home that meets the person’s needs.

Other financial support

Even if you are self-funding a care home, you may still be eligible for other amounts of financial support.

Selling your home – the 12-week ‘grace’ period

If the person’s home is included in a financial assessment, they should not have to pay or contribute to care home fees for the first 12 weeks. The cost should be covered by the local authority. This enables the family to arrange the sale of the home or sort out other options.

After 12 weeks, if the house is still not sold, the financial help will be charged against the value of the house, and recouped by the local authority once the house sale has gone through.

And you don’t always have to sell your home. The social services can lend you the money to pay for your care home and charge it against your property when you do come to eventually sell it. You can also let your property, but this is only recommended if the amount you’ll get from letting will cover the cost of monthly care home fees and you still have enough capital left over to pay for maintenance fees for the property.

Attendance allowance and Personal Independence Payment (PIP)

These are non-means tested benefits for people needing personal care. They’re available for people living at home or in a care home, so can be used to help pay for care home fees.

NHS funded nursing care

If the person staying in the care home requires nursing care, they’ll be entitled to NHS funded nursing care. This means the NHS will contribute towards the cost of the nursing care – which is usually a flat rate (currently £109.79 in 2015).

The Care Act

This is a new piece of legislation that started coming into force from April 2015. In terms of paying for care home fees, the biggest changes will come into force in 2020 (the original start date was April 2016 but this has now been delayed) when the cost of care will be capped. This means that there will be a limit on how much people with dementia will pay for their care.

From April 2020 the amount you pay for care will be capped at £72,000. When you hit the cap, you will be responsible for your own food and lodgings. A flat rate of £230 a week is currently proposed.

Until then however, the costs will continue to be means-tested, which means that anyone with assets of more than £32,250 has to pay the full cost of their care. If you are moving into a care home the value of your home may be taken into account depending on your circumstances.

Article last reviewed 16/07/15.