Ways to pay care home fees

Care homes are run by local councils or Health and Social Care Trusts in Northern Ireland (HSCNI), private firms and voluntary organisations. They need to be approved by the appropriate regulatory body in your country. 

There are three types:

1. with nursing care – registered nurses and care assistants give 24-hour nursing and personal care
2. without nursing care – care assistants provide help with personal care
3. dual-registered care homes – where you can get both personal care and nursing care. So, if you start off needing just personal care but later need nursing care, you can stay in the same place without having to move.

Some might also specialise in mental illness, dementia or Alzheimer’s disease. 

Your local council, or HSCNI, should be able to give you a list of suitable care homes in your area. It’s also worth checking ratings and inspection reports. You can also ask family and friends to find out what people think about places nearby.

Before making your decision, be clear about what you’re looking for. Making a checklist of things that are important to you can help. Here are some useful resources to get you started, depending on where you live.

The cost of care home fees varies depending on location, the quality and service offered. 

Find out the average cost of care in your area using Paying for Care’s care costs calculatorOpens in a new window

Remember, you might have to pay extra for things like trips out, hairdressing and some therapies – so it’s important to check what’s included.

If you need care, the first step is to figure out what type of care you need and how much you’ll need to pay for it. Your local council, or HSCNI, will do two tests:

1. Needs assessment: they'll check what care you need.
2. Financial assessment: they'll look at your money and decide if you can pay.

There are thresholds for savings and assets you can have to get help. If you have more than the limit, you'll have to pay for your care.

Even if you don’t think you’ll get financial help, it’s a good idea to get a needs assessment. This is because they can keep a track of your care needs and tell you about support options.

Find out more about the assessments and thresholds you need to meet to get help in our beginner's guide to paying for your long-term care.

If you're eligible for funding from your local council, or HSCNI, you should be offered a choice of care homes to suit your needs.  

If you want a more expensive care home, your local council, or HSCNI, might cover the cost if someone else, like a family member, friend, or charity, pays the extra money, known as a top-up fee. 

Find out more about care home top-up fees at Age UKOpens in a new window

It’s a good idea to get advice from a specialist care fees adviser, a financial adviser that specialises in long-term care funding. 

They'll help you compare all your options before you decide what's right for you. Find out more in our guide on Help funding care – how to get advice.

Sometimes, the NHS pays for care home costs for people with serious health needs. There are two ways they do this:

1. NHS Continuing Healthcare covers ongoing medical care for those with complex health needs due to a disability, accident, or major illness.
2. NHS-funded Nursing Care (or Hospital Based Complex Clinical Care in Scotland) can help cover care home fees if the NHS decides you need nursing care.

These don't depend on your money situation, but there are strict rules for who qualifies. Find out more in our guide do I qualify for NHS continuing healthcare funding?

When your local council, or HSCNI, carries out a financial assessment to work out how much you’ll pay towards your care, they will assume that you’re already receiving certain disability benefits, even if you aren't already claiming them. So, it’s important to check if you qualify and claim.

Our Benefits calculator will quickly show you what you could get, such as:

• Attendance Allowance, if you’re State Pension age or over, need help with personal care because of illness or disability.

• Personal Independence Payment, if you’re aged 16 or over but under State Pension age. If you live in Scotland, you need to apply for Adult Disability Payment.

• Disability Living Allowance, for a person aged under 16.

There are other benefits you might also be able to claim, depending on your circumstances. Find out more in our guides Benefits to help with your disability or care needs.

If you need to live in a care home permanently and need to use the value in your property to fund your care home fees, you may be entitled to financial support from your local council, or HSCNI, for up to 12 weeks.  

If you’re eligible, your local council, or HSCNI, must not include the value of your property in your financial assessment during your first 12 weeks in a permanent care home. This is called a 12-week property disregard. If you sell your property during the 12-week period, they'll start counting the money from the sale.  

During these 12 weeks, you might want to think about arranging a deferred payment agreement. If your stay was temporary at first, the 12 weeks start when it becomes permanent. Ask your local council or HSCNI, how it might work in your situation.

You might be eligible for your local council, or HSCNI, to pay towards your care if you have savings and capital less than the threshold shown in the table below. How much they will contribute depends on the type of care you need and how much you can afford.

If the amount they’ll contribute doesn’t cover the costs of your chosen care home, you’ll have to find the extra money or find a cheaper alternative.

If you can't pay for care home fees and don't want to sell your home (or it's hard to sell), you can ask your local council for a deferred payments agreement. In Northern Ireland, there’s no formal deferred payment system. But it might still be available – ask your local HSCNIOpens in a new window

This means your local council will pay the care home fees for you, using a loan against your property. You would then repay it when you sell your home or pass away. 

Find out more in our guide Deferred payment agreements.

If you move into a care home and your property is left empty:

• let your local authority know so won’t have to pay Council Tax or Rates until it’s sold

• let your home insurance company know to ensure your property remains covered

• make arrangements to keep your property in good condition, such as

  • regular checks and upkeep
  • paying for utilities like water, gas, and electricity.

You can rent out your home and use the income to help pay your care home fees. But there are some important things to consider:

• You'll need to pay maintenance costs to ensure the property remains in good condition for tenants.

• Care home fees might increase more over time than the rent you can charge tenants.

• While you can't guarantee rent, you can try to find reliable tenants by checking references. Rent guarantee insurance can also provide coverage if tenants fail to pay. 

• There may be times when your property is vacant between tenants. It's important to plan for these gaps and have savings to cover expenses during those times.

There are lots of ways to pay for your care, each with pros and cons. The big decision is usually whether to keep or sell your home. Here are some options below.

If you need a regular income to pay for your care at home, an immediate needs annuity could be worth looking at. 

It’s a type of insurance policy that gives you a guaranteed income for life to pay for care costs. 

The income from this type of annuity is tax free if it’s paid directly to the care provider. Find out how it works and whether it’s right for you in our guide What is an immediate needs annuity?

An investment bond aims to grow your money over time. An insurer will invest your money for you, usually over a period of five to ten years. You might get some back each year but most of it is locked away until the end. 

You can use investment bonds to help pay for your care, but there’s no guarantee that the returns will cover your costs. To help decide if it could be suitable for you, see What are investment bonds?

When your local council, or HSCNI, carries out a financial assessment to work out how much you’ll pay towards your care, money tied up in investment bonds will usually be excluded from their calculations. This is because they’re treated as life insurance policies.

But if you already need care, you can’t just put your money into bonds to avoid paying. Your council, or HSCNI, will see this as ‘deliberate deprivation of assets’ and take their value into account.

If you’re over 55, equity release allows you to get a lump sum or regular income from your home’s value without selling it. 

This could help pay for your care, but you’ll pay interest on the money you take out. So it can be costly. 

It’s important to only consider an equity-release scheme when you’ve looked at all the other options.

Find out more in our guide What is equity release?