Selecting the right care home is a careful balance; you want to make sure the living experience is right for you or your loved one, but you also need to ensure you can adequately pay the care home fees. Even if you’ve carefully planned for the future, funds can be depleted and savings run out, causing anxiety.
However, there are options available to cover your care costs and ensure continuity of care when your money runs out. In this guide, we explore what happens when care home money runs out, who’s responsible for covering costs, and how to prevent this from happening.
Who pays for care home fees depends on the total value of assets and capital belonging to the person requiring residential care. The local authority will carry out a financial assessment to determine how much support people receiving residential or home care may be eligible to receive.
In England, the assessment thresholds are as follows:
| Asset value | Who pays for care home fees? |
|---|---|
| Over £23,250 | You must cover your own care home fees, until your capital drops below this amount |
| £14,250 to £23,250 | Your local authority will cover some of the cost, but you’ll need to pay the remaining amount |
| Below £14,250 | The local authority may cover the total cost of your care home fees |
In Wales, people with capital over £50,000 need to pay their own care home fees. Below this threshold, the local authority will contribute to care home fees.
In Scotland, anyone with capital over £35,000 will need to self-fund their care home costs.
Anyone with capital between £22,000 and £35,500 will need to pay £1 per week towards their care fees for every £250 they have, alongside making other contributions from their income.
Meanwhile, individuals with less than £22,000 will not need to use their capital to cover care home costs.
Self-funding refers to the act of paying for your own care home fees. Anyone with capital above the upper financial threshold is required to self-fund their care costs, until their funds fall below this threshold. Self-funders will pay care home fees directly to the care provider, taking full financial responsibility for the cost of their care.
Individuals going down this route should seek independent financial advice to make sure they understand the implications of self-funding, and how this will affect assets such as property.
There’s no one-size-fits-all answer to who’s responsible for paying care home fees when funds run out, as there are multiple options available. When a care home resident’s available funds fall below the self-funding threshold, the local authority will take over responsibility for paying some care costs. However, remaining care fees may still need to be covered by:
Asking a care home resident to move to another home or a council-funded care facility is always a last resort, as the priority of any care home is to provide residents with lifelong care. While additional funding options are being explored, speak to the care home provider about remaining in the home until there’s a final decision from the local authority, or capital has been freed up. Moving to a smaller room with a lower fee may also be an option.
In some cases, when there are no savings or assets left to cover care home costs, the resident may need to move to another care home that has lower fees or accepts local authority funding. This may cause some disruption and confusion, particularly for residents living with dementia, but both the old and the new care home will do everything they can to make the transition as smooth as possible.
When the money being used to pay for your or a loved one’s care home fees begins to run low, there are several options you can explore to ensure costs are still covered.
If the person receiving care is eligible to receive some local authority funding, but there’s still a shortfall in covering all costs, family members can step in to pay top-up fees. However, it’s important that anyone agreeing to pay third-party top-up fees seeks legal advice before entering into a contract, and has sufficient means to continue making these contributions to prevent any further disruption in the future.
If your assets drop below the self-funding threshold (£23,250), you may be eligible for extra support towards care home fees from your local authority. To find out if you’re eligible, you’ll need to:
If a care home resident is unable to continue paying for care and has significant health needs, the NHS may cover the full cost of care through NHS Continuing Healthcare (CHC). This is not means-tested and is based solely on the nature, intensity, complexity, and unpredictability of the individual’s health needs.
To determine eligibility for NHS CHC funding:
If a care home resident’s condition is deteriorating rapidly, you may be able to have your Continuing Healthcare application fast-tracked.
Another option for covering nursing care costs when the money runs out is NHS-Funded Nursing Care (FNC). This is a weekly contribution from the NHS towards nursing home care for people who have significant health needs, but do not qualify for NHS Continuing Healthcare. The NHS will directly pay this money weekly to the care home to cover costs associated with nursing care.
A Deferred Payment Agreement (DPA) allows you to use the value of your home against any care home fees before it is sold. With a DPA, the local authority will cover care home fees instead, and the amount will be repaid when the home is ready to be sold, or following the individual’s death.
This option allows care home residents to continue receiving the care services they require after their savings have run out. Bear in mind that there may be an administration fee to set up the agreement and interest could be charged on the amount borrowed.
Forward planning and clear communication with loved ones are essential to prevent care home money from running out. Prevent any disruption or anxiety with these steps to stop funds falling short.
Before moving into a care home, ask the local authority for a care needs assessment to determine exactly what support is and isn’t required. This helps to prevent unnecessary costs for care that isn’t needed, helping savings go further.
Try to plan long term to make sure you have sufficient funds available for your future. Seek professional financial advice and create a savings plan, considering the following factors:
Talk to friends and family in advance about your care preferences, and your financial status. Make sure they’re aware of how much you’re going to be able to self-fund your care home costs, so they know what to expect. Discuss whether you’d be comfortable for them to step in to pay top-up fees in the future, or whether you’d be happy to move to a more affordable care home.
Next of kin are not legally required to pay care home fees on behalf of a loved one. Next of kin are only responsible for covering care home costs if they have signed a contract with the care home to act as a guarantor or to pay top-up fees. If a care home resident dies with unpaid care home fees, the debt will be covered by their estate – it is not the responsibility of their next of kin.
If you’re not eligible for local authority funding and cannot arrange a Deferred Payment Agreement, you may have to consider selling your property. If your property has previously been placed into a trust, you may be able to avoid using it towards care home fees. However, this will only be possible if the local authority finds that this wasn’t the primary reason you put your house into a trust, as this would be classed as a ‘deprivation of assets’.
As an alternative to selling your home to pay for care home fees when money has run out, you could also look into equity release. This would allow you to keep hold of your property, and would mean anyone still living there would not have to move out. If the house is vacant but you aren’t ready to sell it, renting it out could be another option.
Care home fees for individuals living with dementia need to be paid for in the same way as care home fees for all other residents. The local authority will carry out a financial assessment to determine the proportion of care costs that will be covered by the council, and how much will require self-funding.
Discover luxury residential care homes offering expert nursing, dementia care and respite care at Dunham Care Homes, where care home fees cover:
Contact us today to arrange a visit or find out more about the care we offer.
