How to Pay for Care Home Fees: A Complete Guide

Moving into a care home is one of the biggest financial decisions many families face. Alongside finding the right level of support, understanding how care costs work in England can feel overwhelming. From local authority funding to NHS support and deferred payment agreements, there are several ways to approach the cost of long-term elderly care.

This guide explains the main funding routes available, how financial assessments work, and what practical steps you can take when planning for residential care.

For families researching how to pay care home fees, the most important thing is understanding that support is available depending on health needs, income, savings, and property ownership.

Understanding How Care Home Fees Work

Care home fees vary depending on the level of care needed, the location of the home, and whether nursing care is required. In England, residential care can cost hundreds or even thousands of pounds each week.

Typically, fees cover:

• Accommodation

• Meals

• Personal care

• Laundry and housekeeping

• Activities and social support

• Nursing care (if applicable)

Before anyone enters permanent care, the local authority usually carries out two separate assessments:

1. A care needs assessment

2. A financial assessment (means test)

The care needs assessment determines the type of support required. The financial assessment looks at savings, income, pensions, and assets to decide whether the person qualifies for help with costs.

Current guidance in England states that people with assets above £23,250 are usually expected to pay the full cost of their care themselves.

What Counts as Assets?

When councils assess finances, they usually look at:

• Savings

• Investments

• Pension income

• Property ownership

• Certain benefits

However, not every asset is automatically included.

For example, a property may be disregarded if:

• A spouse still lives there

• A disabled relative remains in the home

• A relative over 60 lives there

• The stay in care is temporary

Understanding these rules is essential when considering how to manage care home fees effectively.

Self-Funding Care

Many people initially pay for care themselves. This is often called self-funding.

Self-funders usually have greater flexibility when choosing a care home because they are not restricted to homes contracted by local authorities.

People commonly use:

• Pension income

• Savings

• Investments

• Property proceeds

• Rental income

Some families also choose to combine several sources of income to spread costs more sustainably.

Although self-funding offers flexibility, it is important to plan carefully because care may be needed for several years.

Local Authority Support

If a person’s assets fall below the upper threshold, the local council may contribute toward care costs.

The council will:

• Assess care needs

• Carry out a financial assessment

• Calculate a personal contribution

• Determine what funding support is available

Even when council support is available, residents may still need to contribute from pensions and income.

The amount the council pays often depends on:

• Care requirements

• Local authority funding rates

• Choice of care home

• Additional services requested

Families should always ask for a written breakdown of costs and funding responsibilities from whatever care home they are enquiring about.

NHS Continuing Healthcare

One of the most misunderstood funding routes is NHS Continuing Healthcare (CHC).

CHC is fully funded by the NHS and is not means-tested. That means savings and property are not considered if someone qualifies.

Eligibility depends on whether a person has a primary health need, which may include:

• Complex medical conditions

• Advanced dementia

• Severe mobility issues

• Ongoing nursing requirements

The assessment process can be detailed and sometimes challenging to navigate, but successful applications can cover the full cost of care.

Families should request a CHC assessment if they believe health needs are significant.

NHS-Funded Nursing Care

If someone does not qualify for full NHS Continuing Healthcare but still needs nursing support, they may qualify for NHS-Funded Nursing Care (FNC).

This is a contribution paid directly to nursing homes by the NHS to help cover nursing-related costs.

It does not cover accommodation or personal care, but it can reduce overall fees.

Deferred Payment Agreements

A major concern for many families is whether they must immediately sell a home to pay care fees.

In England, Deferred Payment Agreements (DPAs) were introduced to help prevent people from being forced to sell their homes during their lifetime.

A deferred payment agreement allows the council to pay care fees on behalf of the resident, with repayment delayed until:

• The property is sold

• The estate is settled after death

The arrangement is secured against the property, similar to a loan.

According to local authority guidance, eligibility usually depends on:

• Permanent care home placement

• Property ownership

• Savings below £23,250 excluding the property value

• Sufficient equity in the home

Many councils also charge:

• Setup fees

• Administration costs

• Interest on deferred amounts

Deferred payment schemes can provide valuable breathing room for families needing time to make decisions.

The 12-Week Property Disregard

Many families are unaware that there is often a temporary grace period when someone first moves permanently into care.

During the first 12 weeks, the value of the property may not be included in the financial assessment.

This period gives families time to:

• Consider property options

• Explore deferred payment agreements

• Seek legal or financial advice

• Arrange future funding plans

For some households, this can significantly reduce immediate financial pressure.

Can You Rent Out the Property?

Some families choose to rent out a property rather than sell it immediately.

Rental income may help contribute toward care costs while preserving ownership of the home. However, families should carefully assess:

• Rental demand

• Maintenance responsibilities

• Tax implications

• Whether rental income covers care fees

Councils may still consider the property’s value during financial assessments unless a deferred payment arrangement is in place.

Attendance Allowance and Other Benefits

People paying for their own care may still qualify for benefits that help with costs.

Attendance Allowance can support older adults who need help with personal care due to illness or disability.

Other potential financial support includes:

• Pension Credit

• Personal Independence Payment (in some cases)

• Council Tax reductions for empty properties

Benefits eligibility depends on individual circumstances, so it is worth checking entitlement regularly.

Top-Up Fees Explained

Sometimes a local authority will agree to fund care only up to a certain weekly amount.

If a family chooses a more expensive care home, an additional payment known as a top-up fee may apply.

Top-up fees are usually paid by:

• Family members

• Friends

• Charities

• Occasionally the resident themselves in limited situations

Before agreeing to a top-up arrangement, families should ensure they can maintain payments long term.

Independent Financial Advice Matters

Long-term care funding is complicated, and every family’s situation is different.

Speaking with a specialist later-life financial adviser can help families explore:

• Investment planning

• Equity release

• Care fee annuities

• Tax considerations

• Estate planning

Professional advice can be especially important when large assets or property are involved.

This can make a significant difference when managing care home fees over several years.

Avoiding Common Mistakes

Families often face unnecessary stress because key financial decisions are delayed or misunderstood.

Some common mistakes include:

Delaying Financial Assessments

Councils cannot determine funding support until assessments are completed. Delays can create confusion about who is responsible for fees.

Assuming the NHS Will Automatically Pay

NHS funding only applies if strict eligibility criteria are met. Families should actively request assessments if they believe healthcare needs are substantial.

Not Understanding Deferred Payments

Some people mistakenly believe deferred payment agreements are grants. In reality, they are loans secured against property that must eventually be repaid.

Giving Away Assets

Attempting to transfer property or savings to avoid care costs can trigger deprivation of assets investigations.

Councils can still assess someone as owning assets they deliberately gave away to reduce care contributions.

Planning Ahead for Future Care

The earlier families start discussing care funding, the more options they may have.

Forward planning can include:

• Creating powers of attorney

• Reviewing pensions and savings

• Updating wills

• Researching care providers

• Exploring insurance products

• Understanding local authority processes

Open family conversations are often uncomfortable, but they can reduce stress later.

Emotional Challenges Around Paying for Care

Finances are only one part of the care journey.

Many families struggle emotionally with:

• Selling a family home

• Using inheritance for care

• Navigating council systems

• Balancing guilt and responsibility

These feelings are completely normal. Seeking support from advisers, charities, or support groups can help families feel less isolated during difficult decisions.

Questions Families Should Ask a Care Home

Before choosing a care home, families should ask clear questions about costs and funding.

Examples include:

• What is included in weekly fees?

• Are there additional charges?

• How often do fees increase?

• Are top-up fees required?

• Does the home accept local authority funding?

• What happens if savings run low?

Transparency is essential when evaluating long-term care home affordability.

Choosing the Right Funding Approach

There is no single solution that works for everyone.

The best approach depends on:

• Health needs

• Available assets

• Property ownership

• Family support

• Long-term financial goals

Some people will self-fund entirely, while others may rely on a combination of NHS support, local authority assistance, and deferred payment schemes.

Understanding all available care home fee options allows families to make informed decisions with greater confidence.

Next Steps

Paying for care can feel daunting, especially when decisions must be made quickly during emotionally difficult times. However, understanding the funding system can help families avoid unnecessary stress and make better long-term choices.

Whether through council support, NHS funding, self-funding, or deferred payment agreements, there are several routes available depending on individual circumstances.

Families who seek advice early, understand assessments thoroughly, and ask the right questions are usually in the strongest position to make informed decisions about future care.

To find out more about care fees and the support available at The Firs, speak with a member of our friendly team today. We’ll be happy to guide you through your options and answer any questions you may have.