Care home funding refers to the financial assistance available for care home costs, which can come from an individual’s own money, local authorities, or the NHS. Care home funding is complex due to a combination of Local Authority assessments, varying eligibility for public funding, the need for individuals to contribute based on income and assets, and the existence of complex rules around giving away assets. The situation and process can feel overwhelming for care seekers and their families. Self-funders, who are not eligible for financial support / public funding, can face a daunting process of organising their own care. To understand a person’s specific situation, a care needs assessment followed by a financial assessment from their Local Authority is the first step.
The Local Authority’s financial assessment (or means-test) evaluates income (such as pensions and benefits) and capital (savings, investments and the value of their property). If total assets exceed the Government’s “capital threshold” (currently £23,250 in England), then the person is considered a ‘self-funder’ and expected to pay for their care home fees. Those with total assets below the threshold, may receive full or partial Local Authority care funding.
NHS support such as NHS Continuing Healthcare funding (CHC) is available for those with complex health needs, and for those who require nursing care there is the NHS-funded Nursing Care (FNC). CHC covers full care costs, while FNC provides a weekly contribution towards nursing care. Eligibility is based on care needs, not financial circumstances.
Who pays for care homes? The key funding options:Options for paying for a care home include income and savings, Local Authority funding and top-up payments from family. Other solutions involve selling or renting out a home, using a deferred payment scheme or an immediate needs annuity, and exploring charitable grants or benefits. Here are the key care home funding options:
Self-Funding: Those with assets over £23,250 usually pay the full cost of care, often using income, savings, or investments. Most Forest Care residents are self-funders. In some cases, the family home may need to be sold, unless a spouse or dependent still lives there.
Local Authority Funding: The Local Authority may help with care costs following a care needs and financial assessment. Residents still contribute based on their assets. A personal expenses allowance (currently £30.65 per week in England) is retained for items like toiletries, clothing, and hobbies.
Top-up Payments: If a care home’s fees exceed the Local Authority’s contribution, family or friends (not the resident) can pay the difference as a “top-up.”
NHS Continuing Healthcare (CHC): Fully funded care for health-related care needs due to a disability, an accident, Parkinson’s, diabetes, multiple sclerosis or another illness. Eligibility is not means-tested but does require a detailed care needs assessment.
NHS-funded Nursing Care (FNC): The NHS pays a weekly contribution (currently £254.06) directly to nursing homes for residents whose care requires the input of a Registered Nurse. Residents, families, or the Local Authority cover the remaining fees. Eligibility is based on an external nurse’s assessment and is not means-tested. Those receiving CHC funding are not eligible for FNC. Four of Forest Care’s homes have nurses on-site 24/7, with most residents being eligible for FNC funding.
A care funding assessment, or means-test, is a process by the Local Authority to determine how much an individual must contribute to care costs based on their income and savings. If total assets exceed £23,250, the individual must pay the full cost. The family home may be excluded if a spouse or dependent still lives there.
A needs assessment is required first to establish the care needed, eligibility for Local Authority support, and the cost involved. The financial assessment then determines the individual’s contribution towards that care.
12-Week Property Disregard: For self-funders who own a property, the Local Authority usually disregards the property value for the first 12 weeks in a care home. During this time, the Local Authority pays care fees at a “Guide Rate” while the property is sold. If the Guide Rate does not cover the full fees, the resident is responsible for paying the shortfall when the property is sold. After the property is sold, the resident is responsible for the full fees.
Care Home Costs UK: Care home costs vary depending on care type, quality, and location, with residential care usually costing less than nursing or dementia care. It is important to compare options and plan ahead. Forest Care’s All-Inclusive fee covers everything from physiotherapy and chiropody to hairdressing and massage therapy with no hidden costs.
Individuals with assets over £23,250 (including cash, property, and investments) are classed as self-funding and must find, organise and pay for their own care. This allows for greater choice and flexibility, including preferred care homes, locations, and services, with immediate access and no delays from funding assessments. However, self-funding can be costly, with the risk of depleting funds. In some cases, the individual may need to sell their home to cover fees. At Forest Care, fee payments can usually be accrued and deferred until the property is sold, subject to certain conditions.
The Deferred Payment Scheme: Local authorities may offer a ‘Deferred Payment Agreement’ for long-term care, allowing residents to delay selling their home during their lifetime to cover care costs. In the care system, the funding is treated as a loan, secured against the property’s value, with interest and admin fees being applied and payable at the point the property is sold.
Local authority support and how it works:Local Authority care funding is available when a person passes both a care needs assessment and a financial assessment. Families or individuals can contact their Local Authority’s adult social care department by phone, online, or in person to request a care needs assessment. This evaluates the level of support required and eligibility for help. A financial assessment then reviews income, savings, and assets to determine how much the individual must contribute when paying for a care home. Based on these assessments, the Local Authority creates a care plan outlining the support provided and confirms both the level of Local Authority funding and the individual’s contribution. If the chosen care home costs more than the Local Authority’s contribution, a family member can pay a ‘top-up fee’ to cover the difference.
Local Authority care funding typically covers basic care costs but excludes extras like additional therapies, hairdressing, private outings, or special dietary needs. Forest Care’s All-Inclusive fee covers all these care needs and services – physiotherapy, chiropody, hairdressing and massage therapy with no extra costs.
NHS Continuing Healthcare funding (CHC) is free NHS-funded care for people with complex, long-term health needs where health care is the main priority. Eligibility depends on the complexity and intensity of their health needs, not diagnosis or finances. A Multidisciplinary Team assesses the person’s needs, with a decision on a full assessment made within 28 days. If eligible, CHC covers all care costs, including nursing, personal care, accommodation, medications, and therapies in a care home. It is not means-tested.
CHC differs from Local Authority care funding, which is means-tested and for social care needs. Anyone who may qualify should speak to a GP, healthcare professional, or social worker to request an assessment.
NHS-funded nursing care (FNC) is a weekly payment of £254.06 made by the NHS directly to nursing homes to cover nursing care by a registered nurse. Eligibility requires living in a nursing home, not qualifying for CHC, and needing nursing care as assessed by professionals. A CHC assessment must be completed before FNC is considered.
FNC only applies to permanent care, not respite, and is available whether the person is self-funding or supported by the Local Authority. With consent, the nursing home usually handles the NHS application after admission. Payments are often backdated to the admission or application date.
Planning ahead: Financial advice and practical tips:Planning care, choosing a care home, and navigating funding can be confusing and overwhelming for individuals and their families. Forest Care understands that this is often a challenging and emotional time and offers guidance every step of the way.
The process begins with open family discussions about their loved one’s wishes, health needs, and long-term goals. The next step is to contact the Local Authority for a care needs assessment. This assessment is essential to understand the individual’s physical, mental, and social needs, determine the level of care required, explore potential funding, and create a care and support plan to guide future decisions.
Seeking financial advice early is a crucial part of the planning process. It can help families understand their funding options, make the most of their finances, avoid unexpected complications down the line, and ensure a smooth transition to a care home. Forest Care is committed to supporting families through this journey—answering questions, offering advice, and providing compassionate care in a warm and professional setting.
For further help, Age UK is a trusted resource offering free advice, helpful tools, and a confidential helpline for care planning and financial support.
How Forest Care supports families with funding:At all our Surrey and Hampshire homes, we understand that navigating care home funding options can feel overwhelming. That’s why our experienced team is here to guide and support care seekers and their families through every step of the process, from exploring funding options to understanding how to pay for long-term care.
Our All-Inclusive Fee makes the cost of care simple and transparent. One straightforward fee covers residential, nursing, permanent, and respite care. Every service is included, from physiotherapy and chiropody to hairdressing and massage therapy, giving families complete peace of mind with no hidden or unexpected costs.
In some cases, the individual may need to sell their home to pay for care home fees. To help ease this transition, Forest Care can usually arrange for fee payments to be accrued and deferred until the property is sold, subject to certain conditions.
At Forest Care, we are committed to transparency and fairness in all funding arrangements, in line with our Fees & Funding Policy, which provides further details on available care home funding options.
