Who pays for care home fees when savings run out?

A difficulty in planning finances for care home fees is that nobody knows how long they are going to live, or if their needs will change. However carefully you budget, not all circumstances can be foreseen. So you need to know who will pay the care home fees when the savings run out.

Running out of money can be an anxious and stressful time for care home residents and their families. It can take some time to arrange the next step in paying for the care home.

If you or a loved one will soon run out of money for care home or nursing home fees, you should start making arrangements several months before the money runs out.

The local authority has a duty of care to those who are assessed as having eligible care needs. So the very first step is to arrange a care needs assessment. This will give you and the local authority an up to date picture of your or your loved one’s care needs. You will also be able to find out what funding you are now eligible for.

Are next of kin responsible for care home fees?

A big concern for family members of care home residents, particularly next of kin, is they will be legally obliged to pay their loved one’s care home fees if their money runs out. This is not the case. Unless you have signed a contract agreeing to pay the fees or a top-up fee, you are not financially responsible.

When carrying out a financial means test, the local authority will not include your income or assets. It will only include those of the care home resident. If you have joint assets with the care home resident, they will be considered to own 50% of each of those assets. If you jointly own a property, their share of it will only be taken into account if you don’t live there anymore.

How do I know if I am eligible for funding?

The first thing you should do is have a care needs assessment to see if you are eligible for funding from your local authority or the NHS.

Under the Care Act 2014, local authorities have a legal duty to support people with eligible needs. This includes funding care for those who cannot afford to pay for it themselves.

While you may have already had a needs assessment before and been ineligible, your needs may have changed, along with your finances. You can request a needs assessment from your care home, your local authority, or your local Health and Social Care Trust if you live in Northern Ireland.

Can I stay in the same care home if I receive funding?

Whether you can stay in the same care home depends on how expensive it is and how much funding you are eligible for. If you have complex needs that require you to be in that specific home, but it’s expensive, you may qualify for higher funding to enable you to stay there.

Some homes, such as those in the Lilian Faithfull group, Greensleeves Care, and the LuxuryCare, offer a ‘Home for Life’ initiative. This means that residents don’t have to, or very rarely have to, leave for financial reasons. Unfortunately, for many homes, this is not a financially viable option.

If you are unlikely to be able to stay in the same care home, your local authority will offer you at least one care home that is within budget. They ought to give you a few to choose from. Speak to your current care home about the situation, as they are often happy to let you stay while you sort this out, and may even provide support for you to view other homes. 

Top-up fees

You can stay in a more expensive home as a self-funder if somebody is willing to pay the shortfall between local authority funding and what the care home charges. This could be a relative, friend or even a charity. 

They will sign a contract, so it’s important that they can afford, and are willing, to pay the top-up fee on an ongoing basis. It’s also important to take into account that the care home’s fees may increase. Or, the person paying the top-up fee may have a change in circumstances, such as having another child or being unable to work due to ill health, that will hinder their ability to pay.

You may wish to consider moving to a less expensive care home to lessen the top-up fee.

Request a care needs assessment

A care needs assessment looks at your health, mobility and ability to manage everyday tasks. The goal is to find out what you are struggling with and decide what care would be best for you. It also determines whether your needs would make you eligible for funding from your local authority, provided that you cannot afford to pay for care yourself.

Each country in the UK has its own criteria.

England

Under the Care Act 2014, the three key criteria that your needs must meet to be considered eligible include:

• Your needs or difficulties are because of mental or physical illness or impairment, not other factors.
• There are daily tasks you must do to look after yourself that you cannot perform without at least two of the following:
  • Extreme pain, distress or anxiety
  • Assistance or prompting
  • Endangering somebody else in your home or care home
  • Taking significantly longer to finish the task than is expected
• Being unable to do the tasks you struggle with significantly impacts your wellbeing

Scotland

Scotland looks at the level of risk you are at if you do not receive care, particularly how urgently at risk you are. They look to see if you are at risk of the following criteria hindering your wellbeing and ability to be independent:

• You have difficulty with performing personal care and domestic tasks
• You struggle to take part in work, education or community life
• There is significant neglect of your mental or physical health

In Scotland, personal and nursing care is free if your needs assessment shows that you qualify. However, you will need to pay for your accommodation in residential care.

Wales

Under the Social Services and Wellbeing Act 2014, you may be eligible for funding if:

• Your difficulties are caused by mental or physical ill-health or disability, your age, or dependence on drugs or alcohol.
• You have difficulty with one or more of the following:
  • Self-care
  • Communication
  • Protecting yourself from abuse or neglect
  • Attending work, education or leisure activities
  • Maintaining relationships
  • Looking after a child in your care
• You cannot perform these tasks even with available assistance
• You are unlikely to be able to perform these tasks unless the local authority arranges care and support 

Northern Ireland

Northern Ireland looks at your level of risk in relation to the following:

• Your physical and mental health
• Your ability to look after yourself
• Your control of your immediate environment
• Your risk of or ability to protect yourself from neglect or abuse
• Your ability to engage in work, education or social activities
• Your ability to sustain social relationships

This video from carehome.co.uk explains how much average care home fees are so you can get an idea of how much you have to pay. it will also help you determine if you will have to pay your own care costs.

See if your assets are under the minimum for local authority funding

To qualify for funding from your local authority, as well as having eligible needs, you must be unable to afford to pay yourself. If your money is running out, check to see if your capital is now below the upper limit. This could qualify you for some funding towards your care. If your capital is also below the lower limit for your country, then you may be able to have your care home fees paid for entirely by the local authority.

England

Upper limit: £23,250
Lower limit: £14,250

Scotland

Upper limit: £35,000
Lower limit: £21,500

Wales

Wales has a single threshold of £50,000 for residential care

Northern Ireland

Upper limit: £23,250
Lower limit: £14,250

How do I qualify for NHS continuing healthcare?

NHS continuing healthcare is funding available for people living in England, Wales or Northern Ireland who qualify as having what is known as a primary health need. If you are eligible, your care home fees will be paid for by the NHS.

Eligibility is not based on a particular diagnosis. Instead, healthcare professionals will look at how your condition affects your breathing, mobility, nutritional intake, continence, communication and other factors.

To find out if you are eligible, you discuss it with your care home or GP. They will arrange an initial assessment. If your first assessment indicates that you may be eligible, a second assessment will be carried out by your local NHS Clinical Commissioning Group. If your health is deteriorating quickly or you have a terminal illness, you may be fast-tracked through the process.

How do I qualify for NHS-funded nursing care (FNC)?

If you do not qualify for NHS continuing healthcare, you may still be eligible for NHS-funded nursing care. This is when the NHS covers the costs of any care you receive from a registered nurse while you are in a care home.

For those who need nursing care, this could help to reduce your costs. In some instances the rate is paid directly to the care home and deducted from your fee.

However, this is not always the case and FNC may be paid directly to the care home in addition to the fees quoted. Speak to the individual care home. Or check your contract to find out how the home manages FNC and whether this may help to reduce your costs. 

To be eligible, you must live in a care home that is registered to provide nursing care, and be ineligible for NHS continuing healthcare funding but have been assessed as needing care from a registered nurse.

England FNC rate

NHS funded nursing care rates 2025/26 in England are:

• Standard rate: £254.06
• Higher rate: £349.50

This is an increase of 7.7% since the 2024/25 tax year.

You will only receive the higher rate if you qualified for the highest FNC rate before October 2007 and continue to do so.

Scotland FNC rate

£104.90 per week for nursing care and/or £233.10 per week for personal care.

In Scotland, the funding is provided by the local council rather than the NHS. Anybody living in a care home can claim this funding to help with their care home fees as long as they have been assessed as needing personal and/or nursing care.

Wales FNC rate

£201.74 per week.

In Wales, FNC is funded through the Clinical Commissioning Group (CCG) local to your nursing home.

Northern Ireland FNC rate

£100 per week.

The contribution is made by your local Health and Social Care (HSC) trust.

Care Fees Annuity – insurance for care home fees

A Care Fees Annuity is a payment plan you can set up to cover your care fees if you run out of money. It’s effectively insurance for care home fees.

There are two types:

• Immediate Needs Annuity can pay out as soon as possible and provides money for your care fees for the rest of your life.
• Deferred Care Annuity is set up in advance and can pay out after a year to five years, depending on when you need it.

With both, you pay a lump sum upfront. How much this is depends on a number of factors, including your age, health, life expectancy and how much you’re expecting to pay for your care each month. The Immediate Needs Annuity is more expensive than the Deferred Needs Annuity.

Both are not taxed and neither are included in your estate when it is assessed for inheritance tax.

Read more about Immediate Needs Annuity to pay for care home fees.