Care home fees are rising – find out the costs, and how to get funding

The annual cost of living in a care home has soared 9.6pc year-on-year to £41,600 in 2023, according to healthcare data provider LaingBuisson.

Care fees have been steadily rising for years, but now soaring energy bills and food prices have pushed many providers to breaking point, forcing them to pass on their rising costs. 

So-called self-funders, who pay for their own care, will bear the brunt of these surging fees. Even the most fastidious of savers are at risk of seeing their cash wiped out.

Helen Morrissey, head of retirement analysis at stockbroker Hargreaves Lansdown, said: “Social care funding is a huge and growing issue – recent figures put an estimated 137,480 people having to pay the eye-watering cost of care. 

“A relatively short stay in care may be manageable, but anything longer can test even the best laid financial plans and, at worst, leave family finances in tatters.

“Despite this, it’s an issue no government has really been able to grasp. There had been reason for optimism back in 2021 when Boris Johnson introduced a social care plan, which looked to cap personal care costs at £86,000 and raise the limit where people qualified for support to £100,000. 

“However, any optimism has since fizzled out as subsequent economic events saw these plans kicked firmly into the long grass, with no real timetable for when they might be revisited.”

With care fees currently uncapped, it is vital that families suddenly faced with this challenge understand the support available to them and how they can bring down the cost.  

Here, Telegraph Money explains whether you will have to pay for care and, if so, how to fund it. 

• Will I have to pay for care?
• What is the means test for care?
• Can I pay for care at home?
• How much will care cost?
• I’m a self-funder – can I get any help from the Government?
• What happens if I run out of money?
• How to choose a care home?
• How can I fund care?

Will I have to pay for care?

According to the Office for National Statistics (ONS), almost half of all care home residents over 65 are self-funders. 

In England, anyone with more than £23,250 in savings will have to pay for care. This threshold has been frozen since 2010-11. 

If you have been self-funding and you pass below the threshold, then the council will step in to pick up the bill. Make sure you engage with the local authority several months before this happens for a means test. 

What is the means test for care? 

To find out whether you are eligible for state funding, you must apply to the local council for a care needs assessment and a financial means test.

The former will decide how serious the person’s care needs are. It may be that they need to go into a nursing home, or – if their needs are sufficiently complex – that they qualify for full or partial funding from the NHS. 

For more information on NHS funding, we got a behind-the-scenes look at how the system works in our guide: I used to work for the NHS – here’s how to never pay care home fees.

The financial means test will determine how much you have in income, savings, investments, property and so on. 

The council will also ask about assets you have previously owned. Gifting money and property to bring yourself below the threshold is risky as it could be seen as “deliberate deprivation of assets”, which could result in your inheritance being clawed back to cover care costs. 

If you have between £14,250 and £23,250, you will have to contribute to your care fees. For every £250, or part of £250 above £14,250, you are treated as though you have an extra £1 a week income. This is called a tariff income. 

Less than £14,250, and your capital will be ignored and the council will assess you based on income only. 

Bear in mind your property will be discounted from the means test if a spouse or civil partner still lives there, or if you want to receive care at home. 

If it is very obvious you will not qualify for state funding, then the local authority is likely to carry out a “light touch” financial assessment, according to Nick Hutchings of financial adviser Shaw Gibbs Financial Planning.

If it is urgent, and the person has been taken into care unexpectedly, then the local authority can expedite your means test, Mr Hutchings said – otherwise, “expect it to take a good few weeks.” 

It is a good idea for self-funders to re-engage with the local authority if the person needing care later deteriorates, as it may be that they now qualify for NHS support. 

If it turns out you should have qualified for NHS Continuing Healthcare, when you’ve been paying for yourself, then you may be able to claw back what you’ve spent on care fees.

Can I pay for care at home? 

Often, families prefer to arrange care for their relatives at home if they can. 

According to the Homecare Association, the minimum you should expect to pay for a careworker in 2023 is £25.95 per hour. 

At this cost, 28 hours of homecare per week would set someone back about by nearly £3,000 a month. 

But it could prove much more expensive if the person’s needs are more complex, requiring round-the-clock support.

You may also need home adaptations. The council will provide you with a home assessment from an occupational therapist free of charge. 

The price of home adaptations can range hugely depending on what is needed. Smaller adaptations like shower seats are fairly cheap, costing between £50 and £150, according to the consumer association Which?. A stairlift, however, will cost you on average £3,867. 

If the adaptations cost less than £1,000, the council should pay for it. Depending on your income, you may be eligible for a Disabled Facilities Grant of up to £30,000. 

The means test for care at home is the same, however the local council will disregard the value of your property. It will also allow you to keep a higher amount of income to cover bills.  

How much will care cost?

According to LaingBuisson, the average someone can expect to pay for a care home in the UK is now £800 per week. 

Where you live has a significant impact on fees, with residents in south-east England typically paying £270 more than those in the North East, according to Telegraph analysis of LaingBuisson data. 

However, this data covers both state-funded and self-funding residents. The reality is that self-funders are likely to pay far more. 

That is because government funding is insufficient to cover care homes’ soaring costs, so self-funders effectively subsidise the fees of the publicly funded. 

Looking just at self-funders, average fees in England jump to £1,120 per week. Nursing home fees are particularly high, with self-funders typically paying £1,385. 

These are average fees, and the reality may be very different for some families. Mr Hutchings said: “From my experience, care fees usually cost £1,500 a week at minimum.” 

I’m a self-funder – can I get any help from the Government?

Even if you have more than £23,250 in assets, you can still get government support to cover care costs. 

The attendance allowance is a non-means-tested benefit for those with a long-term illness or disability. You can get £68.10 a week if you need supervision either during the day or at night. It rises to £101.75 if you need supervision both night and day, or if you have a terminal illness. 

NHS Continuing Healthcare provides funding to those with extremely complex needs. It takes into account factors such as mobility and breathing, and also looks at the intensity, complexity and unpredictability of your needs. 

You can get an initial assessment from a GP, nurse, social worker or other health professional. They should complete a Checklist, and, depending on your eligibility, you may be referred for a full assessment. 

If your condition is rapidly deteriorating, you should be considered for a fast-track assessment.

NHS Nursing Care is for nursing home residents who cannot get funding through NHS Continuing Healthcare. NHS pays the care home £209.19 a week to cover nursing fees.

What happens if I run out of money?

If covering your care costs means you run out of money, then you will become eligible for state funding.

A problem self-funders often run into is where the care home they have chosen exceeds the local authority’s budget. If this happens, then they can arrange for a “top-up” where a third-party – normally a relative – covers the difference. 

If the third party payments cannot be continued, you may have to move to a less expensive home. However, the authority should carry out an assessment on the effect a move may have on your wellbeing and any risks involved first.

How to choose a care home

Whether you’re trying to pick a care home for yourself, or a family member or loved one, it’s a tricky process and involves weighing up the location, facilities and cost – and it can be tricky to find somewhere that fulfils all criteria.

You can use websites such as carehome.co.uk, housingcare.org or lottie.org to find care homes in your desired area. 

Once you have a shortlist, you should read the Care Quality Commission (CQC) reports on each home. The CQC inspects care homes at least every three years to assess their safety, effectiveness and the responsiveness of their staff, among other things. If you are satisfied with the CQC’s findings, arrange an in-person visit. 

Our guide on how to pick the perfect care home sets out what you should look for when you visit, the questions you should ask, and how to make a complaint if you’re not happy with the care you receive.

How can I fund care? 

There are a range of strategies to cover the cost of your care. Some of them are well-known ways of generating an income, whereas others are only available to care home residents and their families.

Selling the home is sometimes the only way to generate enough capital to cover fees, but it is far from the only option. 

Investments: You can invest in dividend-paying funds and stocks to generate an income to cover the cost of care. However, you run the risk of depleting your pot if markets take a turn for the worse.

Rental income: Renting out the home could provide an income to pay for care – perhaps combined with other sources such as pension income. 

Downsizing: Selling the home and moving somewhere smaller could free up income for care. 

Immediate needs annuity: In exchange for a lump sum, self-funders can buy an insurance policy that will cover their fees for the rest of their life. If the person needing care lives for a number of years, then this can be extremely cost-effective.

However, you run the risk of overpaying if they die much sooner than expected. It can take up to three months, and “if the lump sum is coming from the sale of a property, it’s better to wait,” he said. 

Equity release: A lifetime mortgage allows you to unlock a tax-free lump sum by borrowing against the value of the home. This is not an option where the homeowner lives alone and is going into care, because the loan needs to be repaid when the borrower either dies or goes into care. 

However, it could be an option for those receiving care at home, or where a spouse is still living in the home. Remember that interest on the loan rolls up over time, so the longer the homeowner lives for, the bigger the debt that will need to be paid.