With the average UK care home costing £65,000 a year, our money expert says some people don't have to pay - and it doesn't mean selling your home.
One fear haunts many people as they or their partner get older and frailer: how will we pay for a care home?
Carehome.co.uk says the average UK care home fee is more than £65,000 a year. A nursing home is around £79,500 and specialist care, such as for dementia, can cost even more.
Prices in some parts of the country are even higher. Such fees can rip through a lifetime’s savings very quickly.
The government had promised to tackle this crisis of affording care. But now it has told Baroness Louise Casey, the head of its Independent Commission into Adult Social Care, that she should produce recommendations in 2026 for a plan to be implemented "over a decade".
It should "focus… on existing funding… and whether [it] is being best used", which seems to mean there will be no extra money.
The final report, due out in 2028, would make even "longer term recommendations". It is what civil servants call "kicking a problem into the long grass". Therefore, we are stuck with the current rules for the foreseeable future.
England, Scotland, Wales and Northern Ireland each have their own systems, but all are similar and unlikely to be changed radically without a lead by Westminster.
So here is my guide to navigating the maze of care home payments.
If the primary need for a person to be in care is medical then in England, Wales, and NI – not in Scotland – the NHS should pay all the fees without a means test. The NHS doesn’t advertise this continuing healthcare and local authorities often ignore it, so very few people even know about it. Claiming can be very difficult.
Lisa Morgan, a partner at specialist solicitors Hugh James, helps people with claims on a no win, no fee basis. She told me: "It is a difficult process for families, but information is power.
"Read as much as you can about it. Don’t take no for an answer – if refused, appeal!"
Nearly half of all appeals are successful at the first or second stage. It’s worth fighting for as the care home fees will be paid in full – and then you can ignore all the rules below.
People naturally fear they will have to sell their property to pay for care. That need not happen. If a spouse or partner continues to live there, then its value is ignored. It is also ignored if a relative who is aged over 60 or disabled lives there.
So the value of a home is normally only considered if it is left empty. That will wipe out any help from the local council, but it does not have to be sold.
In England, Scotland and Wales you have the right to a deferred payment agreement once your savings and investments fall below the limit where you are expected to pay everything yourself (£23,250 in England, £35,000 in Scotland, £50,000 in Wales). In NI, ask your local Health and Social Care Trust.
With an agreement, the local authority puts you in a care home and the bill ticks up all the time you are there. In England and Wales interest is charged on the debt, currently at a maximum annual rate of 4.25%. When you die the amount owed is paid from your estate – so the home may have to be sold then to pay it.
If you have considerable assets, it may be worth thinking about an "immediate needs annuity". You give an insurance company a lump sum and it pays your fees for life. You must get advice from a specialist independent financial adviser before considering it.
Never pay a firm to sell you a scheme to avoid care home means tests. They don’t work and may cost your heirs money.
The local authority will assess the needs of the person who requires care and then apply the means test to their income and assets to decide if it will meet the cost.
The resources of their spouse or partner are ignored – they have absolutely no obligation to pay the fees or contribute to them, but can top them up if that would buy their loved one better facilities.
If the person in the home has capital above £23,250 (England and NI, £35,000 in Scotland, and £50,000 in Wales), they will be expected to pay for their own care until it falls below that. If it falls to £14,250 (£21,500 in Scotland, £50,000 in Wales) then their capital is ignored, and the council pays the full cost.
Between the two figures in England, NI and Scotland, the resident will have to pay a small contribution towards their care.
If you have needs that only a registered nurse can meet, you may also be able to get more than £200 a week NHS-funded nursing care paid to the home.
In Scotland, you may also get a payment of over £100 a week for your personal care. These are not means tested.
Partners should divide their savings equally between them long before they need care. If they are in a joint account then the council will assume they’re owned equally but payments out of a joint account will run down half as quickly as they will in an individual one, delaying the time when the full care costs will be paid.
Do not divide the assets unequally – so the person in care has less than £14,250 for example – as that will count as deliberate deprivation and the council can still take money from them.
If you pay entirely for your care, you can claim Attendance Allowance (Pension Age Disability Payment in Scotland), up to £110.40 a week. If the local council pays for your care, it will take almost all your income towards the cost, leaving you with just £30.65 a week in England, £27.19 in NI, £35.90 in Scotland and £44.65 in Wales.
Finally, remember the majority of people never need a care home. They die peacefully in hospital or at home.
Our financial experts at Saga Money have more help for you on navigating care homes, including preparing for future care home costs, how to choose the right care home and the different ways of saving for your future care.
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