A Guide To Funding Elderly Care

Planning for elderly care isn’t always straightforward. Costs can be high, needs can change in an instant, and finding a way through the funding maze can feel overwhelming. This guide breaks it down, giving you a clear overview of the care funding options available and explaining how vital local authority assessments shape the support you may receive.

Funding for care at home or in a care home

Access to funding for later life and care, whether at home or in a care home, is essentially means tested – and in England, if your parents or relatives have more than £23,250, excluding the value of the home*, then they will likely be funding their own care. For those with assets between £14,000 – £23,250, the state or local authority will contribute to care costs.

The home is excluded from any means tested assessment, except when someone is being assessed for a care home place and they are the current sole occupier of the home. If one parent is going into a care home leaving their spouse or partner in the home, then its value is excluded from any financial assessment.

Sources of funding

There is funding available through various sources:

The state: through the benefits system
The local authority: responsible for the delivery of social care in the area (usually the county council or unitary authority).
The NHS: which does, under certain circumstances, provide funding for nursing or medical care at home or in a care home.

There is some care funding available which is not means-tested, but based on health or social need, such as Attendance Allowance, Personal Independent Payments through the benefits system, and continuing and intermediate care from the NHS.

Even if your family are “self-funders” (that is, paying for their own care), these are well worth pursuing. Note: there’s a fair bit of paperwork to wade through!

Seek professional advice whichever route you take. Many organisations can help. You might want to choose a financial adviser with expertise in this area, so we would suggest that you look for an accredited Society of Later Life Advisers (SOLLA) practitioner from their website.

Read on to see the main sources of local authority and state funding available.

Funding for care at home

There are ways you can get support for care at home, helping your loved one stay safe and comfortable while easing the financial burden.

Attendance Allowance

Attendance Allowance is for people over State Pension age who need help with social (personal) care – washing, dressing or eating, due to an illness or disability. It is available for those who need to be looked after by day, and/or overnight in case help is needed.

Disability Living Allowance (DLA)

Disability Living Allowance (DLA) is for anyone born before 8th April 1948 and who is already claiming DLA.

Personal Independence Payment (PIP)

Personal Independence Payment (PIP) replaced the DLA (as above) for those born after 1948. A benefit for people who are under State Pension age and who need help with daily activities or getting around because of a long-term illness or disability. It isn't based on your National Insurance contributions and it isn't means-tested, so your savings don't matter. You can spend PIP on whatever you need. When someone reaches pension age the alternative benefit is Attendance Allowance, but you can only claim one or the other.

NHS Continuing Care

NHS continuing care is a package of care for people who are assessed as having a “primary health need”. A diagnosis of dementia, for example, is not eligible criteria for NHS Continuing Healthcare support by itself. It's arranged and funded by the NHS. Be aware though, that it is notoriously difficult to meet the criteria for NHS continuing care.

If you receive care in your own home, the NHS covers the cost of the care and support you need to meet your assessed health and associated care needs, which includes personal care such as help with washing and getting dressed.
If you receive NHS continuing and are in a care home, the NHS pays your care home fees.

NHS intermediate care

NHS intermediate care is free temporary care at home for six weeks following a stay in hospital, or to enable the person being cared for to stay at home following an emergency breakdown in care services.

Local authority grants

Local authority grants can be given if you need assistance at home with daily living and your individual financial assets fall under a set amount.

Carer’s Allowance

You can get Carer’s Allowance if you care for someone and meet some strict criteria then you may be eligible for a carer’s allowance. You can also earn Carer’s Credits to help with the financial issues that may come with being a carer.

Constant Care Allowance

Constant Attendance Allowance is available to those with a war pension or suffering as a result of an industrial accident.

Council tax discounts

Council tax discounts. If you are a live-in carer that meets certain requirements, or an adult considered to be 'severely mentally impaired' (SMI), you could qualify. You can apply via your local council’s website.

Care home funding – in a nursing home or residential care home

Local authority payment

Local authority payment can be used to help fund a residential care home, it is a means tested payment service and dependent upon a financial assessment of individual assets. For anyone with less than £23,250 in cash or assets in England or Wales, the local authority will fund care in a care home. For someone with between £14,250 – £23,250 they will provide some funding.

Attendance Allowance

If there is no local authority or NHS funding contribution then you may be eligible for Attendance Allowance funding (up to £5,800 per year).

NHS funded nursing care

As the title suggests, you can receive nursing care, which is funded depending upon your care needs. It will be paid directly to the care home by the NHS.

Funding your own care

If your parents are funding their own care, then using assets and investments are options. There are many different schemes and the main options are outlined below. Please take independent advice.

Annuities

A financial product, including immediate care annuities, that provides a guaranteed income for life or care fees in exchange for a lump sum.
Equity release

Unlocking money from the value of your home, while continuing to live in it, to help fund care costs.
Deferred payment agreements

An arrangement with the local authority allowing you to delay paying care home fees until your home is sold.

Links to these assets and investments options: annuities (including immediate care annuities), equity release, and deferred payment agreements.

Care assessments

The all important first step to receive care, funded or otherwise, is getting your loved one’s care requirements and financial situation assessed.

Our guide to care needs assessments outlines why assessments are a good idea, how to get one, and what happens once you’ve got it.

Even if your parents are self-funding, it is important for them to have an assessment. If they have social care and/or health needs they will be assigned a social worker and given support with their needs, which may change over time.