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Care home costs: a guide to average fees

Care home costs: a guide to average fees

If you’re starting the search for a care home you will have many questions. The cost of a place in a care home is likely to be up at the top of the list.  They are seemingly very expensive, particularly if specialist care, for someone living with dementia for example, is required.

There is some confusion about care home costs – how they are made up, who pays for what, and what different funding options there may be. In this guide we aim to de-mystify care home fees so that you are able to make the best decisions with your parents and relatives.

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Top tips for funding care home fees

How much does a care home cost?

Care homes are owned/run by a range of different organisations; from national groups of often larger scale homes owned and operated by private companies, to small owner managed businesses and charities including benevolent organisations.

The cost may not vary too much between different providers, except perhaps with charities, although they too need to re-invest in their homes.  

cost of a care home

Whilst none of this may actually matter to your final choice, or the options you are able to choose from, the ethos and day to day operation of the home may well be a factor in your decision-making. 

Nursing homes and Residential homes – how average fees vary by the type of care home

There are 2 types of care home: residential care homes cater for people who are able to live mostly independently, but who might need help with washing and dressing and other tasks such as giving medication. 

The cost of residential care is less expensive than the second type – nursing homes – which provide dedicated medical support and nursing care in addition to personal care.  There are also care homes of both types which provide specialist care, such as dementia care, which will come at a further premium.  The average annual costs of the different types of care homes are:

  • Residential homes – £681 average per week
  • Nursing homes – £979 average per week
  • Specialist dementia care homes/units – £1,100 average per week
  • (respite care – often available for short-term stays upto 2 weeks – approx. £477 per week)

These are average care home fees across the UK, with different fees in the nations, and marked differences across the regions of England (similar to house price differences).

Specialist care by its nature will be more expensive, particularly if it is round the clock, or requires specialist therapies.  

(Source – LaingBuisson 2022).

how much does a care home cost

How are care home fees made up?

In general terms care home fees are broken down as follows:

  • Board and lodging  15% (room, meals, laundry plus shared costs including admin, cleaning, insurance, rates, utilities etc)
  • Staff costs 50%
  • Medical costs  £5%

It is not always easy to get a clear breakdown of costs, so always read the small print of the contract to ensure you understand if there are hidden extras – such as outings or entertainment, or GP visits.  (You will note that the figures above only reach 70% of the fee – the care home provider – will build in a profit margin).

Who pays for care home fees?

Under the current system of funding for care home places, local authorities will have a set price negotiated with the care home for the residents they are funding.  This is likely to be significantly less than the fees an individual pays for themselves. Essentially privately funded care home places contribute to funded places.  Not ideal but it explains the difference in price between the two. 

Self-funded

if your parent or relative has more than £23,500 in savings (excluding the family home if a spouse continues to live there) then they will be funding the care home fees.

Local Authority funded

for someone with less than £23,500 the Local Authority will part fund or if below £14,500 fully fund the care home costs. It will be a care home decided by the Local Authority who will have a capped amount for what they will contribute/pay.  Your parent will be given a choice of care home but it will be limited to those which the local authority is able to fund within their budget cap. 

Top-up fees

Relatives or friends can agree with the Local Authority to pay a top-up fee for a different care home if the preferred choice is more expensive than their recommendations.   This can also apply within a care home where you can pay a top up for a bigger/better/more accessible room.

NHS Funding

if your parent or relative is successful in applying to receive NHS Continuing Care, the NHS will fund all the care home fees.  This is hard to achieve, not surprisingly, but very much worth the effort of applying, although it is a postcode lottery, and also dependent upon critical primary healthcare needs.  A diagnosis of dementia of itself will not qualify someone for NHS Continuing Care. The NHS may also fund nursing costs if your parent is eligible for NHS Funded Nursing Care contribution.  Both will be reviewed regularly.

Help with funding care home costs

Even if you are funding the care home fees yourselves it is recommended to arrange a local authority care needs and financial assessment. This will determine what care is needed and how it might be funded.  It will include any nursing care required, and this will help with funding support from NHS through their Funded Nursing care contribution – which will be paid directly to the home by the NHS.

how much does a care home cost

Benefits and care home allowances

Moving into a care home does not mean that the resident is no longer able to access benefits such as Attendance Allowance, Disability allowance or carer’s allowances.  All of these can help offset the cost of the weekly fees. 

Selling the house to pay care home fees

If one parent remains at home it will not be included in any calculations regarding self-funding care home fees.  So – your Mum will not need to sell the house in order to pay for her husband’s place in a care home.  It will be her husband’s assets and savings that will be used to calculate his ability to pay the fees or not.

Should savings run out and different decisions have to be made, there are options to consider before selling the family home:

Equity release/lifetime mortgage

Historically Equity Release was perceived to be a risky option with high interest rates.  It is now a ££ billion industry, well regulated and very viable option to selling the home.  But as with all things financial, take advice first.

Deferred payment options

In some circumstances you can sell the home to the Local Authority in lieu of care home fees.  This is known as a deferred payment agreement. The house will only be sold after your parent has died, and the proceeds go to the Local Authority.

A note of caution: running down assets or transferring ownership of a house to be below the threshold for self-funding could be called deprivation of assets which will be penalised by the Local Authority.

deprivation of assets

Considerations before signing a care home contract

Proof of affordability

most care homes will require you to demonstrate that you will be able to pay the fees in full for up to 2 years.

Trial period

the care home may offer a trial period for perhaps 30 days – to enable the resident to settle in before committing fully, and to be sure the level of care required can be given.  Review the termination clause regarding the trial period and to avoid any unnecessary costs you will need to give enough notice.

Fees and additional charges

the contract should include the type of room and cost of the services provided and how payments will be made, including any deposit required, any top-up fees or additional charges such as monthly advances for eg hairdressing.  It should also include a notice period for any increases.

Changes in services and care

Details of the services and care to be received will be detailed as well as the process of any changes that need to be made – this is particularly important as your relative’s health declines.  More care or moving to a different room may be required so it is important to understand the implications of this.

Insurance

The contract will tell you what and what is not covered by the care home’s insurance. For instance, you may be allowed to bring your own furniture, but the care home may not provide insurance for it.

Absence

Details of what happens to care home costs and accommodation if your parent is away from the home, due to, for example, a hospital visit or holiday are included in the contract.  The room should be kept for a number of weeks, and the care home may offer a discount due to the savings the absence allows.

Terminating the contract

The contract will outline the process for termination either by the care home or by you, including the notice period and fees as well as practical issues such as clearing the room of belongings.

What happens when my relative dies?

If your parent dies in the care home the contract should explain the process for fee charges as well as vacating the room.If the care home chooses to terminate the contract they must clearly explain the reasons why.  The reasons must be valid – such as repeated non payment of fees or if the care home believes it can no longer provide the level of care required.

Changes to care home costs are regulated to protect the consumer

There are consumer rights regarding care home contracts through guidance published by the Competition and Markets Authority.

It states that care homes across all UK nations are required to present key information to help you make a decision. Important information, such as the care home’s fees, must be clearly highlighted, easily accessible.

how much does a care home cost

Care home contracts must be written clearly and simply to ensure residents and/or their representative are able to easily understand their rights and responsibilities.

In accordance with consumer law, if the contract is unfair, it will not be valid. Unfair contractual terms are not legally enforceable. A contract is unfair when it puts the resident and/or their representative at an unfair disadvantage, such as giving the care provider more rights than a resident.  Unfair care home contract terms could include:

  • The provider holds the resident to account for things that are their fault (e.g. failure in care leads to injury or death of resident)
  • Allowing the care home to increase fees unexpectedly
  • Not giving the resident important information
  • Charging fees for an extended period of time following a resident’s death.

Beyond the bingo - the price of a care home

There has been a lot of concern about care homes during the pandemic. The vast majority worked tirelessly under almost impossible circumstances to keep their residents safe and well.

There are also ongoing concerns about staffing levels  in care homes.  You may well be anxious about a possible move, so it is even more important to do your research, ask questions of staff, residents and families before you sign a contract.  Some key questions to ask include:

A care home is expensive comparatively speaking to other care options such as remaining at home and receiving live-in or day care.  However, it may be the best option for your relative for a range of reasons: receiving 24/7 care and support they need; companionship and activities to maintain their quality of life;  peace of mind for you to know that they are safe and cared for.

If at any time you are concerned for their welfare, then there are procedures and processes you can follow with the care home staff.  In very particular circumstances you may need external help.  Contact the Relatives and Residents Assocation which campaigns for care home residents.  Our guide to how to make a complaint will give you the information you need.

Half a million people live in care homes in the UK, the vast majority wonderfully cared for by extraordinarily dedicated staff.  You only have to read some of the reviews.  

FAQs on the cost of care homes

What happens if we run out of money?

If assets fall below £23,500 then the Local Authority will part-fund the care.  Start discussions with the care home well before this happens as there may be other alternatives such as a smaller room. 

Who pays care home costs?

There are three options: self-funding a place in a care home. Secondly, the Local Authority will part or fully fund if assets are below £23,500.  Thirdly, in some circumstances the NHS will fund a care home place under NHS Continuing Care.  There is also the option to top-up local authority funded fees. 

How much are dementia care home costs?

Specialist care, such as for someone living with dementia, is more expensive. Average weekly costs are ££1,100 in the UK. 

Will the local authority make me move Mum to a cheaper care home?

You can top up the fees yourselves to enable your Mum to remain in the care home.  There may be other solutions such as moving to a different room, or receiving NHS Continuing Care funding. Explore all the options with the provider and the local authority.  

What do I do if I'm concerned about Dad's care?

You should take up any concerns with the care home staff. If you remain concerned, you can contact the Care Quality Commission which regulates care providers. 

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