If you’re considering additional care for a loved one, then one question you may be asking yourself is, are next of kin responsible for care home fees?
If you are not eligible for local authority funding then your loved one will need to pay for their care privately.
In this article we will look into who is responsible for paying care home fees and how that might change over time.
Here’s a summary of what we will cover in this article:
- The average cost of a care home in the UK varies greatly depending on your care needs, location and the quality of the facility.
- The local authority will conduct a means test to discover if someone is eligible for care funding.
- Next of kin are never responsible for paying for care fees of another person, unless a top up fee is agreed. Next of kin assets are also not taken into account during the means test.
How much will a care home cost?
The cost of residential care within a care home setting varies greatly between facility and location.
Plus it depends on the level of personal care required, and the type of care home they choose.
During the needs assessment conducted by your local authority you will gain a better understanding of your loved ones care needs. You’ll also get answers to questions such as, when should someone with dementia go into a care home?
Someone who needs minimal assistance will likely pay less than a person with complex nursing care needs.
Confused about care funding?
What is the average cost of a care home?
It is very difficult to calculate the average monthly care home costs an individual will be expected to pay because of all the differing factors that will be included in their care plan.
Some less costly residential care home costs start at around £2816 per month.
But those at the higher end of the scale, with more luxury facilities, can start at around £1500 per week.
Average nursing care costs
For a nursing home where the care is more in-depth and medical, some reviews suggest that the average cost is £3552 per month.
Again, if this nursing care takes place within a luxury setting weekly costs can be considerably more, starting at £1800-2000 a week depending on needs.
Specialist care homes, for example those specialising in dementia care, may charge a higher rate still.
Does location impact pricing?
The geographic location of the home will also affect the cost.
London and the South West are generally the most expensive, the North West and South West less so.
Who pays for care home fees?
Deciding who pays for care home fees is the responsibility of the local authority and it depends on the circumstances of the person moving into the home.
Once it has been decided that your loved one needs to move into a home you’ll need to begin the assessment process.
Means testing for care
The first task is to get a means test completed by the local authority. This covers local authority funding for care in your own home and a care home.
This means test will assess all of the assets, pensions and savings of the person who is moving into the care home.
If the local authority accepts the responsibility of paying for care then you will be allocated a personal health budget.
What if assets are shared?
Fortunately, the local authority will only assess one half of shared assets in their assessment.
If an individual and their spouse, or another relative, have shared savings or property, only the individual’s half will be taken into account.
The family home as an asset
This also applies to family homes. If one spouse moves into a care home but the other doesn’t, the shared property is not taken into account.
This is because the other spouse will continue to live in the property, so it can’t be included.
It would be unfair if one spouse had to give up their home to pay for the other spouse’s care costs.
What if I live alone?
If you live alone and own your home, it will be taken into account during the means test.
If you own your home but with a mortgage, only the portion of equity you own will be included.
The value of your home (minus any mortgage) will be calculated and added to any other income or assets you own.
Are my personal savings counted as assets?
Money saved in your own account, will be counted as part of your assets during the test.
If you have savings in a joint account, only your half will be taken into account.
Any other properties you own will also be taken into account.
The same goes for domestic and overseas properties, pension and investments.
Your state pension (if you are receiving it) will also be added to your financial means test as ongoing income.
Confused about care funding?
Do next of kin pay for care home fees?
Next of kin are never obliged to pay the care home fees for someone else.
Assets, owned by next of kin, are not taken into account during the means test.
However, there are circumstances when they may want to pay a top up fee in order to get the care home that their loved one wants.
If you sign a financial contract accepting responsibility for the top up fee then you are responsible for that payment.
What happens to care home fees when the money runs out?
Care home fees what happens when the money runs out, is a question we often get asked.
At this point the individual should undergo another means test, so that their level of funding is adjusted.
Get ahead, prepare in good time
There are significant waiting times for means tests so make sure you organise one a few months prior to the money running out.
If an individual is in a privately funded care home with high fees, it is likely they will need to move to different home, which can be unsettling and disruptive.
So who pays for care?
In England, there are some financial limits set out to dictate who pays for care. Figures are correct as of January 2023.
People who have below £14,250 in cash and assets will have their care paid for by the local authority.
Those who have between £14,250 and £23,250 will have to pay a portion of costs toward their care. The local authority will pay for the rest.
And finally, people who have over £23,250 will be considered responsible for paying for all of their care home fees.
What about in the rest of the UK?
The rest of the UK has slightly different financial limits regarding who pays for care. Figures correct as of January 2023.
In Scotland, the upper savings limit is £28,750, and the lower is £18,000, which is a bit more generous than in England.
Wales is even more generous with an upper limit of £50,000 and no lower limit at all.
This means that anyone with less than £50,000 in savings and assets will have their care paid for.
Northern Ireland is the same as England, with an upper limit of £23,250 and a lower limit of £14,250
NHS Continuing Healthcare
The exception to this rule is for people who qualify for NHS Continuing Healthcare.
Individuals who have certain health care needs may be eligible for this financial assistance.
This applies to people who have an ongoing and long term complex health care need.
There is no definitive guideline for who qualifies for this financial assistance, it must be assessed by the NHS.
If you qualify for NHS Continuing Healthcare, the NHS will arrange and fund your nursing care home.
Get Financial Advice
Paying for care is costly and there are tax implications for all financial decisions so please take advice from an independent financial advisor.
How can I keep my home or assets to pass onto my family?
Whatever you decide to do with your assets you must consider the tax implications.
You may read information that suggests giving away your assets as gifts, putting your property into joint names or putting it into trust.
Our recommendation is to always take advice from an independent financial advisor before taking any significant action.
Always consider tax implications
Plus putting assets into trust can be costly and time consuming to arrange.
There are tax implications for all financial decisions so please take advice from an independent financial advisor.
What is Deprivation of Assets?
Deprivation of Assets is when assets have been wilfully disposed of in order to avoid paying care fees.
If the local authority believe this has happened, they can include the ‘disposed of’ assets in the means test anyway.
Should this apply to you, you may find that this means you have spent time and money for no benefit at all.
Uncertain family futures
There is also no guarantee that any arrangements with family members will be permanent.
All relationships are subject to tensions and change, especially where money and inheritance are concerned.
For example, if money is given by the person needing care to an adult child, that child may experience life events that mean the home or assets are taken into account, like a bankruptcy.
Losing assets during a divorce
In the event of a divorce, inheritance may not always be included in a financial settlement.
If they need to sell the family house for some reason, they will have to pay capital gains tax if it is their second property.
This could mean your home or assets are lost or heavily taxed anyway.
What can be done to keep financial assets?
Care home fees need to be paid as soon as care begins.
However, you don’t have to sell a beloved family home as soon as as individual begins receiving care.
Instead you can enter into a Deferred Payment Agreement with your local authority.
Deferred Payment Agreement
A deferred payment agreement is an arrangement whereby your council lends an amount of money based on the value of a home.
This money will then pay for care home fees without having to sell the home immediately.
Should the individual pass away, the home will have to be sold within 3 months in order to repay this loan to the council.
What happens to the home whilst in care?
During the time the individual lives in the care home, the home may be rented or have family members live in it.
However the property will need to be vacated when the loan needs to be repaid.
To set up a deferred payment agreement, you’ll need to pass an eligibility test, pay administration fees and interest.
Care home fee top ups
If your loved one is eligible for care funding but wants to go to a particular care home, the local authority payment may not cover the whole costs.
You may pay a top up fee to cover the gap between the local authority payment and the fee charged by the home.
Be aware that this top up may, and probably will, increase over time.
Care home fees generally go up annually and local authority payments may not rise to meet them.
So do next of kin pay for care home fees?
Next of kin are never obliged to pay the care home fees for someone else.
However, there are circumstances when they may want to pay a top up fee in order to get the care home that their loved one wants.
Keeping financial assets in the family
When someone needs long term care, the individual’s financial assets are often used to pay for that care.
Planning ahead can help to make the cost associated with care homes easier to bear.
Be careful – local authorities know all the tricks to keep assets within the family to avoid paying for care.
Always consult an independent financial advisor when considering any significant financial decisions.
Choosing home care instead care homes
Many families choose home care visits as a more cost effective option over care homes.
If you are considering care at home, live in care, or companion care but don’t know where to start then let Sweet Pea do the hard work for you.
Just enter your loved one’s care details into our intelligent matching system and we’ll generate a personalised shortlist of trusted and available carers in your area.
It’s easy to find the care you need – start your search now.
