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Home Lifestyle Over one-third of care home residents face long term struggle of paying for their care

Over one-third of care home residents face long term struggle of paying for their care

by Wanda Rich
a modern colonial style residential suburban home with a small porch and a two car gar SBI 301040738
  • In 2019/20 it is estimated 143,774 or 36.7% of people in care homes in England were self-funders. This compares to 248,153 who are state funded.
  • The South East had the highest proportion of self-funders (45.4%) and the North East had the lowest (24.6%),
  • House prices alone do not explain regional differences. London may have the highest house prices, but it had the second lowest proportion of self-funders.
  • Last month the government announced the Health and Social Care Levy. As part of this the government introduced an £86,000 care cap on care costs though people must still find money to cover accommodation costs. People with assets up to £100,000 will also receive some state help from April 2023.
  • Currentlyanyone with more than £23,350 in assets must meet their care costs in full.

NHS Digital as released estimates of the number of people paying for care in England

Care homes and estimating the self-funding population, England – Office for National Statistics (ons.gov.uk)

Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown:

“Today’s figures show the sheer scale of the number of people who are paying the astronomical costs of care. Almost 150,000 people are having to foot the bill, and homeowners, in high property value areas, are particularly affected.

If you’re paying for care, finding the money to pay for this over the long term can cause real strain on family finances. While recent government announcements mean more people will get some help from the state, it won’t cover all the associated costs of care, so there will still be bills to pay. This help doesn’t start until April 2023 either, and if you already need care, or you need it between now and then, you won’t be entitled to this extra support from the state.”

Will you need to pay?

In England, if you have assets of less than £14,250, the council may pay for care – although it will also take your income into account. It will do a needs assessment, and a means test to check your assets, and if you qualify on both counts it will arrange the level of care it decides you need.

If you’re getting care at home, or only going into a home temporarily, the means test will not include your home. If you’re going into a care home permanently, it may include the home, unless someone from specific groups also lives there. This includes your partner, any of your children under the age of 18, or a relative who is disabled or over the age of 60.

If you have between £14,250 and £23,250 you will have to contribute to the cost of care, but if you have assets over £23, 250, you’ll need to foot the entire bill.

How to pay for care

Medical needs

If your loved one has complex medical needs, they should be assessed for NHS Continuing Healthcare. This can pay for all their care in some cases, and can be incredibly valuable, so make sure you check with the GP. However, don’t assume they’ll qualify. The NHS will go through a rigorous assessment process first, to decide whether your medical needs are complex enough to require NHS care. It’s not enough to have caring needs, you’ll have to have very high medical needs too, requiring regular intervention from medical experts and professionals. You’ll also have to able to demonstrate potential harm if you don’t get the care you need.


One option is to save a pot of money for potential care needs. The difficulty here is that most people will never need it, and some people will need hundreds of thousands of pounds, so it can be difficult to plan effectively.


A guaranteed monthly pension income will go towards the cost of care. If they’ve accessed their pension under pension freedoms, they may have money in their pension pot that can be used too. For younger people, this often makes sense as a way to save for your own care needs, especially if you’re saving into a workplace pension and your employer is helping to build the pot too.

For this to be effective, you need enough left in the pot to cover care costs, which is possible if you live off the income produced by the investments (usually around 4%) without dipping into the lump sum. And if you never need this money to pay for care, you may be able to leave whatever is in your pension to your family without paying inheritance tax.

Your property

Often the value of the property will need to be used in some way. Some people will rent the family home out to cover fees, although this is risky because rental income is not guaranteed and will be depleted by maintenance and repairs.

You can consider equity release to free up some of the capital in the property, but this is expensive. There will be a set up cost, and usually any interest on the loan will roll up and needs to repaid when the property is sold. The longer you live, the more the interest will cost.

There’s also the option of a deferred payment arrangement with the local council, which becomes an option once your savings (excluding your home) have dropped below the threshold. The council adds up the care fees payable during your life, and then after your death, your family can sell the house and repay the debt – along with any set up fee and interest. Councils tend to charge less interest than equity release, so this could be a cheaper option in the long run.

But for many people, the most sensible option ends up being selling the property. You might pay fees from the lump sum as you go along, but it’s worth considering an immediate needs care annuity – which is also known as an immediate care plan or care fees annuity. These pay a fixed amount to the care home every month for the rest of your life and tend to cover the gap between pension income and the cost of care. They pay much better rates than standard annuities, but you will still need to pay for care for a number of years to break even.