How are care homes paid for?
Choosing a care home is stressful enough without the money being a mystery. This is a plain-English overview of who pays for residential and nursing care in England, and the official places to check the current rules and figures.
The three main ways care is funded
- Self-funding — you pay the fees yourself, usually because your capital (savings, investments and often the value of your home) is above the means-test threshold.
- Local-authority funded — if your capital is below the threshold, your council may pay towards your care after a needs assessment and a financial (means) assessment. You may still contribute from income.
- NHS-funded — where care is primarily for a health need, the NHS may fund it in full through NHS Continuing Healthcare, or contribute an NHS-funded nursing care payment towards nursing in a care home.
The local-authority means test
When a council assesses what you can afford, it looks at your capital against upper and lower thresholds. Broadly:
- Above the upper capital limit — you usually pay the full fees yourself.
- Between the limits — the council contributes, and you pay a means-tested amount (including a notional charge on capital between the limits).
- Below the lower capital limit — your capital is not counted, though most of your income still goes towards fees, keeping a protected personal allowance.
The upper capital limit has been £23,250 and the lower limit £14,250 in England for several years, but these figures can change — check the current thresholds via the NHS money & benefits guide ↗. Whether your home's value counts depends on your circumstances (for example, it is usually disregarded if a partner still lives there).
NHS Continuing Healthcare (CHC)
If your main need is a health need rather than help with daily living, you may be eligible for NHS Continuing Healthcare — a package arranged and fully funded by the NHS, regardless of your savings. Eligibility is decided by an assessment of the nature, intensity, complexity and unpredictability of your needs.
Practical steps
- Ask your council for a free care needs assessment — anyone can request one.
- If care may be needed, ask about a financial assessment to see what the council will pay.
- Ask whether an NHS Continuing Healthcare assessment is appropriate.
- Get the fees in writing from each home, and how increases are handled — use our shortlist & visit checklist to compare like for like.
- Consider a regulated independent financial adviser who specialises in care funding.