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How to finance your stay in a care home

The costs of a stay in a care home can be covered by the elderly person, topped up by a friend or family member, partially or fully covered by a Local Council, or paid for in full by the NHS.  It is important to understand the different conditions for each type of financing structure.

How to finance your stay in a care home
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> Who pays for a stay in care home?

In order to determine who pays for a stay in a care home, Local Councils will undertake a means test to find out just how much they will pay, and how much the elderly person will pay. Even if the elderly person has enough capital to pay in full the costs associated with their stay, a Local Council will still conduct an analysis, used to establish social care needs. But it is important to understand that most people needing residential care will be expected to pay a part of their costs.

Depending on the level of the elderly person's savings, assets and income, the Local Council will set a rate for which the elderly person will pay a part of the costs of the stay in a care home, and the Local Council will pay a part. In the case where the costs of stay in a care home exceed the maximum level set by a local council, a top-up fee may be requested, to be covered by the elderly person or their friends or family.

> Means tested capacity

A means test is a way of establishing how much an elderly person can contribute to their stay in a care home. Depending on the person's available savings, capital, and income, a weekly income level will be established, plus personal expenses allowance, which becomes that person's contribution to their care home expenses.  The Local Council will cover the rest of the care home costs. 

Questions and answers

Can care home costs be tax deductible?Show

If an elderly person resides in a private, Council or NHS care home, they costs are not tax deductible.

How is a means-test calculated?Show

If an elderly person has less than £23,250 in capital, they become eligible for funding for their care home stay.  Their means are calculated by adding up a person's savings, capital, income, and business assets.  



A top up is a third party contribution paid to cover costs exceeding the Local Council and elderly payments for a person's care home costs.  These are usually paid by friends or family.


Benefits such as pension credits.  Some income, such as a war widow's payment, can be partially ignored.  Others, such as top-ups, may be considered even though the elderly person does not actually own the income.

NHS registered nurse costsShow

The NHS covers the cost of a registered nurse.  It is important that this is clearly outlined in the care home contract, and is not double-billed to the resident.

Savings and capitalShow

Bank accounts, stocks, bonds, and property.  Is used to calculate an elderly person’s means.

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