In order to feel more in control regarding future care fees, the first step is understanding the system clearly.
Discover everything you need to know about how care fees are assessed in the UK:
A regularly asked question I come across is, “How exactly do care fees work?”, or similarly, “How are care fees assessed?”
There’s a lot of confusion around this, and how care fees will impact someone’s future planning. Many people assume that the council will “take the house”, or others think that there’s a fixed limit that you’ll pay, and then all future fees will be covered. Today, I want to explain how neither is quite right.
Here at Heritage Estate Planning, we believe that in order to feel more in control regarding future care fees, the first step is understanding the system clearly. In this article, I’ll be sharing how care fees are actually assessed in the UK, to ease some of the confusion around what is expected.
If your health starts to decline, and the decision for care is becoming increasingly likely, there is a process that you’ll follow. Before any discussion about money happens, you need to get in touch with your local authority to carry out a care needs assessment.
This assessment looks purely at your health and support requirements, taking money out of the conversation (at this stage). The local authority and the care needs assessment will consider points such as:
The outcome of this assessment determines what level of care is required, and whether it can be delivered in your own home, or if a move into residential or nursing care is more suitable/needed.
Once your care needs have been established, only then does the financial side begin, which includes the question of care fees.
After the care needs assessment has been completed, the local authority will carry out a financial assessment, often referred to as a “means test”.
This assessment will determine who pays for the care you require, and will look at:
If you are the sole occupant of your home, and you move into permanent residential care, only then will the value of your property be included in the financial assessment.
Your home will not be included in the assessment if your spouse or civil partner still lives there, a dependent relative still occupies the property, or certain protected individuals remain in the home. In these situations, the property is completely disregarded, which is something many people don’t realise.
When considering care fees, the government sets capital limits that determine who pays. Currently, they are approximately:
If you fall below the thresholds, a “tariff income” will be applied. This assumes a small weekly income from your capital to calculate your contribution. The good thing is, is that this is a structured calculation. You can plan knowing these contributions. But it doesn’t neglect the fact that it can still have a significant impact.
This is where the reality of care fees and future planning can have a real impact. Care homes vary significantly in quality, and as such, there are stark differences in costs.
Standard residential care can start around £2,000 a week. More premium homes, with features such as en-suite rooms, landscaped gardens, extensive activity programmes, restaurant-style dining, and even hair salons, can cost up to £3,000 and beyond per week.
Many people are surprised to learn that these costs add up very quickly. Even at £2,000 a week, that covers over £100,00 per year.
In addition, there is another important distinction that most people don’t realise. A large portion of care home fees is not technically “care” but are living costs, such as the accommodation, food, heating, and facilities. The actual “care” fees, including help with washing, dressing, medication, etc. is often a small component of the total weekly cost.
This distinction became particularly relevant when the government proposed a lifetime care cap, and what many people think to be a “fixed” limit.
The previous government announced plans for a lifetime cap on care costs, at around £86,000. Understandably, many people thought this meant that once they had paid £86,000, then everything would be covered. Unfortunately, this wasn’t quite true.
The cap would have only applied to the care element outlined above, and not the residential or accommodation costs. Even if the cap had been introduced, you would still have to pay high weekly “living” costs on top of that.
The proposal has since been scrapped by the UK government, but it provides a helpful context to this discussion, as it highlights how misunderstood care funding often is.
If your capital reduces to the lower threshold, and you qualify for council funding, the local authority will pay their approved rate for care.
However, that rate may be lower than the care home you are currently in, or you may need to move to accommodate this. Alternatively, family members can “top up” the difference, but it is an emotional reality that many families don’t anticipate.
If you are self-funding at £3,000 per week, and the council rate is £1,500 per week, someone would need to contribute the difference if you wanted to stay in that care home. Otherwise, you may be required to relocate.
This has a huge emotional impact on the person receiving care and their families too. It’s not just about the money, but staying near friends and family, having access to outdoor space, staying in familiar surroundings, and a high-quality environment all impact the care home you choose.
When you self-fund, you have that choice. When you rely entirely on local authority funding, that choice becomes limited.
Care fee assessments in the UK are not random or unfairly targeted, they follow a structured process: care needs assessment, financial means test, and then application of national thresholds. But without planning, the overall financial impact can be substantial.
At Heritage Estate Planning, we believe early understanding gives you control. The system may not be a perfect one, but when you understand how it works, you can make informed decisions about your future.
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