Paying for a Care Home: A Plain-English Overview

Fees & Funding · 8 min read

The cost of residential care is one of the first things most families look into, and one of the most confusing. There are several different ways care can be funded, and how they interact — with each other and with existing benefits — is not always obvious. This guide aims to give a clear, plain-English overview of the main options.

For families in Bristol, there is also a more detailed guide to how local authority funding works specifically: Understanding Council Funding for Care Homes in Bristol.

1. The Four Main Ways Care Is Funded

Most people fund their care in one of four ways, or through a combination:

Self-funding — paying the full weekly fee from savings, assets, pension income or a property sale
Local authority funding — means-tested council support for those whose assets fall below the capital threshold
NHS Continuing Healthcare — full NHS funding for those whose needs are primarily health-related rather than social care
A combination — for example, a local authority contribution topped up by family, or a partial NHS contribution alongside a personal contribution

Which applies to you depends on the level of assets, the nature of the care needs, and the outcome of any formal assessment. It is worth understanding all the options before assuming which category applies.

2. Self-Funding

If a person has assets above the upper capital threshold — currently £23,250 in England — they will generally be expected to fund their own care. This includes savings, investments and, in most cases, the value of a property they own.

Self-funders typically pay the full weekly rate set by the care home directly. This rate varies by home, room type and level of care required. It is important to ask exactly what is included in the weekly fee and what might be charged additionally — things like hairdressing, chiropody, escorted appointments or personal shopping are often optional extras.

At Penhill: our weekly fees are transparent and include accommodation, all meals, personal care, laundry, activities and healthcare coordination. Our current rates are available on our fees page.

Self-funders can, and often do, transition to local authority funding later if their assets reduce over time. It is worth planning for this possibility from the outset rather than being caught unprepared.

3. Local Authority Funding

If a person’s assets fall below the upper capital threshold, they may be eligible for means-tested support from their local council. In Bristol, this is administered by Bristol City Council’s Adult Social Care team.

The process begins with a care needs assessment, followed by a financial assessment. The council will calculate a contribution based on assets and income, and if eligible, will fund care up to the “Bristol Rate” — the amount the council considers reasonable for the type of care needed.

If a family wishes to choose a home that charges more than the Bristol Rate, a third-party top-up payment is usually required from a family member or other source. This cannot come from the resident themselves.

For a detailed explanation of how this works in practice, see our guide: Understanding Council Funding for Care Homes in Bristol.

4. NHS Continuing Healthcare

NHS Continuing Healthcare (CHC) is a package of care funded entirely by the NHS for people whose primary need is a health need rather than a social care need. Unlike local authority funding, it is not means-tested — assets and income are irrelevant.

Eligibility is assessed using a standardised framework based on the nature, complexity, intensity and unpredictability of a person’s health needs. It is not enough to have significant needs — those needs must be shown to be primarily health-related.

CHC is less commonly awarded than many families expect, but it is worth pursuing if the person has complex or rapidly changing health needs. A GP, hospital discharge team or social worker can initiate a CHC screening assessment. There are also specialist advisers and advocates who can help families navigate the process, including independent charities such as CHC Advocates.

5. Attendance Allowance

Attendance Allowance is a non-means-tested benefit available to people over State Pension age who need help with personal care or supervision due to a physical or mental disability. It is not affected by savings or income, and is not taxable.

There are two rates: a lower rate for those who need help during the day or at night, and a higher rate for those who need help both day and night. Many people who are eligible have never claimed it.

Attendance Allowance is paid directly to the individual and can be used toward care home fees. However, it stops being paid once a person has been in a care home funded (fully or partly) by the local authority for more than 28 days. Self-funders can continue to receive it.

Claims are made through the DWP. Age UK offers a free helpline and can assist with completing the form: Age UK: Attendance Allowance.

6. Deferred Payment Agreements

A Deferred Payment Agreement (DPA) allows someone who owns a property to defer paying their care home fees until the property is sold, rather than having to sell immediately to fund their care. The council effectively lends the money and is repaid when the property eventually sells.

DPAs are available to people who meet certain criteria, including having assets below a set level once the property is excluded. There are interest charges and arrangement fees involved, and the agreement must be formally set up with the local authority.

This can be a valuable option for families who want to avoid a rushed property sale, or where a spouse or dependent is still living in the home. Bristol City Council can advise on the specific terms and eligibility criteria.

7. What Is and Is Not Included in the Weekly Fee

Weekly care home fees vary significantly, and what is included varies too. Before signing any contract, families should confirm in writing:

All meals, drinks and snacks
Personal care (washing, dressing, continence support)
Laundry and housekeeping
Utilities, heating and Wi-Fi
Activities programme
Basic healthcare coordination (GP liaison, medication management)
What happens to fees if the resident is hospitalised temporarily

Optional extras that may be charged separately can include hairdressing, chiropody, escorted outings, private phone lines and specialist equipment. These should all be clearly set out in the resident agreement.

8. Getting Independent Financial Advice

The interaction between different funding streams, benefits and assets can be complex, and the right answer depends on individual circumstances. An independent financial adviser who specialises in care funding — sometimes called a “later life adviser” or a member of the Society of Later Life Advisers (SOLLA) — can help families understand their options and plan for the long term.

This type of advice is particularly valuable when significant property or assets are involved, when the transition from self-funding to local authority funding seems likely in the future, or when CHC eligibility is uncertain.

Helpful External Resources

Not sure where you stand financially?

Check which funding options may apply to you