Who pays for care home fees when money runs out?

What Happens When Self-Funding for Care Home Fees Runs Out?

When your loved one moves into a care home as a self-funder, it's reassuring to know they're receiving the care they need. However, concerns about what happens when the money runs out or savings run low can cause significant anxiety. This guide provides comprehensive information about the options available when you can no longer pay for care home fees through self-funding, and explains who is responsible for paying when circumstances change.

Understanding Self-Funding in Care Homes

What is Self-Funding?

Self-funding means the care home resident pays for their care home fees out of their own pocket. This typically occurs when they have assets or savings above the threshold set by the government for receiving funding from your local council.

When you self fund your care, you have a broader choice of care home and may find it easier to secure a place in your preferred home. However, understanding what happens when funds deplete is crucial for long-term planning.

How Long Will the Money for Care Home Fees Last?

The length of time funds last depends on several factors, including the cost of care, the individual's care needs, and their assets and income. Care home charges can vary significantly depending on location, type of care required, and the facilities offered. It's essential to regularly review the financial situation to anticipate when money runs out or savings run low.

For those with dementia or other progressive conditions, care needs often increase over time, which may affect costs if additional support is required.

Steps to Take When Your Savings Run Low

1. Request a Care Needs Assessment

When you foresee that funds will soon be depleted, arrange a care needs assessment with your local council. This assessment, typically conducted by social services, determines the level of care and support your loved one requires and is the first step in accessing local authority funding.

The assessment examines:

Physical health and mobility needs
Mental health, including dementia or cognitive conditions
Personal care requirements
Social and emotional wellbeing
Communication abilities

2. Complete a Financial Assessment

Contact your local authority to carry out a financial assessment. The council uses this means test to determine if your loved one qualifies for funding when their assets fall below the set threshold. This assessment examines savings, the value of your home (if applicable), pensions, and other financial resources.

The local authority will look at:

Bank and savings accounts
Investments and stocks
Property ownership (with important exceptions)
Income from all sources
Any financial support from family members

3. Understand the Thresholds

In England, as of 2024, if your loved one's assets are below £23,250, they may be eligible for funding and some help with care costs from the local council. If assets fall below £14,250, the local authority is responsible for paying the majority of care fees, though your loved one may need to pay towards costs from their income.

These thresholds apply to residential care and nursing home settings. The rules around whether property is included in the assessment depend on individual circumstances, for example, whether you need to include your home value depends on whether a spouse or qualifying relative still lives there.

4. Explore Local Authority Funding

If eligible for local authority funding, the council will contribute towards the care home fees. However, this doesn't mean they will cover the full cost of care. There might be a difference between what the council is prepared to pay and the actual care fees, known as a 'top-up fee' or top up fee.

The amount the council pays is typically a standard rate based on what they consider reasonable for meeting assessed needs. Many homes charge more than this standard rate, creating a potential funding gap.

Options When You Run Out of Money

1. Top-Up Arrangements

If there's a shortfall between council contributions and the fees charged by your current care home, family members or the next of kin may consider paying a top up fee. It's important to understand that family members are not legally obliged to pay top-ups as this is a voluntary arrangement.

However, if someone has signed a contract agreeing to pay top up fees, they become legally bound to continue these payments. Before agreeing to pay the fees, ensure these arrangements are sustainable long-term. The person willing to pay the top-up is sometimes referred to as a third party contributor.

Key considerations:

Top-ups are typically paid directly to the care home
The third party payer must sign a separate agreement
No one is obliged to pay their loved one's fees unless they've signed a contract
If top-ups become unaffordable, your loved one may need to move

2. Deferred Payment Agreements

A deferred payment arrangement with your county council allows you to use the value of your home to pay your care costs without having to sell your home immediately. The council pays for residential care in a care home, and the amount is repaid later when the property is sold.

This option is particularly valuable if you own property but have limited savings. The council essentially provides a loan secured against your home, allowing you to defer the decision about whether you need to sell your property.

Key benefits:

Avoid being forced to sell your home quickly
Access to funding if you're asset-rich but cash-poor
Interest is charged but typically at lower rates than commercial loans
Gives time to arrange property sale at the best price

3. NHS Continuing Healthcare

If your loved one has significant health needs, they might qualify for NHS Continuing Healthcare funding. This is arranged and paid for by the local NHS and covers the full cost of care for those who need nursing care due to complex health and social care needs.

This funding is particularly relevant for people with:

Advanced dementia with complex health needs
Terminal illnesses
Conditions requiring constant nursing supervision
Multiple complex health conditions

It's worth checking if you're eligible for NHS Continuing Healthcare through a dedicated assessment. If successful, the NHS covers all care home or nursing home costs, and you won't need to worry about home fees if their money runs out.

4. NHS-Funded Nursing Care

For those who live in a care home but don't qualify for NHS continuing healthcare, NHS-funded nursing care may be available. This contribution helps with the nursing element of care costs but doesn't cover accommodation or personal care expenses.

This is a weekly contribution paid directly by the NHS to the nursing home for anyone receiving nursing care from a registered nurse, regardless of their financial circumstances.

Changing Care Arrangements

1. Moving to Council-Funded Accommodation

If your loved one can't pay to stay in their current home once self-funding ends, they may need to move to a care home that costs less. The local authority must offer at least one care home that meets assessed needs within their funding rates.

This can be a difficult transition, particularly for someone with dementia who may find moving disruptive. The council may offer several options within their fee range, but the choice of care home becomes more limited when receiving local authority funding compared to self-funding.

Important considerations:

The home may require notice before you move
Check what your contract says about transitioning to council funding
The new home must meet all assessed care needs
Location preferences may need to be flexible

2. Reassessing Care Needs

As circumstances change, it's important to request a new needs assessment. This ensures your loved one's current care and support needs are properly met, especially if their condition has changed since moving to residential care.

For individuals with dementia or other progressive conditions, regular reassessments are crucial as care needs typically increase over time. If needs have intensified significantly, this might affect eligibility for NHS Continuing Healthcare.

3. Personal Budgets and Direct Payments

Some people eligible for local authority funding may receive funding through a personal budget. This is the amount the council allocates for your care, which you may be able to manage yourself or with support.

With a personal budget, you might have options to:

Arrange your own care services
Employ personal assistants
Use a mix of care home and home care services
Have more control over how care is delivered

The council can provide the personal budget as:

A direct payment into your bank account
Council-managed funding paid directly to providers
A combination of both approaches

This flexibility can be particularly valuable for younger people in care homes or those with specific cultural or lifestyle preferences.

Planning for the Future

1. Regular Financial Reviews

Regularly reviewing your loved one's financial situation helps anticipate when they might run out of money. This includes reassessing budgets and exploring whether you need home equity release or other options.

Calculate:

Monthly care home fees and any additional costs
All sources of income (pensions, benefits, investments)
Current savings and accessible assets
Rate at which savings are depleting
Projected timeline until assets fall below threshold

2. Seek Professional Advice

Consulting with specialists in social care funding can provide valuable information and advice. Organisations like Age UK offer free guidance on care funding. They can help explore various financial products and funding support to manage care costs effectively.

Professional advisers can help with:

Understanding complex funding rules
Maximising benefits and entitlements
Planning for the transition from self-funding to council support
Exploring NHS Continuing Healthcare eligibility
Navigating deferred payment agreements

3. Understand Contracts and Obligations

Before your loved one enters into a contract agreeing to pay with a care provider, ensure you understand the terms regarding what happens if they become council funded in the future. Some providers may require residents to move or agree to pay a top-up fee if funding arrangements change.

Key contract questions to ask:

What happens when assets fall below the threshold?
Will the home accept council funding rates?
Are there circumstances where moving would be required?
What notice periods apply?
What happens if top-up arrangements break down?

Avoid agreeing to pay top-ups unless you're confident you can sustain these payments long-term. No family member is legally obliged to pay their loved one's care fees unless they've voluntarily signed a contract.

4. Family Discussions

Have open and honest discussions about potential contributions towards shortfalls in care home costs. It's important for everyone involved to understand their responsibilities and prepare for various scenarios.

Family members should understand:

They're not legally obliged to pay unless they signed a contract agreeing to do so
Top-ups are voluntary but become legally binding once agreed
What happens if the person willing to pay can no longer afford it
The implications of becoming a third party top-up payer
Alternative options if no one can pay their loved one's care top-ups

Summary

Running out of money while self-funding care home fees can be concerning, but there are several options available to ensure continued care. By understanding the steps to take when transitioning from being a self-funder to receiving local authority funding, you can navigate this process more confidently.

Remember that circumstances vary, and additional funding may be available depending on individual care needs. If care costs reach around £800 a week or more, it's worth checking if your loved one may be eligible for health-related funding.

Key points to remember:

Contact your local council early when savings run low
Complete both care needs and financial assessments
Understand funding thresholds and what the council pays
Consider deferred payments to avoid selling property immediately
Check NHS Continuing Healthcare eligibility
No one is legally obliged to pay top-ups unless they've signed a contract
Explore personal budget options if eligible for local authority funding

For more guidance about paying care home fees or help with care costs, feel free to contact us. Our team at Ashberry Care Homes is here to help you navigate these challenges and find the best solutions for your family's needs, particularly when facing a change in circumstances related to care funding.

Frequently Asked Questions

What happens when my money runs out while paying care home fees?

When you run out of money as a self-funder, contact your local council immediately for a care needs assessment and financial assessment. If eligible for funding, the council becomes responsible for paying most of your care costs, though they may require you to move to a care home that costs less unless a next of kin or third party agrees to pay a top-up fee towards your care.

The council may also offer you a personal budget to manage your care arrangements with more flexibility.

Do I need to sell my home to pay for care if my savings run low?

Not necessarily. If you live in a care home and your savings run low, you can apply for a deferred payment agreement with your county council. This allows you to pay care home fees using the value of your home without having to sell your home immediately. The council pays your residential home fees, and the amount is repaid when your property is eventually sold.

This prevents you from being forced to sell your home quickly and gives you time to arrange a sale at market value.

How does dementia affect whether you need to pay your care costs?

Having dementia doesn't automatically qualify you for free care. However, if your dementia causes complex health needs, you may qualify for NHS continuing healthcare, which would cover your full care home place costs. If not eligible for this funding, you'll still be required to pay according to the financial assessment.

You can request a reassessment if your condition changes significantly after you've signed a contract. People with advanced dementia may become eligible for NHS Continuing Healthcare as their needs become more complex.

Are family members legally obliged to pay care home fees?

No. Family members are not legally obliged to pay care home fees unless they have voluntarily signed a contract agreeing to pay a top up fee. The next of kin or other relatives are not automatically responsible for paying loved one's care home fees.

However, if someone has signed a contract agreeing to pay towards fees, they become legally bound to continue those payments. Before agreeing to pay any top-ups, ensure you can afford these payments long-term.

What is a personal budget for care?

A personal budget is the amount your local council allocates for your care if you're eligible for local authority funding. You may be able to receive this as a direct payment, allowing you more control over how your care is arranged. The personal budget can be used flexibly to purchase care services that meet your assessed needs, either directly to the care home or to arrange alternative care packages.