Navigating Elder Care Funding in the UK: A Family Guide

Paying for care for an elderly loved one can be a major concern for families. In the UK, elder care (whether at home or in a care home) is means-tested and can be expensive if you’re funding it privately. However, there are several funding options and benefits that can help mitigate costs. Understanding what help is available – and how to apply for it – is crucial. This guide breaks down the key funding sources and government assistance for elder care, including local authority funding, NHS support, and benefits like Attendance Allowance and Carer’s Allowance.

Local Authority Care Funding

Local councils are a primary source of help with social care costs. The system works like this:

If your loved one may need care (at home or in a care home), you contact their local council’s social services for a Needs Assessment (under the Care Act 2014, everyone has the right to an assessment of their care needs , and this is free).

In the Needs Assessment, a social worker or assessor will determine what kind of care is needed (e.g., help with washing, dressing, feeding, etc.). If the assessment finds they have eligible care needs, the council then looks at finances to see if the council should contribute to costs.

Trouble sleeping or frequent health issues (headaches, illness).

This brings in the Means Test (Financial Assessment). The council will assess the savings and assets of the person needing care:

In England, if the person has assets above £23,250, they are generally considered a “self-funder” and must pay for their care in full . Assets include savings and, for care home funding, property (like their house) unless a spouse or certain others still live there. For care received at home, the value of the home is not counted as an
asset (since they continue living there) .

If assets are below £23,250, the council will contribute to care costs on a sliding scale. There’s also a lower threshold (around £14,250 in England) below which the person’s savings are not counted at all.

Income (pensions, etc.) is also considered – usually, a person will be expected to contribute most of their income (except a small allowance) towards care fees before council funding kicks in.

For example, say your elderly father needs home care visits and has £15,000 in savings and a modest pension. He’d fall under the threshold, so the council would likely cover a portion of the care cost, leaving him to pay what he can from his pension. On the other hand, if he has £30,000 savings, he’s above the limit – he’d be expected to pay for his care until his savings spend down to that threshold.

It’s important to get the Needs Assessment regardless of finances. Even if currently above the threshold, the council can still provide advice, and if assets decline or needs increase, having that assessment done helps. Also, the council might arrange care for you (with you reimbursing them) if you prefer not to handle hiring carers privately. If eligible for council funding, you might be offered services directly (council arranges carers, etc.) or a Direct Payment – a cash budget you can use to arrange care yourself.

NHS Continuing Healthcare (CHC)

One of the few ways to get care costs fully covered is through NHS Continuing Healthcare, a scheme for people with very high health care needs. This is not means-tested (income and assets don’t matter) – it’s based purely on health needs. If someone is found to have a “primary health need” (for example, complex medical conditions requiring regular nursing), the NHS will pay for all their care, whether at home or in a care home .

To get CHC, typically:

The person goes through a CHC assessment, which is often initiated if they are in hospital or by request to the local Clinical Commissioning Group (now Integrated Care Board).

There’s a checklist and then a full assessment by a multidisciplinary team, looking at areas like mobility, nutrition, cognition, behavior, medication needs, etc

Only a small percentage of people qualify – it’s notoriously hard to get. (In England, roughly 54,000 people were on CHC at any time in 2022, a fraction of those receiving care) .

There is also NHS-funded Nursing Care: if someone is in a care home and needs a registered nurse, the NHS will pay a fixed contribution for the nursing element of their care (around £209/week in England) – this doesn’t cover all costs, just nursing.

Attendance Allowance

Attendance Allowance (AA) is a benefit for people over State Pension age who need help due to a long-term disability or health condition. It’s not means-tested – income and savings do not matter, and it’s tax-free. It is intended to help with the extra costs of care.

Key points about Attendance Allowance:

It has two rates: a lower rate (£68.10 per week) for those needing help either in the day or at night, and a higher rate (£101.75 per week) for those needing care both day and night (rates as of 2023/24)

It’s awarded based on how much care or supervision the person needs, not on any specific condition. For example, if your mum needs someone to help her dress, cook, and remind her to take medication, she likely qualifies.

To apply, you fill in a form (AA1) detailing the care needs. It can be quite detailed; be honest about “bad days” and all the things you assist with or that they struggle to do.

Getting Attendance Allowance can also increase entitlement to other benefits (like Pension Credit or Housing Benefit) for the person, because it identifies them as having care needs.

Importantly, Attendance Allowance isn’t directly for paying a carer – the money goes to the elderly person to use as they wish (many do use it to pay for a carer or to pay a family member’s expenses, etc.). If your loved one is self-funding care, this £68–£101/week can help offset that. If the council is funding care, AA usually isn’t payable (people on council-funded care homes can’t get AA).

Carer’s Allowance

If you (or another family member) are providing a lot of care unpaid, you should see if you qualify for Carer’s Allowance. Carer’s Allowance is £76.75 per week (rising to £81.90 from April 2024) paid to the carer, but it has conditions:

You must be caring for someone who receives a qualifying disability benefit (Attendance Allowance is one, or the middle/high rate care component of DLA, or daily living component of PIP).

You care for them at least 35 hours per week.

You earn below a certain threshold from other work (around £139 per week net as of 2023).

You’re not simultaneously receiving the full State Pension (there’s an overlap rule with pensions).

Many retired carers can’t get the payment due to the State Pension overlap (since State Pension is considered an “overlapping benefit”). However, even if you can’t be paid Carer’s Allowance because of your pension, it’s still worth applying – it can award an “Underlying Entitlement” that can increase other benefits like Pension Credit via a Carer Premium .

Carer’s Allowance is not a lot of money (and is basically a token recognition, given the hours carers put in), but if you qualify, it’s help towards your living costs. Note: claiming Carer’s Allowance can affect the benefits of the person you care for (if they get severe disability premium in Pension Credit or similar, that premium is lost if someone claims Carer’s Allowance for looking after them). So get advice on this interaction if relevant.

Other Benefits and Support

Beyond the big ones above, be aware of:

Pension Credit: If your loved one has a low income, Pension Credit tops it up and can also give access to things like council tax reductions and the Warm Home Discount. There’s a component called Guarantee Credit and if they have a disability or a carer, Savings Credit or extra amounts could apply.

Disabled Facilities Grant: Mentioned earlier, this grant (up to £30k in England, not counted as income) can pay for home adaptations which indirectly is financial relief – if they can get a stairlift or level shower via a grant, that’s less burden on care needs.

Council Tax discounts: If your loved one has severe mental impairment (like advanced dementia) and lives alone or only with a carer, they might be exempt from council tax. Also, if a live-in carer (who is not a spouse/partner) resides with them, there can be a discount.

Direct Payments for care: If the council is contributing to care, you can request the funding as a direct payment. This might let you hire a carer of your choice or even pay a family member (some councils allow paying a relative who doesn’t live in the same house to provide care).

Charities and local schemes: Sometimes, charities like Macmillan (for cancer patients) or disease-specific funds offer one-off grants for equipment or respite. It’s worth exploring condition-specific organizations.

Planning for Care Costs

If your family will be paying privately (fully or partly), it’s wise to plan how assets will be used:

Equity release: If the person owns a home and is getting care at home, an equity release plan (like a lifetime mortgage) can free up funds to pay for that care while they continue living there. This is a big decision and requires financial advice.

Using savings and pensions: Make a budget of care costs. For example, if live-in care is £850/week, that’s ~£44k/year. If they have a pension of £15k/year and Attendance Allowance ~£5k/year, the shortfall is £24k/year to cover from savings.

Deferred Payment Scheme: If your loved one eventually needs residential care and has a property but not liquid cash, councils offer deferred payments (effectively a loan against the house value) so the home needn’t be sold immediately. They pay the care home and recover the money when the house is sold later or from the estate.

Power of Attorney: Ensure finances are in order – a Lasting Power of Attorney for Property and Affairs can allow you to manage their money and make sure bills (including care fees) are handled if they become unable.

Don’t Be Afraid to Ask Questions

The care funding system is complex. Don’t hesitate to ask social workers, the council finance team, or advice charities for explanations. When dealing with the council:

Make sure you understand any care plan and cost breakdown they provide.

If your loved one is close to the threshold, discuss what happens when savings fall below £23,250 – initiate new financial assessment in time.

If you feel a decision (like a CHC denial or council saying they won’t fund a certain service) is wrong, you can appeal or complain. There are advocacy services to help with Continuing Healthcare appeals, for example.

Also, look at entitledto.co.uk or Turn2Us benefits calculators to double-check you’re not missing any benefit entitlement for either the elder or the carer.

For more details on specific benefits, see Age UK’s excellent free guides (e.g. their Factsheet 34 on Attendance Allowance and Factsheet 10 on Paying for Permanent Care). Carers UK and Citizen’s Advice also provide advice lines you can call for help navigating the system.

Lastly, if managing care and its costs is becoming too complex for your family, consider consulting an independent care fees adviser or solicitor who specializes in elder law. They can advise on funding strategies, preserving assets legally, and the best course of action for your loved one’s circumstances.

Call to Action: If you’re arranging home care and unsure how to afford it, Prime Eldercare can guide you through this process. We offer a free consultation to discuss your care needs and can point you toward potential funding sources. Our goal is to help families find quality care that’s financially sustainable. Don’t hesitate to reach out – peace of mind about care costs is possible with the right information and planning.