Care home fees: 9 things every spouse or partner must know

Hundreds of thousands of us end up needing residential care in later life, and the financial cost can be staggering. Faith Glasgow explains how the system works and ways to prepare your finances.

The prospect of needing long-term residential care in your later years is a worrying one for many people, and not just because of what it implies about their health and quality of life.

According to the Office for National Statistics, from 1 March 2021 to 28 February 2022, there were an estimated 360,792 care home residents in England. Of these, 125,954, or 34.9%, were self-funders. In Scotland, Wales and Northern Ireland over 69,000 people are in care homes.

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The financial implications are increasingly daunting. Care home fees have risen 10% in the past year alone, and now average £1,176 per week, or over £61,000 a year. As Alice Guy, head of pensions and savings at interactive investor, points out: “That’s almost twice as much as the average salary before tax.”

In practice, it’s usually the spouse or adult children who are trying to work out what to do for their loved one. So, if you see the need for long-term care for a partner (or parent) looming on the horizon, what steps can you take to manage the amount paid for care?

The starting point on the path to residential care, if your partner is finding it hard to manage at home, is to ask the adult social services department of your local council for a care needs assessment.

If the conclusion is that they do require care (either at home or residential), a care plan will be agreed and they will be means-tested based on their personal savings and income (not the household’s), to work out how care should be funded. The local authority will look at their personal accounts and will also include 50% of any joint accounts or jointly owned assets.

Your partner’s pension and any other income will go towards their care home fees, apart from a small amount for personal use.

As things stand at present, if their savings are worth less than £14,250 and you live in England (levels are different in Wales, Northern Ireland and Scotland), they won’t be expected to contribute any capital to care home fees.

It’s a sliding scale, so an increasing element of capital is taken into account above that level; if they have savings of more than £23,250, they are likely to have to fund the full cost of their care.

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A lot of anxiety revolves around the fact that if you as a couple own your house, it’s likely to be counted as an asset that could help fund the fees. But the property will not be included in the means test if you as spouse, or an ‘eligible dependent’ (a relative under 16 or over 65, for instance), are still living there.

It will be included where the person being assessed lives alone and needs residential care. However, families no longer have to make a swift sale to fund their relative’s care.

As Dan Harbour, managing director of the non-profit continuing healthcare specialist Beacon CHC, explains: “The local authority must now offer the option of a deferred payment agreement (DPA) to people who live in a care home and meet the relevant criteria, whereby it values the property and puts a legal placeholder on it; the money, including interest and fees, is then recouped when the property is finally sold.”

Care funding is a highly complex situation, in which everyone’s circumstances are different, so it always makes sense to look for free guidance (for example from specialist charities such as Age UK) or pay for specialist financial advice if you can afford to.

But here are a few basic pointers worth considering if you can see the need for long-term care for your partner becoming a reality in due course.

1) Benefits and allowances

The means test will assume your partner is receiving any state benefits or allowances to which they are entitled and will include them in the calculations, so it’s important to claim them as a priority. These might include, for instance, attendance allowance or pension credit.

2) Joint accounts

If you can see the need for long-term care on the horizon, consider some precautionary measures to ring-fence your own assets from the means test.

A couple’s joint current account, for instance, may well be funded mainly by the partner with the larger pension or other income - but it will be treated as if it’s jointly owned.

If the partner with the smaller income is the one likely to need care, it makes sense to ensure both partners are paying the same amount into the joint account, to avoid the higher earner effectively subsidising the lower earner’s care fees.

Similarly, says Harbour, it’s sensible in general to avoid holding all the household’s savings in one person’s name.

3) Deprivation of assets

It’s not a good idea simply to transfer all jointly owned assets into your name because this may be treated as ‘deprivation of assets’.

Under this consideration, if the local authority concludes that the money, property or income of the person needing care have been intentionally given away or spent to avoid paying care home fees, it may calculate the fees payable as though the person still owned those assets.

But in practice this is a very grey area, says Harbour. “There are few hard and fast rules as to what counts as deprivation of assets. It comes down to whether the local authority believes (and can show) that you deliberately tried to get rid of your assets to avoid charges or reduce the amount you would have to contribute to your care.” This means it would have to evidence that you knew you might need care in the future.

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“For example, if your partner has had a diagnosis of dementia and then uses their money to buy your children a Ferrari or give them a huge windfall, that may well come back to bite you,” Harbour explains.

“Conversely, if your partner doesn’t have a diagnosis and there is no reason to suggest they may need care any time soon, and they choose to give away a sum of money, then I’d certainly hope that’s not regarded as deprivation if they do need care in the future. But it’s really tricky.”

The bottom line from the council’s perspective, according to Age UK, is twofold: “You must have known at the time you got rid of your property or money that you needed or may need care and support; and avoiding paying for care must have been a significant reason for giving away your home or reducing your savings.”

4) Paying for home care

There may be a period of months or years when your partner is living at home but some home support is being bought in. Harbour suggests this is an obvious example of a situation where the partner’s savings and income should be utilised as far as possible.

“It’s a sensible step for the person receiving care effectively to pay for it from their own money if they have assets above the upper threshold,” he says.

5) Adjust your will

Most couples’ wills are drawn up so that the surviving partner inherits everything on the death of the first. But if you are unlucky enough to die before your partner in care, this means your whole estate could be included as part of your partner’s eligible finances if their ability to pay fees is reassessed.

As and when care for your partner becomes a reality, therefore, it’s worth revisiting your will to redirect your estate directly to your children or elsewhere in the event that you die first.

6) Ensure you have Lasting Power of Attorney (LPA)

Having an LPA in place makes it easier to administer your partner’s finances and make decisions on their behalf if they are suffering from dementia or are no longer able to run their own affairs.

7) Keep an eye on the finances

A person’s ability to pay for their care should be annually revisited; but in practice, says Harbour, it’s best to be proactive. “The onus is on the individual’s partner/family to monitor the financial situation. There are delays in the system, so we would advise people to get in touch with the council and make sure they are on the waiting list for a financial assessment once their savings have depleted to around £30,000.”

8) Rule changes in 2025?

New rules are on the cards for 2025, which will mean those who own assets worth between £20,000 and £100,000 will receive some support towards care home fees. If you have less than £20,000 in assets, you will not have to pay for care from your assets, but may still have to contribute from your income. A total lifetime cap on care costs of £86,000 is also due to be introduced.

However, these caps will only cover care costs, not accommodation, food or other living costs. Care home residents or their families will continue to foot the bill for these costs.

Harbour is skeptical as to whether these changes will actually come to fruition, given the costs and the administrative burden they would place on already stretched local authorities.

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Moreover, the caps are misleading because they don’t cover all costs. Alice Guy gives an example: “Someone who lives for five years in a care home with £24,000 personal care costs and £36,000 accommodation costs could end up spending £86,000 on care but £180,000 on accommodation costs: £266,000 in total.”

9) Continuing healthcare

People with significant ongoing health needs - known as a primary health need – may be entitled to a package of health and social care paid for by the NHS rather than the council, called NHS Continuing Healthcare (CHC).

This will cover their health and social care needs, including care home fees and specialist support. Importantly, if you meet the qualifying criteria you’ll be entitled to free NHS CHC funding, regardless of your income or savings.

However, it’s not easy to qualify for CHC. There are specialist organisations such as Beacon CHC that can help you to apply in the first place, or to appeal the NHS decision if you are turned down.