Who pays for care home fees when savings run out

What happens when care home savings run out?

If someone has been self-funding and their savings run out, families should prepare by asking the local council to carry out a financial assessment to decide whether it should contribute towards the cost of care. The NHS and Age UK guidance both make clear that the council should be contacted before savings fall below the upper capital limit, as support is generally arranged from the point of contact, rather than backdated automatically.

The council may also carry out a care needs assessment to look at the person’s current needs and decide what care and support is required, taking into account whether the person’s current placement is suitable to meet their assessed needs, as well as continuity of care, safety, frailty, and the impact of a move – which may all be relevant.

In practical terms, once savings run low enough, the council will begin contributing towards fees. That doesn’t always mean the person stops paying altogether, but that the responsibility shifts from full self-funding to a shared contribution based on the financial assessment.

When does the local council start paying care home fees?

In England, councils will contribute towards care home costs once a person’s capital falls below £23,250. If capital is between £14,250 and £23,250, the council may help with fees, but the resident will usually still contribute from income such as pensions, and may also pay tariff income based on the level of savings they still hold.

Once capital falls below £14,250, the council should meet most of the cost, although the resident will still make a contribution from their pension income.

The council must also ensure that any placement it funds is suitable for the person’s assessed needs. It cannot simply focus on price and ignore whether the placement is appropriate, which is particularly important where someone has complex needs, is settled in their existing home, or would struggle with a move.

You can read more about likely fee levels in our guide to care home costs and fees 2026.

Will CHC funding cover your care home fees?

Yes. NHS Continuing Healthcare funding, or CHC, is a package of care funded by the NHS for people whose primary need is for healthcare. If someone qualifies, CHC must cover the full cost of care, including any residential fees. Unlike local authority funding, it is not means-tested, so eligibility is based on care needs only, not on savings, income or property.

This is a crucial point when asking who pays care home fees for dementia sufferers. A diagnosis such as dementia doesn’t automatically mean the local council should pay, or that the person must self-fund. If the person’s needs are primarily health needs, the NHS may be responsible instead.

If you are not familiar with CHC, read our guide on what CHC is and our article on paying for care home fees before CHC.

Can you reclaim care home fees already paid?

In some cases, yes. If someone met the criteria for CHC funding but was never assessed, it may be possible to reclaim care home fees retrospectively. Successful claims can lead to repayment of care fees that were paid privately, sometimes over a period of years.

Find out more about our Retrospective Reclaims Service.

Who pays top-up fees for care homes?

A top-up fee is an additional payment made where the local council is paying the majority of the fees but the care home is more expensive than the council would usually fund. The extra amount is paid by a third party, often family members, rather than the resident. The council must show that at least one suitable alternative placement is available within budget before a third-party top-up can lawfully be charged.

In terms of who is responsible for paying care home fees once council funding starts, usually, the resident contributes what the rules require from their own income, and a third party may pay a top-up fee only where a more expensive placement is chosen by preference, rather than necessity.

If you are being asked to pay, it is important to check whether the charge is lawful and whether the placement cost actually reflects assessed needs.

Read more here: Should I Be Paying Care Home Top-Up Fees?

Can you sell your home to pay care home fees?

Sometimes a person’s home is considered as part of the financial assessment, but not always. Whether the property counts will depend on the circumstances, e.g. the home may be disregarded if a spouse or partner still lives there. NHS guidance also notes that a person may have to sell their home to pay for a care home unless their partner continues living in it, although other options may be available.

Where the home is part of the person’s capital assets, but they don’t want to sell immediately, a deferred payment arrangement may be an option. Under a deferred payment scheme, the council pays the care home fees and recovers the money later, usually when the property is sold or from the estate after death. This typically applies when savings are below £23,250, and most of the person’s wealth is tied up in their property.

Families often assume there is no option except selling the home to pay – which is not always right. Much depends on who still lives in the property, the timing of the move into care, and whether the council should offer a deferred payment agreement. For more on wider funding options, read our guide on how to avoid care home fees.

Getting advice about paying care home fees

Care home funding rules are rarely simple and when running out of money becomes a real concern, families need to understand every option available to them, including local authority support, CHC, retrospective claims and the rules around top-up fees and property.

At Farley Dwek, we advise families on eligibility for CHC funding, CHC assessments and appeals and reclaiming care home fees if you are eligible. To discuss whether CHC funding can cover your care home fees, speak to our team by contacting us online or call us on 0161 272 5222.