Who Pays for Long-Term Care Costs?

May 29, 2025

As we live longer, the question of how to fund care in later life becomes increasingly important. Whether it’s prompted by ill health or a progressive condition, long-term care costs are something that many of us will need to consider – and this type of care isn’t cheap. So, who pays for long-term care in the UK? And how can you plan ahead?

In this article, we unpack the average cost of long-term care in the UK, and share some financial strategies that can help you prepare for future care needs. 

What is Long-Term Care?

Long-term care relates to ongoing support provided for individuals who are elderly, have disabilities, or live with chronic physical or mental health conditions. This type of care can be provided at home (domiciliary care), in residential care homes, or in nursing homes, and can be arranged privately or via local authorities. Long-term care services range from basic community support through to high-intensity nursing care.

The Average Cost of Long-Term Care in the UK

Long-term care costs can vary depending on the level of care required and your location. According to carehome.co.uk, here are the current average figures across the whole of the UK:

In 2021, the Department of Health and Social Care estimated that 1 in 7 people over 65 will face lifetime care costs exceeding £100,000, and around 1 in 10 people could see this figure rise above £120,000.

Who Pays for Long-Term Care?

Recent data published by carehome.co.uk suggests that over a fifth of people making care enquiries are unsure about who will pay for their care. Funding for long-term care in the UK is complex, and while some help may be available via the NHS or your local authority, many people will be expected to self-fund.

NHS-Funded Care

There are two types of NHS funding available:

• NHS Continuing Healthcare (CHC): Fully funded care for people with complex medical needs. You’ll need to be examined by a multidisciplinary team of healthcare professionals who will determine eligibility based on your assessed needs, rather than any particular diagnosis or condition.
• NHS-Funded Nursing Care: For those in nursing homes, the NHS may cover part of the nursing element of your care costs. To gain access to this funding, you’ll need to first be assessed for NHS Continuing Healthcare, and then a decision will be made about what type of funding you are eligible for (if any).

It’s important to note that both of these schemes are subject to strict criteria and funding isn’t guaranteed, even if you have a severe health condition.

Local Authority Funding

If you’re not able to access NHS support, you may still be eligible for local authority funding. The first step to accessing this type of funding is getting a needs assessment. If you do need care, then your local authority will carry out a financial assessment to determine what long-term care costs you will need to pay.

If you have less than £23,250 in savings, also known as the Upper Capital Limit (UCL), then you may qualify for part or full funding. However, this support varies between councils and is also influenced by your income, property ownership, and care needs.

Some local authorities offer deferred payment schemes wherein care home costs are paid by the council and later reclaimed from the value of your home after death or sale. This can be useful if all your money is tied up in your property. 

Planning Ahead for Long-Term Care

Cash Flow Forecasting

Understanding your income, assets, and projected long-term care costs is vital. We can help you create a robust cash flow model to assess how long your money will last, and what adjustments may be needed.

Savings, Pensions, and Investments

The average cost of long-term care is rising faster than inflation, so you need to make sure that your retirement income keeps pace. Our financial advisors can review how your pension, savings and investments are structured, and recommend any products to boost your income i.e. investment bonds or care annuities.  

Long-Term Care Insurance

Long-term care insurance costs will depend on your age, health, and the level of cover required. Although annual premiums can be costly, insurance companies will usually pay a regular income if care is needed, helping to offset high ongoing fees.

Equity Release

If you own your home, you may be able to release equity to fund care without having to sell the property. Lump-sum or drawdown options provide flexibility, but they can have tax consequences.

Helping You Prepare For Future Care Costs

At Piercefield Oliver, we understand how overwhelming it can be to navigate the costs and funding options for long-term care. Our expert financial advisors have in-depth knowledge of later-life planning, care funding, and pensions, and we can help you make confident and well-informed decisions surrounding future care costs.

Book your free consultation to discover how we can help you prepare for later-life care costs.