Who Pays for Long-Term Care Costs?
Who Pays for Long-Term Care Costs?
Retirement Planning Advice: Retire on Your Own Terms
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:
| Type of care | Average weekly cost | Average annual cost |
| Residential care (no nursing) | £1266 | £65,832 |
| Nursing home care | £1529 | £79,508 |
| Residential dementia care | £1306 | £67,912 |
| Nursing dementia care | £1554 | £80,808 |
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.
Matt Rowe
Financial Planner
Piercefield Oliver
Frequently Asked Questions
The average cost of residential care without nursing is approximately £1,266 per week, while residential nursing care typically costs around £1,529 per week. Depending on the level of care required and your location, costs could exceed £2,200 per week.
It all depends on your circumstances. If your savings and assets fall below certain thresholds and you meet the criteria for eligibility, your local authority may help cover some of your care home costs. Otherwise, you may need to self-fund or look into deferred payment options.
Whether or not you are eligible for NHS Continuing Healthcare all depends on your assessed medical needs. If the NHS deems you as eligible, they will cover the full cost of care, including accommodation.
Long-term care insurance can help cover the cost of care if you become unable to look after yourself due to illness or disability. This may be a suitable option depending on your financial position and health status.
If your savings and assets drop below the threshold set out by your local authority, you may become eligible for support. If you find yourself running out of money while paying for care, make sure you contact your local authority early to reassess your situation and avoid any disruption to current care.