How is replacement care funded?

Replacement care services can sometimes be provided free but are usually means-tested. The Care Act 2014 means that replacement care is now recognised as a service to the person with dementia, who may have to pay, and that the carer should not be charged.

However, if the person with dementia has a needs assessment but is found not to have eligible support needs, the carer can be asked to pay for replacement care, subject to a financial assessment that the local authority will carry out.

There are a range of options that may be appropriate when it comes to funding replacement care.

Some replacement care services may be provided free of charge by the local authority. Many are means-tested, which means the person with dementia may have to contribute towards the cost. The local authority will calculate the cost of the services to be provided and then financially assess the person, to see how much the person should contribute to the cost of these services.

If a person with dementia is funding the replacement care themselves, they should contact the organisation providing the replacement care directly to ask about availability and to sort out the financial arrangements. It is important to gain a thorough understanding of what is included in any contract to provide care and support. This will help to avoid misunderstandings or unexpected costs.

Funding arrangements

Care homes

The local authority can charge the person with dementia for short-term stays in care homes (under eight weeks) in one of two ways. They can assess the amount they should pay based on their income and capital and according to national rules. Alternatively, they can charge what they think is a 'reasonable' amount, although this should take account of individual circumstances and leave the person with enough money to run their household. There are national rules about how much the person should be left to live on. A financial assessment may be carried out to establish how much the person should pay.

Care in the community

If care is provided in the person's own home, the local authority can ask the person with dementia to pay a 'reasonable' amount toward the cost. As with temporary replacement stays in care homes, the person must be left with enough money to run their home and to live.


Instead of organising services directly, some local authorities may give people vouchers that can be used with local services. For more information contact the local authority or local carers centre.

Direct payments

After a needs assessment, the amount of money identified as being necessary to meet the person's needs is called a personal budget. A person with dementia may decide to receive their personal budget allocation in the form of a direct payment. A direct payment is paid directly to the person, to pay for their care and support. They aim to give people greater flexibility and choice over how their needs are met. They can be used in a number of ways, such as employing a personal assistant, taking a break with a carer, or replacement care in a care home for up to four weeks in any 12-month period. However, the direct payment can only be spent as agreed in the person's support plan and it will be agreed in advance how it will be used to meet their needs.

Carers may also be entitled to a direct payment depending on their need for support. Again, it must be used to meet the needs and achieve the goals identified in their support plan. A carer may hire a paid carer from an agency, for example to help with shopping trips, or they may use the direct payment to pay for a supported holiday or for education. The local authority can give information on personal budgets and eligibility. See also our page: Personal budgets.

Other funding

A person may be able to get help with the cost of funding replacement care or taking a break from a charity, grant-making trust or benevolent fund. Ex-service organisations, as well as those that support retired people in a particular type of work, may also help. The local carers centre or Alzheimer's Society can advise on what is available locally.

There may also be national organisations that can help. For more information see Paying for care and support in England.

Carer's allowance

For someone receiving Carer's allowance, their entitlement continues for a period of up to 12 weeks inside a 26-week time span, or until Disability living allowance (DLA), Personal independence payment (PIP) or Attendance allowance entitlement for the person they care for, stops. Consequently, a short period of replacement care, within these limits, should not affect their entitlement to Carer's allowance.