Who pays for care home fees in Wales?

If you have capital above £50,000, you will be required to pay for all of your own care home fees. If you have capital below this threshold, the local authority will pay for your care home fees, though your income may still be used to contribute.

The Social Services and Wellbeing (Wales) Act sets the rules in Wales for paying for care home fees. It sets a capital threshold for people who are in residential care of £50,000.

If you have capital above this threshold, you will be required to pay for all of your own care home fees. If you have capital below this threshold, the local authority will pay for your care home fees, though your income may still be used to contribute.

For up-to-date threshold figures, see our benefit rates information.

Will my property be included in my financial assessment for care home fees?

If you own your own home, this may be included in the financial assessment to determine who pays your care home fees.

However, your home will not be taken into account if one of the following people also lives in the property, and will continue to live there after you have moved into a care home:

  • a husband, wife, civil partner or partner
  • a close relative over the age of 60
  • a dependent child
  • a relative who is disabled or incapacitated.

If your house is also the permanent home of someone who does not fall into this group but who has been caring for you, your local authority has discretion to decide whether or not to include the value of the home in the assessment while they are living there. This applies especially in cases where the carer has given up their own home to care for you.

Another option is for the local authority to allow the carer to continue to occupy the home while charging the care fees against the home. This is done through a deferred payment agreement (DPA), which allows the local authority to recover the fees when the property is sold. For more information see ‘Can I defer my payments for my care home?’ further down the page.

Will the value of my home be used to pay for my care home straightaway?

Where the value of your home is included in a financial assessment, it should not be taken into account for the first 12 weeks of you living in the care home. This is called the ‘12-week property disregard’. This may mean that, during this time, the local authority will pay or contribute towards the fees.

This grace period can enable the family to arrange to sell the home, or speak to the local authority about other options. If the home is not sold after 12 weeks, the local authority can continue to pay the care home fees via a DPA. This means the local authority will claim back the money it has paid in care fees once the home is sold.

Can I defer my payments for my care home?

A deferred payment agreement (DPA) allows a person to defer paying the costs of their care home until a later date. Payment is not written off but it is delayed. The local authority provides funding as a loan against a person’s home, which is repaid when the property is sold.

An important change brought in by The Social Services and Wellbeing (Wales) Act is that local authorities can now charge arrangement fees to set up the loan. They can also charge interest on the loan from the day it is set up.

The Act states that all local authorities must operate a deferred payment scheme and offer deferred payments to people meeting the criteria for the scheme. A DPA must be offered to you if your property offers adequate security and if:

  • your needs are to be met in a care home
  • you have less than the capital threshold limit excluding the value of your home
  • your home is not occupied by a spouse or dependent relative.

Permission may be refused in certain circumstances, for example if the value or equity in the property is not enough to cover the loan.

Can I get information and advice about deferred payment agreements?

Deferred payment agreements (DPAs) are complicated, and the local authority should tell you about the scheme and how it works. They should point you to written sources of information, advocacy and independent financial advice, if they feel you might benefit from having a DPA.

In particular, the local authority should:

  • consider your options if you lose capacity to make decisions, and offer advice on deputyship, Lasting power of attorney and advocacy
  • discuss the importance of planning how to use, maintain and insure your property
  • keep you informed about the DPA as it continues with regular written financial statements, and provide the information you need when the agreement ends.
What is the threshold for paying for care home fees in Wales?

Find out the threshold for payment of care home fees in Wales. 

See threshold

Is there a limit on how much my local authority can spend on my care home? 

There is usually an upper limit on how much a local authority will spend on an individual’s care home fees. This is referred to as the ‘usual’ or ‘standard’ rate.

The local authority will normally tell you what their limit is. Sometimes they will provide a list of care homes in the area within this budget and you can choose from this list. You may also find a different home in the area yourself that is within the local authority’s budget. For more information see 'Care homes: when is the right time and who decides?'.

Under the Social Services and Wellbeing (Wales) Act, the local authority must offer at least one care home option that meets your needs, but they should offer more than one. If it is not possible to meet your needs within their price limit, they must fund your care in a more expensive care home.

What happens if I want to stay in a care home that costs above my local authority's limit?

If you want to stay in a more expensive home than the local authority would usually fund, they may agree to part-fund your place, as long as a third party (such as a relative or a charity) agrees to pay the difference.

This difference is between what the local authority would usually expect to pay (based on your care needs and the local authority’s price limit) and the extra cost of the more expensive care home.

This difference is often referred to as a ‘top-up fee’. This is different to top-up fees for additional services.

Will I have to pay a top-up fee if the only suitable care home is above my local authority's limit?

No one should be asked to pay a top-up fee, unless the local authority has offered a suitable care home place within its budget that meets your needs, but you (or your carer, deputy or attorney) choose for you to stay in another, more expensive home.

Top-up fees may be paid to the local authority or to the care home directly. The local authority must ensure that the person paying the top-up is willing and able to meet the additional cost, and enters into a written agreement with the local authority. The agreement should include information about what will happen if fees change, or circumstances change and fees cannot be paid.

In some cases, a top-up fee can be paid by the person with dementia themselves – for example, if they are receiving section 117 aftercare under the Mental Health Act.

What happens if the top-up fee stops being paid?

If the top-up fee stops being paid, the local authority may move you to a care home within its budget. This new home must meet your assessed needs. To avoid this disruption, it is important to consider whether it is possible to continue to pay the extra amount for as long as is needed, bearing in mind that this might go up over time.

What are top-up fees for additional services?

Sometimes charges for additional services are also be referred to as ‘top-up fees’, but they are not the same.

Additional costs can be charged to you by the care home for services such as magazine subscriptions, haircuts and manicures. These payments are not to cover the costs of your basic care and are voluntary.

You should not be asked to pay for the costs of your basic care using your minimum income amount (MIA) but you can choose to use it for additional services.

More information about paying for care homes

The Minimum income amount (MIA – previously the ‘Personal expense allowance’) is the minimum amount of money you must be left with each week when you are contributing towards your care costs in a care home.

You can’t be charged so much that you have less than this amount left to spend as you wish. It is not a benefit, but your own money, which is protected so you have money available to live on.

In Wales, the Minimum income amount for 2024/25 is £39.50 weekly

Can my local authority increase my Minimum income amount?

There are some circumstances where the local authority can increase how much money you are left with. If you have an occupational pension being paid to you while you are in a care home, it is possible to pass up to half of this to your spouse or civil partner who remains at home.

Certain benefits, such as the mobility part of Disability living allowance, or Personal independence payment, must not be taken into account in your financial assessment for care home fees.

Some other benefits, for example the War widow’s pension, should only be partially counted.

Will moving into a care home affect my benefits?

Depending on the outcome of the financial assessment, your benefits may be affected. If you are fully self-funding, you can still receive some benefits (such as Attendance allowance), which can help towards paying care home fees.

However, some of these benefits will stop after 28 days if you go into a care home and if the local authority is contributing towards your care costs. Other benefits you are entitled to will go towards the cost of care (including your state pension and other income). In these cases, you must still be left with your minimum income amount. 

For current rates and amounts see our benefit rates information. This page is updated every year. 

Where can I get advice about benefits and care homes?

It may help to speak to your local Citizen’s Advice or Age Cymru for a benefits check to find out whether financial help is available. Your carer may also find this useful – in areas such as protecting their pension rights, for example.

For more information see 'Benefits for people affected by dementia'.

If you are classed as a self-funder and are paying your own care home fees, you can approach a care home directly and agree the financial arrangements together. This is also the case if you are a self-funder living at home, you can approach a care provider or agency directly and agree the financial arrangements together for care in your own home.

However, you might still want to have a needs assessment from the local authority. A needs assessment will help you to work out what type of care you need and what options are available. This can help you decide whether the care home you are considering is appropriate.

If you did not have your needs assessed when you moved into a care home, it is important to make sure an assessment is arranged. This is especially important if it looks as though your savings will go down over time to below the threshold.

If this happens, it could mean you’ll need local authority funding. The local authority will only help with future care home fees if your money runs out, and if it has assessed you as needing care in a care home. You can ask the care home manager or a carer for help with arranging a needs assessment.

If you are making your own arrangements with the care home, or if a relative is doing this for you, you need to make sure that you are given a contract that sets out the home’s obligations and fees. You should be
clear about:

  • the services that are included in the fees
  • what may be charged as ‘extras’
  • how much notice will be given if the fees increase.

If they are assessed as needing to be in a care home, self-funders can now ask local authorities to arrange their placement for them. This is not dependent on whether they have mental capacity to make this decision or not.

If you are paying part or all of your own fees, it is important that you are claiming all the benefits you are entitled to. Your carer or a family member may be able to help you with this.

If you need nursing care in a home, you will need to have your nursing needs assessed. The NHS can often fund care provided by a registered nurse (see ‘Nursing care costs in Wales: when does the NHS pay?’).

You can ask the care home manager or your GP to help you arrange this assessment.