Dementia Care Home Fees: Do You Have to Pay?

It depends on their financial situation and care needs. A dementia diagnosis does not automatically mean free care. However, if the person's primary need is for healthcare, they may qualify for NHS Continuing Healthcare — which covers all care home fees. If not, the standard means test applies: self-funding above £23,250, partial help between £14,250-£23,250, and council-funded below £14,250.

This guide covers England only. Scotland, Wales, and Northern Ireland have different care funding systems.

Last updated: March 2026.

This is one of the most common questions families ask when a parent or spouse is diagnosed with dementia. The answer is not straightforward, but it is not as complicated as the system makes it feel. It comes down to three things: the nature of the person's care needs, whether they require nursing care, and their financial situation.

This guide walks through each funding route clearly, explains what you can claim on top, and helps you work out whether your family might be paying more than necessary.

What Are the 3 Funding Routes for Dementia Care?

Before diving into detail, here is the decision framework. Every person with dementia in a care home falls into one of three funding routes. Work through these questions in order:

Question 1: Is the person's primary need health-based?

This means: is their main reason for needing care a healthcare need (such as advanced dementia with complex behavioural challenges, swallowing difficulties, or severe cognitive decline) rather than a social care need (such as help with washing and dressing)?

• YES -- They may qualify for NHS Continuing Healthcare (CHC). This covers all care home fees. No means test. No contribution required. Move to Route 1 below.
• NO -- Move to Question 2.

Question 2: Does the person live in a nursing home (not a residential care home)?

• YES -- They are entitled to NHS-Funded Nursing Care (FNC): £267.78 per week paid directly to the home. This is not means-tested. Move to Route 2 below, then continue to Question 3 for the remaining fees.
• NO -- Move to Question 3.

Question 3: What are the person's total assets (savings, investments, property)?

• Over £23,250 -- The person is a self-funder and pays the full cost of care. Move to Route 3 below.
• £14,250 to £23,250 -- The person receives partial council funding. The council pays most of the fees, but the person contributes from their assets (tariff income of £1 per week for every £250 above £14,250).
• Under £14,250 -- The person is fully council-funded. The council pays the care home fees (though the person still contributes most of their income, keeping only the Personal Expenses Allowance).

This is the framework. Now let us look at each route in detail.

Route 1 -- NHS Continuing Healthcare (Fully Funded)

NHS Continuing Healthcare is the single most important funding route for families dealing with dementia. If the person qualifies, the NHS pays all care home fees -- typically £1,000 to £1,500 per week or more. There is no means test. Savings, property, and income are completely irrelevant.

What is "primary health need"?

The test for CHC is whether the person has a "primary health need." This does not mean they need to be physically unwell. It means their overall package of care needs is primarily driven by healthcare requirements rather than social care requirements.

For people with dementia, the following factors often establish a primary health need (see NICE guideline NG97 on dementia assessment and management):

• Severe cognitive impairment -- inability to make decisions, recognise family members, or understand their surroundings
• Complex behavioural needs -- aggression, wandering, resistance to care, distress behaviours
• Swallowing difficulties (dysphagia) -- risk of aspiration, need for modified diet or PEG feeding
• Psychological and emotional needs -- severe anxiety, hallucinations, delusions
• Unpredictable or rapidly changing needs -- sudden deterioration, fluctuating capacity

The Decision Support Tool

The CHC assessment uses a Decision Support Tool (DST) that evaluates 12 care domains. For dementia, the most relevant domains are:

1. Cognition -- memory, orientation, understanding
2. Behaviour -- aggression, agitation, resistance to care
3. Psychological and emotional needs -- anxiety, depression, psychosis
4. Communication -- ability to express needs and understand others
5. Altered states of consciousness -- drowsiness, confusion episodes

Each domain is scored from low to severe/priority. A person does not need to score highly in every domain. One domain at "priority" level, or a combination of domains at "severe" level, can be enough to establish eligibility.

Why many people with dementia are wrongly refused

Research consistently shows that CHC is under-awarded for dementia. Common reasons include:

• Assessors underweight cognitive and behavioural needs -- focusing instead on physical health domains where the person may score lower
• "Managed needs" argument -- assessors claim that because the care home is managing the person's behaviour, the needs are not severe. This is incorrect. The question is what the needs are, not whether they are currently being managed.
• Lack of detailed evidence -- families do not provide enough day-to-day examples of the person's care needs, challenging behaviours, and the level of supervision required

If your relative has moderate to advanced dementia and has been refused CHC, there is a strong case for appealing. For a detailed guide on the assessment process, see our article on NHS Continuing Healthcare eligibility for dementia.

How to appeal a CHC refusal

You have the right to request a local review within 6 months of the decision. If the local review upholds the refusal, you can escalate to NHS England for an independent review panel.

Key points for a successful appeal:

• Gather daily care logs from the care home showing the level of support required
• Obtain professional opinions from the GP, consultant, or community psychiatric nurse
• Focus on the nature, intensity, complexity, and unpredictability of the person's needs -- these are the four key characteristics that determine a primary health need
• Challenge any suggestion that "managed needs" reduce eligibility

Many initial refusals are overturned. Our guide on how to appeal a CHC rejection walks through the process step by step.

Route 2 -- NHS-Funded Nursing Care (Partial Contribution)

If the person with dementia lives in a nursing home (a home registered to provide nursing care) but does not qualify for full CHC, they are almost certainly entitled to NHS-Funded Nursing Care (FNC).

What is FNC?

FNC is a flat-rate contribution of £267.78 per week (2026/27 rate) paid by the NHS directly to the nursing home. It covers the cost of registered nursing care provided in the home.

Important facts about FNC:

• It is not means-tested -- everyone in a nursing home with nursing needs receives it, regardless of their savings or income
• It is paid directly to the nursing home, not to the individual or family
• It applies whether the person is self-funding or council-funded
• It reduces the amount the person (or council) needs to pay by £267.78 per week

Why FNC is often overlooked

Many families do not realise FNC exists, or assume it is automatically applied. In practice:

• Some nursing homes do not proactively inform families about FNC
• Families paying care home fees directly may not realise a portion should be covered by the NHS
• The assessment for FNC is separate from the CHC assessment and must be requested

If your relative is in a nursing home and you are not sure whether FNC is being applied, ask the home directly. Over the course of a year, FNC is worth approximately £13,919 -- this is not a small amount.

FNC vs CHC -- understanding the difference

FNC and CHC are related but fundamentally different:

• CHC covers all care home fees (often £50,000-£80,000 per year). It requires a primary health need.
• FNC covers only the nursing component (£267.78/week). It applies to anyone in a nursing home who does not qualify for CHC.

A person cannot receive both CHC and FNC at the same time. If CHC is awarded, it replaces FNC entirely (because CHC already covers everything).

Route 3 -- Means-Tested Council Funding

If the person with dementia does not qualify for CHC, and is not in a nursing home (or is in a nursing home but still needs to fund the non-nursing costs), the standard local authority means test applies.

The thresholds

The means test looks at the person's total capital -- savings, investments, and in many cases, property:

• Above £23,250 -- The person is a self-funder. The council has no obligation to contribute to fees (though it must still carry out a needs assessment under the Care Act 2014 and can help arrange a placement).
• £14,250 to £23,250 -- The person receives partial funding. They are assumed to have "tariff income" of £1 per week for every £250 of capital above £14,250. The council pays the remainder.
• Below £14,250 -- The person is fully council-funded. The council pays the care home fees, but the person contributes almost all of their income (pension, benefits), keeping only the Personal Expenses Allowance of £31.82 per week.

For a full explanation of the means test, including what counts as capital and what is disregarded, see our care home means test guide.

A Critical Edge for Self-Funders: If the person does not qualify for CHC and is self-funding above £23,250, do not blindly accept the first fee quoted by the dementia care home. RightCareHome has analyzed the Market Sustainability and Improvement Fund (MSIF) data—the exact rates local councils pay these same homes. Families are routinely quoted £1,500+ per week for dementia care, while the council pays £1,000 for the exact same room. Knowing the fair local rate is your strongest negotiating tool to reduce the self-funded fee.

Property rules when a person with dementia moves to a care home

The family home is one of the most significant assets in the means test. The rules around property are particularly important for dementia:

When the property IS disregarded (not counted):

• The person's spouse or civil partner still lives in the property
• A relative aged 60 or over still lives there
• A disabled relative still lives there
• A dependent child under 18 still lives there
• The person is in a care home on a temporary basis (though this rarely applies long-term for dementia)

When the property IS counted:

• If none of the above apply, the property is included in the means test after an initial 12-week disregard period
• After 12 weeks, the full value of the property is counted as capital
• If this takes the person above £23,250, they become a self-funder

Deferred Payment Agreements: If the property is the main reason the person is above the threshold, the council must offer a Deferred Payment Agreement. This means the council pays the fees and places a legal charge on the property. The debt is repaid when the property is eventually sold -- often after the person's death.

This prevents families from being forced into an immediate sale. However, interest accrues on the deferred amount, and arrangement fees may apply. For a detailed guide to this option, see our article on Deferred Payment Agreements.

Worked Scenario: Funding Dementia Care

To see how these rules apply in real life, let's look at a common situation.

The Situation: David (78) has Alzheimer's disease. His wife continues to live in their £400,000 jointly-owned home. David has £35,000 in personal savings. He needs a nursing home with a specialist dementia unit quoting £1,800 per week.

The Funding Assessment:

1. CHC Assessment (Route 1): Although David has Alzheimer's, the ICB assesses his needs as primarily social (supervision and personal care), not complex medical. He is refused CHC funding.
2. FNC Contribution (Route 2): Because he is moving to a nursing home and requires nursing oversight for his condition, he is awarded NHS-Funded Nursing Care. The NHS pays £267.78/week directly to the home. The remaining fee is £1,532.22.
3. Property Disregard: Because David's wife still lives in the house, the £400,000 property is completely disregarded.
4. Means Test (Route 3): His capital is assessed purely on his £35,000 savings. Because this is above £23,250, he is a self-funder for the £1,532.22 remainder.

The Result: David's family pays £1,532.22/week. They also immediately claim the higher rate of Attendance Allowance (£114.60/week) to help offset this cost. Because his property is protected, his savings will drain down over roughly 8 months until he hits the £23,250 threshold, at which point the council will step in to help fund the placement.

What Benefits Can You Claim on Top of Any Funding Route?

Regardless of which funding route applies, there are additional benefits that families often miss. These can make a meaningful difference to the person's finances.

Attendance Allowance

Attendance Allowance pays up to £114.60 per week (higher rate) for people aged 66 and over who need help with personal care. It is tax-free and not means-tested.

Key rules for care homes:

• Self-funders can claim and keep Attendance Allowance in full -- worth approximately £5,959 per year
• Council-funded residents lose Attendance Allowance 28 days after council funding begins
• CHC-funded residents are not eligible for Attendance Allowance (because the NHS is already covering all care costs)

If your relative is self-funding, Attendance Allowance should be claimed immediately. Over a typical care home stay of 2-3 years, it adds up to £12,000-£18,000. Many families with a relative who has dementia do not realise they can claim this benefit.

Personal Expenses Allowance

Every person in a council-funded care home placement is entitled to keep a Personal Expenses Allowance (PEA) of £31.82 per week from their income. This is intended for personal items -- clothing, toiletries, newspapers, small treats.

The PEA applies regardless of the person's condition. Even if the person with dementia cannot manage their own finances, the allowance should be ring-fenced and used for their benefit (usually managed by a family member with Power of Attorney or a deputyship order).

Carer's Allowance for family members

If a family member is providing regular care for the person with dementia (at least 35 hours per week), they may be eligible for Carer's Allowance of £86.45 per week.

Important caveats:

• Carer's Allowance typically stops once the person moves into a care home full-time (because the family member is no longer providing 35 hours of care)
• It may continue during the transition period if the family member is still providing significant support
• The carer must earn less than £204 per week (after deductions) to qualify

Even if Carer's Allowance itself stops, having a record of claiming it can provide National Insurance credits that protect the carer's State Pension entitlement.

Is Your Family Paying More Than Necessary?

The care funding system is not designed to make things easy for families. Information is scattered, assessments are inconsistent, and the people who need help the most -- those dealing with a dementia diagnosis -- are often the least equipped to fight for it.

Here is what we see regularly:

• Families self-funding at £1,200-£1,500 per week who have never been told about CHC, despite their relative having advanced dementia with complex needs
• People in nursing homes where FNC of £267.78 per week has never been applied or has lapsed without anyone noticing
• Self-funders who have never claimed Attendance Allowance -- missing out on £5,900 per year in tax-free income
• Families who were told their relative "does not qualify" for CHC based on a screening checklist alone, without ever receiving a full assessment

If any of these sound familiar, it is worth reviewing your situation. Even a single overlooked entitlement can save thousands of pounds per year.

Our care home funding eligibility guide provides a step-by-step assessment to help you identify which funding routes may apply to your family's circumstances.

Our Funding Calculator provides a personalised breakdown of every option available to you, based on your specific circumstances.

Get Your Custom Funding Action Plan

What to do next

1. Check CHC eligibility -- If your relative has moderate to advanced dementia, request a CHC Checklist screening from the local Integrated Care Board (ICB). You have the right to request this at any time, even if a previous request was refused.
2. Confirm FNC is applied -- If your relative is in a nursing home, verify with the home that NHS-Funded Nursing Care is being received and deducted from the fees.
3. Claim Attendance Allowance -- If your relative is self-funding and not already claiming, apply immediately. Claims can be backdated to the date you request the form.
4. Review the means test -- If capital is falling towards the £23,250 threshold, contact the local authority to request a financial reassessment.

Nobody should pay more than they need to. The system may be complicated, but the entitlements are real -- and for many families dealing with dementia, the difference is tens of thousands of pounds. For a broader view of what changed (and what didn't) in care funding this year, see our guide on new rules for care home payments in 2026. And if you are already self-funding, our article on how to reduce care home fees legally covers practical strategies.

Dementia Care Funding Paths by Assets and Needs

Sources

• NHS — NHS Continuing Healthcare
• NICE — Dementia: Assessment, Management and Support (NG97)
• UK Parliament — Care Act 2014, Section 9 (Needs Assessments)
• Alzheimer's Society — Care Home Funding and Dementia
• LaingBuisson — UK care home fee benchmarking data (2025/26)

Further Reading

• New Rules for Care Home Payments 2026
• How to Reduce Care Home Fees Legally
• Deferred Payment Agreements Explained
• Care Home Funding Eligibility Guide