Understanding state funding for care: What support is available and how does it work?

Planning for later life care often raises one key question: what support is available, and how much will you need to fund yourself?

While many people assume care is either fully funded or entirely self-funded, the reality is more nuanced. There are several forms of state support available in the UK, each with different criteria, funding levels and application processes. Understanding how these fit together is an important part of planning ahead.

In most cases, state support for care costs falls into three categories.

NHS Continuing Healthcare (CHC)

This is the highest level of support and covers the full cost of care, including care home fees where applicable. It is funded by the NHS and is not means-tested, so income and assets are not taken into account.

Eligibility is based on whether an individual has a primary health need, which is assessed through a formal process. This can be complex and often requires detailed evidence.

Funded Nursing Care (FNC)

If an individual does not qualify for CHC but still requires care from a registered nurse, they may be eligible for Funded Nursing Care.

This is a fixed weekly contribution from the NHS towards the nursing element of care home fees. The remaining costs are usually either self-funded or covered through other forms of support.

Attendance Allowance (AA)

Attendance Allowance is a benefit paid to individuals at State Pension Age and over who need help with personal care due to illness or disability.

It is not means-tested and is paid directly to the individual, who can use it towards care or support. It can be used for any purpose, including day-to-day needs.

For many people, local authority funding forms a key part of how care is paid for, particularly where capital falls below certain thresholds.

In England, individuals with savings and investments below £23,250 may be eligible for the local council to contribute towards the cost of social care. The level of support provided will depend on both the individual’s care needs and their financial position.

The process begins with a needs assessment, which is carried out by the local council and is free of charge. This assessment determines the level of care and support required and can be requested by anyone.

If care is deemed necessary, the council will then carry out a financial assessment, often referred to as a means test. This determines how much the individual is expected to contribute towards their care costs. Depending on the outcome, the council may pay most of the cost with a contribution required from the individual, share the cost, or determine that the individual is responsible for funding their care in full.

Where the council contributes towards care, a personal budget is agreed as part of a care and support plan. This can be managed in different ways, including through direct payments, council-arranged care, or a third-party organisation.

Even where the council is involved, individuals retain choice and control. This includes how the personal budget is used and, where residential care is required, the ability to choose a suitable care home within the agreed funding level. It is also possible for family members to contribute towards a more expensive option through a top-up arrangement.

It is important to be aware that some support is provided free of charge where it has been assessed as necessary. This includes minor home adaptations costing less than £1,000 and short-term care following discharge from hospital.

These forms of support do not operate in isolation.

• CHC provides full funding where eligibility is met
• FNC offers partial support where nursing care is required
• AA provides additional financial support for personal care

It is also important to note that if CHC is awarded, AA is usually no longer payable. This is also the case if care is funded by the Local Authority.

The difference between these funding routes can be significant, both financially and practically. However, eligibility is not always straightforward, and the assessment process can be challenging to navigate without support.

For example, CHC assessments require detailed evidence of care needs and are subject to strict criteria. Similarly, understanding when and how to claim AA, or how local authority thresholds apply, can make a meaningful difference to overall affordability.

Reviewing current or expected care needs at an early stage can help avoid unexpected outcomes. It is important to understand which types of support may apply, keep clear records of care requirements and medical evidence, and seek guidance ahead of assessments. Ensuring that wider financial and legal planning is aligned is equally important.

State funding is only one part of the picture. To make informed decisions, it should be considered alongside personal finances, legal arrangements and long-term planning.

Working with a specialist later life adviser can help bring these elements together, providing clarity on available support and ensuring decisions are made with a clear view of both immediate needs and longer-term outcomes.

At Old Mill, our later life planning team includes advisers accredited by the Society of Later Life Advisers (SOLLA), bringing specialist expertise to what is often a complex and sensitive area.

We work with individuals and families to provide a clear, step-by-step approach to later life planning, including care funding, financial structuring and long-term cashflow modelling. Our aim is to help clients make informed decisions with confidence, at a time when it matters most.

An initial conversation is available without charge, offering the opportunity to explore your position and understand the options available to you.

If you would like further advice from our specialist team for later life care, speak to your usual Old Mill adviser or contact Simon Valentine-Marsh or Andrew Page.