Top-up fees for the ongoing cost of care

With an ageing population and the increase in care costs, future care is a real concern for thousands of people. The healthcare analysts LaingBuisson have confirmed that the cost of care in the UK has risen by almost 10% in the past year to £41,600 per annum for a residential care placement and £56,056 for a nursing home placement. The significant increase in the cost of care means many people in care will run out of funds, resulting in family members being asked to pay a top-up payment for the ongoing care costs of loved ones.

Increasingly we are seeing families charged a top-up fee to cover the cost of their relative’s care. In some circumstances, a top-up fee can be paid. However, in our experience, families are often being incorrectly charged a top-up fee.

What is a top-up fee?

A top-up fee, or third-party contribution, is an additional payment made on top of what the local authority is willing to pay for care.

A top-up fee is paid when the budget provided by the local authority is not sufficient to pay the fees of the preferred care home. With the significant increase in the cost of care, it is common to now see top-up fees amount to hundreds of pounds a week.

Who pays the top-up fee?

Top-up fees not only impact those people who rely on local authority funding when they first go into a home. Residents who pay for their own care, often after selling their home, are finding their money dwindling away much faster than anticipated due to the huge increase in care over the past five years.

This is because the cost of living in a care home has risen 19% from 2021-22 to 2022-23, according to analysis of data from LaingBuisson. The average cost of residential care across the UK in 2022/23 was £800 a week. But in the South East of England, the average fees are much higher at £955 a week.

In 2023, it was estimated that of the 372,035 care home residents, 37% were self-funders. Given the high cost of care, it is not surprising that many of the thousands of people each year who sell their homes to fund their care find the money does not last and they turn to the local authority for help.

If a resident’s capital falls below the local authority’s capital limit threshold (£23,250 in England, £32,750 in Scotland or £50,000 in Wales), they’ll usually qualify for some help from the local authority to pay the fees. However, it may be that the care home charges more than the amount the local authority thinks is required to meet their care needs.

If this is the case, and there are other suitable care homes available which are less expensive, the local authority may either ask the resident to move to a cheaper home or ask for payment of a top-up fee to stay in the chosen care home.

It is at this point that relatives are likely to be given a choice, make up the shortfall or your loved one will have to be moved from the place they now regard as home.

When can top-up fees be charged?

The Care Act 2014 sets out the local authority’s duty to assess the care needs and financial resources of the person needing care and allows the local authority to charge for the cost of care. The Care and Support and Aftercare (Choice of Accommodation) Regulations 2014 set out what people should expect from a local authority when it arranges a care home place for them.

Where the care planning process has determined a person’s needs are best met in a care home, the local authority must provide for the person’s preferred choice of accommodation, subject to certain conditions. This also extends to shared lives, supported living and extra care housing settings.

The local authority must ensure:

• the person has a genuine choice of accommodation;
• at least one accommodation option is available and affordable within the person’s personal budget; and,
• there is more than one of those options.

However, a person must also be able to choose alternative options, including a more expensive setting, where a third party or, in certain circumstances, the resident is willing and able to pay the additional cost. This is called a ‘top up’. But a top-up payment must always be optional and never the result of commissioning failures leading to a lack of choice.

If there is a proposal to charge a top-up fee, the local authority (in England) has a responsibility to ensure that the relevant person is provided with clear and accurate information regarding alternative, affordable care placements. This provides a genuine choice of accommodation. The Local Government and Social Care Ombudsman (‘the Ombudsman’) considered this issue in 2015 and published a report entitled ‘Counting the cost of care: the Local authority’s role in informing public choices about care homes’, which provides guidance around top-up fees because families could be paying too much for social care.

The report confirms where there is an assessed need, there is a duty to provide an affordable placement which is within the contract rate the local authority will pay. A choice of options should be offered to an individual about affordable care, in addition to options which may require a top up to ensure that there is a ‘proper choice’.

The rules are similar in Wales and are dictated by the Social Services and Well-being (Wales) Act 2014. These rules confirm that a local authority must have more than one option available for a person to choose from in relation to alternative placements to amount to a ‘genuine choice’ about whether to enter into care in a more expensive setting. Again, in the event it is evident that an alternative placement has not been offered, the relevant person may be able to recover the cost of the top-up fee paid.

Each local authority sets a base rate that they are agreeable to paying in respect of an individual’s care. If an individual or their family make an informed choice to enter their relative into a home which is more expensive than the local authority is able to provide, a top-up fee or third-party payment can be made. A decision to move to a more expensive home could be made on the basis of, for example, a desire for a specific care environment, because the care provider offers additional activities or due to a preference for a larger room with increased amenities.

However, the decision to pay a top-up fee is a voluntary one and the local authority cannot request a top up is paid, if they are unable to provide affordable accommodation options which fall within the local authority rate.

A top up is appropriate if the relevant person is provided with a genuine choice of funded accommodation, but rejects it and opts to enter into a more expensive home.

Residents usually can’t pay their own top-up fees (they shouldn’t be able to afford this if they’ve qualified for local authority funding), so it’s normally a relative or friend who is responsible for funding the top up. The local authority can charge top-up fees, provided the individual responsible is aware of, and agrees to fund, the top up on a fully informed basis.

If there is a proposal to charge a top-up fee, the local authority have a responsibility to ensure that the relevant person is provided with clear and accurate information regarding alternative, affordable care placements. This provides a genuine choice of accommodation.

However, despite the Ombudsman providing guidance, we are seeing more and more families paying top ups where no genuine choice of accommodation has been given.

In 2022, the Ombudsman upheld a complaint against Stockport Metropolitan Borough Council. In this case, when it was decided that ‘Mrs P’ should move into a residential care home, the council initially proposed two homes to her daughter, but both were full. Mrs P was subsequently admitted to the fourth option, which required her daughter to pay a top-up payment of £240 per week. Mrs P’s placement was initially meant to be a respite placement while the council searched for affordable options and the daughter agreed to pay the top-up payment for one or two weeks until a placement was available in an affordable home. However, four years later, the daughter wrote to the council to say she could no longer afford the top-up payment and subsequently made a complaint.

The Ombudsman’s decision was that the council was at fault, because it did not offer an affordable care home placement, before asking the daughter to pay a top-up towards her mother’s fees. The council agreed to remedy the injustice it caused by reimbursing the daughter the five years of top-up payments paid.

The Ombudsman also found against Birmingham City Council in 2022. The Ombudsman concluded that a family should never have been charged for 11 years of care home top-up fees. There was no evidence the council had offered the family a care home which did not require them to pay the top up. In this case, the council agreed to reimburse all the top-up fees paid and to pay £250 to recognise the distress, time and trouble caused.

In 2023, the Ombudsman also upheld a complaint against Derbyshire County Council. Mr X’s family were offered two care home placements, one charging £750 per week and the other at £950 per week. The £750 per week was not suitable as it was too far for Mr X’s wife, who was 96, to visit regularly. Mr X’s daughter made a complaint as she said at no time had she agreed to a top-up fee. She argued the council did not make available a genuine choice of residential accommodation available without a top-up fee.

The Ombudsman investigated a complaint against the council and found they were unable to provide evidence to support there was a ‘genuine choice’ of accommodation, resulting in the payment of a significant top-up fee. The Ombudsman found there was no suitable alternative accommodation available at the usual local authority rate and therefore the council had failed in regard to its obligations. As a result, the Ombudsman concluded that the council had to waive the top-up fees in relation to the placement payable from the date of admission.

Care home fee increases

Care home fees usually increase annually, but the local authority may not increase its contribution to the cost of the care, so be aware that a top-up fee could increase.

In this case, the local authority should be asked if there is another, cheaper care home in the area that can meet the care needs. If there is, there will be an option to move to the cheaper care home.

However, if there isn’t a cheaper care home available that can meet the care needs, the local authority will have to increase its contribution, to cover the care home fee increase.

If you can no longer afford to pay a top-up fee?

If the person paying the top-up fee can no longer afford to pay it, the local authority has to carry out a new care needs assessment before deciding what to do.

They will not be able to simply move the resident to a cheaper care home. First, the local authority must consider whether the new care home can meet all the care needs and the impact the move might have on the particular resident’s health and wellbeing. In the meantime, the local authority would be responsible for covering the fees.

Challenging a request for a top-up fee

As the Ombudsman's decisions show, individuals should be aware there are grounds you can challenge a top-up fee request and seek reimbursement of top-up fees paid. If, for example:

• the care needs assessment didn’t record all the needs;
• a suitable care home within the cost of the care was not offered; or
• the local authority has refused to increase the cost of the care, and the care needs aren’t being met.

To challenge a request, you can use the local authority’s complaints procedure within 12 months or seek legal advice.

What you need to know

The ageing population and the heavy financial burden of paying for care is a real concern for many. However, spotting the potential issues with long-term care fees for private clients is crucial for wealth management and estate planning. Due to the nature of this process, choosing a specialist solicitor in this area is vital for the client to make sure they know if they are lawfully being charged for care.