By Tracey King and Milan Chetkovich
PART TWO – THE COST OF ACCOMMODATION IN RESIDENTIAL AGED CARE
In the second of a two-part opinion series on aged care homes, we seek to explain how the costs of moving into or living into a care home could have implications for your finances and family home. If you want to refresh yourself on the costs of aged care nursing and other services, you can toggle back to the previous blog.
An aged care home is a good choice if you are unable to care for your family member, and often this is identified when you find that your quality of life and that of the person you are caring for has become too much. This is recognised as carer stress.
The first step is to arrange for an ACAT assessment through My Aged Care. An aged care assessor can come to your home and help you work through your options. If you need to arrange an assessment, you can apply at any time.
If you are faced with the difficult decision to put a parent or your partner into aged care because they have been assessed as having high care needs, you may also be wondering how you might afford to make this decision.
The Commonwealth Government funds aged care homes to provide accommodation, hotel-type services and care to elderly Australians. All people entering an aged care home will need to consider the accommodation costs. This is an amount of money that you may need to pay towards the costs of a room. Prices of rooms are set by the aged care home in line with Government regulations.
Your financial situation doesn’t affect your eligibility to live in a government-subsided aged care home. However, it may impact the amount you have to pay. How much you can afford to contribute to the cost of care and accommodation is determined by a means assessment through Centrelink.
The subsidies aim to make aged care more affordable. If you are eligible for government assistance toward your accommodation costs, your provider cannot ask you to pay the agreed room price. You can only be asked to pay an accommodation contribution which is determined by Services Australia.
Whilst there is flexibility in how you pay for your accommodation, it’s important to choose a room within your budget. Look around your local area and research the costs for different homes. You should also arrange to tour the facility and meet the manager during your research process.
There is generally two types of subsidised placements:
- If you or your partner are the first person in a household to enter an aged care home (known as a protected person), and the other person is still living in the family home, then the person going into care would be eligible for a subsided aged care place.
You will find in this situation that you will not be required to fund the Refundable Accommodation Deposit (RAD) provided the home has a subsided (concessional) aged care place available.
Each home has a percentage of subsided (concessional) and fully paid places so you are best to check with the provider directly. - If you are on a full or partial aged care pension, then you may also be eligible for a fully subsided aged care place.
Do I have to pay the full cost upfront?
You have three options as to how you can pay for your aged care accommodation:
- a refundable lump sum amount (Refundable Accommodation Deposit – RAD);
- rental-style daily payments (Daily Accommodation Payment); or
- a combination of both (RAD/DAP).
You should undertake the Centrelink assessment estimator on My Aged Care to see whether you are eligible for a subsidised aged care placement.
For detailed information about the different accommodation payment options, how each option works, and how to work out your costs, visit the understanding aged care home accommodation costs page.
Means Assessment Guide:
| Income (per annum) | Assets – note below | Subsidies for Aged Care | |
| Scenario 1 | Less than $30,204.20 | Less than $55,000 | Government will pay your accommodation |
| Scenario 2 | >$76,170.12 OR | $186,331.20 | You will need to pay for your accommodation |
Note on Asset Calculation – If a protected person is remaining in the family home (partner, dependent child, carer or close relative) then the home is not included in the assets test.
Once the assessment is completed, you will receive a fee advice letter. It will outline your care and accommodation costs, (if any) and your means-tested care fee if any.
The financial factors are important, but the decision on whether to sell or keep your home is also based on emotional and personal factors, as well as who else calls it home. Make sure you look at the full picture and seek advice from a financial planner who is accredited and experienced in aged care advice.
The information provided in this article is general in nature and not intended to influence any decision about the costs of aged care or be viewed as personal advice. This information is our own personal opinions and are not to be construed as the opinions of Southern Cross Care (WA) Inc. (my employer) or any other aged care provider. You need to consider whether this advice is right for you, having regard to your own objectives, financial situation and needs. It is important to check any product information directly from the provider. Ensure you consider the relevant residential care accommodation contracts, Product Disclosure Statement (PDS) or other applicable product documentation before making a decision to purchase, acquire, invest in or apply for an aged care, financial or credit product. You should always seek your own professional financial and legal advice prior to making any decisions regarding your financial situation and the costs of aged care.
Further information about the costs of aged care can found on My Aged Care. Consider consulting with your local Centrelink Office. https://www.myagedcare.gov.au/aged-care-home-costs-and-fees
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