The time has come when your loved one needs to relocate, and although there are a range of housing options for seniors, you have decided that an aged care home is the best choice for them at this point in their life.
Aged care homes come in all shapes, sizes, and various prices. The challenge is to find the right location and care for your loved one’s budget, needs and preferences. The different costs associated with aged care homes is a combination of how much they will need to pay and whether the Government will contribute to the cost in any way.
In terms of aged care costs, it depends on several different factors, including:
- The type of help your loved one needs
- The aged care home chosen
- Their financial situation
- The services they will receive
What fees are involved?
There are a number of costs associated with aged care homes. The Australian Government subsidises aged care homes across Australia to provide accessible and affordable care, and the subsidies are paid directly to aged care homes. How much and the types of costs involved depend on the aged care home and an assessment of your loved one’s assets and income, which is called a “means assessment”. Aged care home costs include:
Basic daily fee
This is an amount that everyone pays for the day-to-day services they will receive at the aged care home and includes cleaning, meals, laundry and facilities management. The fee is paid directly to the aged care home and applies for every day your loved one is a resident, including days when they may be away on holiday or in hospital.
The basic daily fee is set at 85 percent off a single person’s rate of the basic age pension. The government updates this fee on the 20th March and 20th September every year in line with increases to the aged pension. Prices are published on the Department of Health website.
In terms of the average costs of aged care in Australia, and based on current rates, the maximum basic daily fee is $52.71 per day or $19,239.15 per year.
Means-tested care fee
This is an ongoing contribution that some people pay toward the cost of their clinical and personal care. It is different for everyone, and not everyone has to pay it, as it is determined by the means assessment. Clinical care includes services like medication assistance, catheter care and specialised nursing services. Personal care includes help with grooming, dressing, bathing and going to the toilet.
You can use the government’s fee estimator to determine if your loved one will need to pay a means-tested care fee. If they do have to pay, you may need to complete a means assessment to find out the exact amount. The assessment should be completed after your loved one has been assessed for an aged care home and before they enter care.
The means-tested care fee is between $0 and $259.26 per day, and the maximum fee can change over time. However, there are annual and lifetime caps that apply, and once your loved one reaches the cap, they cannot be asked to pay any more. These caps are indexed on the 20th March and 20th September every year. As of 20th March 2021, the maximum an aged care home can charge is:
- $28,338.71 per year or
- $68,012.98 in a lifetime
Accommodation costs
This is an amount that some people pay to contribute towards or cover the full costs of their room, depending on their means assessment. All aged care homes set their own accommodation pricing, and what your loved one has to pay depends on the aged care home and their eligibility for government help which is determined by the means assessment.
As a general guide, if your loved one is eligible for government assistance, they will pay some or all of the accommodation costs. If your loved one isn’t eligible, they will need to pay the room price agreed to with the aged care home.
Room prices will depend on the type of room chosen, including the size of the room, whether it’s a single or shared room or if it has a shared ensuite or bathroom. Aged care homes are required to publish their maximum accommodation costs, and the Find a Provider tool can help you compare your options. You and the aged care home can negotiate and agree on a lower price, but they cannot charge you more than the published price for that room.
There are three options in terms of how accommodation can be paid for:
- A refundable lump sum amount
- Rental-style daily payments
- A combination of both
In terms of the means assessment:
- If your loved one has an income below $28,100.80 and assets below $51,000, the Australian Government will pay their accommodation costs.
- If they have an income above $70,827.12 or assets above $173,075.20, they will need to pay for the full cost of their accommodation which has been negotiated and agreed to with the aged care home.
- If they need to pay for part of their accommodation, Services Australia or the Department of Veterans’ Affairs (DVA) will determine their contribution amount based on their means assessment. The Australian Government will pay the rest.
These income and asset amounts change with indexation on the 20th March and 20th September every year, and the above are up to date as of 20th March 2021.
Additional service fee
Depending on which aged care home you choose and what you agree to with your provider, there are additional things you may be charged for that go beyond the minimal care and service requirements. The government does not subsidise these, so if you agree to them, you or your loved one will need to pay the full cost.
These hotel-type services include access to paid TV services, hairdressing and a preferred brand of toiletries. Some aged care homes will allow you to choose what additional services your loved one would like, others will offer a package of additional services. The provider sets the fees for these.
Extra services fee
Some aged care homes have “extra service” status, meaning they can provide residents with a higher standard of service, including higher quality linen, specialised menus or particular room furnishings. Again, these are set by the aged care home and not subsidised by the government, so you or your loved one will have to pay the full costs.
In terms of all fees, the aged care provider must record all of them in the Accommodation Agreement, the Resident Agreement, and, if applicable, in the Extra Services Agreement.
Residential aged care supplements
Aged care homes may be able to access additional funding supplements from the government to ensure your loved one receives the care they need. These include primary supplements like:
- Enteral feeding supplement — for people who require enteral feeding on an ongoing basis
- Oxygen supplement —for people with an ongoing medical need for oxygen
and other supplements like:
- Veterans’ supplement
- Hardship supplement
- Viability supplement — for those in rural and remote areas.
Fee advice letter
If you have completed a means assessment, you will receive a fee advice letter once the assessment has been completed. It is valid for 120 days unless there is a significant change in your loved one’s circumstances.The fee advice letter will outline:
- The basic daily fee
- Whether your loved one is eligible to pay the agreed room price or the maximum accommodation contribution, if any
- The means-tested care fee, if any.
It will not outline:
- Extra service fees — these will only apply if you require an extra service room
- Additional service fees — these will need to be discussed and agreed to with the aged care home.
If there is a change in your personal or financial circumstances, you’ll need to notify Services Australia (or DVA if relevant), so they can update your assessment and reissue your fee advice letter.
Financial advice
If you’re worried that your loved one may not be able to afford your home care, residential respite care or permanent residential care costs, you can ask for them to be considered for financial hardship assistance. If they are eligible, the Australian Government will pay some or all of their aged care costs.
Because of the complexity of the fee structure with aged care homes, it is recommended that you seek independent financial advice before deciding how to pay for aged care.
Services Australia’s Financial Information Service (FIS) is a free service available to everyone. FIS officers can show you how to make informed financial decisions and help you to understand the financial implications of aged care costs. They can also help you understand how different payment methods for residential care may affect your loved one’s pension and aged care costs.
References
- 2021, Understanding costs, My Aged Care
- 2021, Aged care home costs and fees, My Aged Care