Whether you’re considering options for yourself or deciding how best to help someone close to you, residential aged care can be a complex area requiring careful thought.
The uncertainty surrounding where to move, how much it will cost and where the money will come from can be overwhelming and stressful.
This guide provides the basics. You will understand the steps you need to take, where to find answers and how your financial adviser can help you make an informed decision.
There are typically three steps you need to take before entering residential aged care.
Step 1: Approval
More Australians are using aged care services each year. Whilst it may seem daunting at first, the aged care system has improved significantly over the last few years, with a strong focus on ensuring help and resources are available to help you every step of the way.
You can access aged care services through a non-government subsidised provider of aged care anytime. However, if you wish to access government subsidised aged care, the first step involves an assessment. This assessment will help identify the type of services you may be eligible for.
The assessment can be performed by any doctor, nurse or social worker who is a member of an Aged Care Assessment Team (ACAT, or ACAS in Victoria).
You can visit myagedcare to request an assessment.
The assessment process
An assessment will be completed to work out their care needs and identify the type of support that they may be eligible for. This is a free service which you can start by calling My Aged Care (the Government service for aged care).
During the call, a client record will be created to register you with My Aged Care. To create this record, they will be asked about your current needs, any aged care services you may already receive and the results of any prior assessments.
They will seek to find out more information about how they are managing around the home, any health concerns they may have, and any support from family or friends they receive. Openness and honesty will ensure they can fully understand their care needs.
After the assessment
The assessment will determine their eligibility to access services at home or in a residential aged care facility. If they are assessed as eligible to access services, they will receive an approval letter and support plan that sets out the services they are approved to access. If they are not approved to access services, you will receive a letter stating why and who to contact for more help.
Step 2: Find a home
To make sure you find an aged care facility that you or your loved one is comfortable in and that will suit their needs, you may like to visit a few different places. You can apply to as many facilities as you like.
When you visit each aged care home, note of what you liked, didn’t like, and whether you or your loved one would be happy to live there. This will help you decide which home would be most suitable.
The accommodation costs for all aged care facilities are published on myagedcare. This website also provides a description of the rooms and services available at the facility.
Types of residential aged care services available aged care homes can help you with:
Day-to-day tasks (such as cleaning, cooking, laundry).
Personal care (such as dressing, grooming, going to the toilet).
24-hour care under the supervision of a registered nurse.
Accessing a variety of additional services such as physiotherapy (exercises, mobility, strength and balance) or podiatry (foot care).
Step 3: Organise your finances
On entry to an aged care facility, you may be required to pay an accommodation contribution or accommodation payment.
Some people will have their accommodation costs met in full or part by the Government, while others will need to pay the accommodation price agreed with the facility. The Department of Human Services (DHS) will advise which applies to you or your loved one determined by their level of assets and income at entry.
There will also be a basic daily fee to pay and there may be a means-tested care fee, which is determined by your level of assets and income reassessed quarterly. Some aged care facilities offer you a higher level of service or a higher standard of accommodation or food for an extra service or additional fee.
The means-tested care fee
Cost: Between $0 and $28,087 (capped) a year (as at 20 March 2020)
Generally, if you have financial assets of $208,000 or more you can be asked to pay a means-tested care fee.
What is it?
The means-tested care fee is a contribution towards day-to-day care costs in an aged care home.
The amount payable depends on two components – a combined income and assets assessment and your cost of care. However, there are annual and lifetime caps in place to limit the amount of the means-tested care fee you can be asked to pay.
Cost: $0 to $550,000 (refundable accommodation deposit)
- Average published price in major cities: $447,000
- Average published price in regional areas: $348,000
- Average published price in remote areas: $293,000
What is it?
Each residential aged care home has different costs for living there. These can vary significantly depending on the location and status of the home.
You can pay the accommodation costs as a refundable lump sum, referred to as a refundable accommodation deposit (RAD), or in periodic payments, referred to as a daily accommodation payment (DAP). Or a combination of both.
If you pay a RAD, this will be refunded to you or your estate when you leave the care home. The accommodation costs are negotiated between you and the aged care home but cannot exceed the amount published by the facility on the Government website myagedcare.
Other costs charged by the aged care provider should be advertised.
There are two types of extra fees:
Extra service fees for aged care homes with extra service status. These fees could be for higher standards of food, accommodation, and hotel-type services.
Additional fees for other care or services that are in addition to those that the home must provide.
If the value of their assets and income are below the relevant Government thresholds, the cost of their aged care will be further subsidised by the Government. In these cases, some or all their accommodation costs can be subsidised by the Government and they will only need to pay the basic daily care fee.
Aged care study
Jane is 86 and widowed. She was living on her own for some time after her husband passed away but has become frail with age. After researching her options with the help of her family, Jane was assessed by an Aged Care Assessment Team (ACAT) as requiring residential care and found a suitable aged care home to move into.
The basic daily fee
This fee is paid by everyone entering residential aged care and is currently $52.25 per day (as at 20 March 2020). Jane will be required to therefore pay $19,071 a year.
The means-tested care fee
Jane has a home worth $750,000, $50,000 in cash and $5,000 in personal effects. Jane will be required to pay a means-tested care fee of $551 a year.
Jane’s residential aged care home is valued for $400,000.
Total fees and costs
Jane will therefore need to fund a total of $419,622 in the first year. This includes $400,000 for her accommodation in the aged care home which she can choose to pay as a lump sum refundable deposit or rent style periodic payments or a combination of both.
How to fund a residential aged care
There are many ways to help fund the residential aged care costs. These range from renting or selling the family home, to specialised investment solutions offered by financial service providers.
The best place to start is by having a conversation with a financial advisor. They can help you navigate the complexities of funding aged care, leaving you to focus on finding the right aged care home or home care provider.
A financial adviser can help with the decisions you need to make, and which strategies are best suited to your circumstances.
They can also help you keep your plan on track with an annual review, in case your circumstances, or external factors such as legislation, change.