When a family encounters aged care financials for the first time, the usual response is confusion and stress - the family is already under an emotional strain coping with an elderly relative who is physically frail or has cognitive decline - trying to understand the aged care financials becomes difficult in this situation.
We help families to understand how the aged care financials are calculated, their implications, and strategies that can be used to minimise the financial impact of moving into residential aged care.
While the Commonwealth subsidises the cost of aged care in a Commonwealth regulated aged care home, the resident may be expected to pay a number of aged care fees and charges; some fixed and mandatory, and some variable and optional - depending upon the financial circumstances of the resident.
The aged care fees to pay will depend on assets and income, which is assessed by the Department of Human Services or the Department of Veterans’ Affairs. You’ll need to know how much income you and your partner receive, and how much you and your partner own in assets. You can use the My Aged Care Income and Assets Checklist to make sure you’ve listed all of your income and assets.
The My Aged Care fee estimator can help you work out how much you can expect to pay for the type of care you want. The fees are indexed (increased) twice each year in March and September when the Age Pension gets increased.
All residents are required to contribute to their care by paying the basic daily care fee, and then for some residents who have been assessed as having sufficient menas, they may also be asked to pay the means tested care fee.
The Basic Daily Care Fee is fixed and mandatory and is set at 85 % of the current age pension (the BDCF is currently $54.69 per day). As the BDCF is indexed to the pension, when the pension is increased on the 20th March and 20th September in each year, the BDCF is increased.
The Means Tested Care Fee is calculated by the Commonwealth and is based upon information provided by the resident.
Families can obtain an estimate of the MTCF by accessing the Residential Care Fee Estimator on the My Aged Care website
If the family chooses not to complete the financial assessment, then the Commonwealth will charge the maximum MTCF.
Aged Care Providers can request an accommodation payment from the resident - this accommodation payment can be made as either a lump sum payment (consider to be like a rental bond) or can take the form of an equivalent daily payment. The resident can also choose to pay the accommodation payment as a combination of a lump sum payment and daily payment.
Residents who have low means will have their accommodation payment paid by the Commonwealth.
For residents with sufficient means, they will be required to pay the Refundable Accommodation Deposit (RAD). The RAD is an arbitary amount which has been set by the aged care provider as the maximum amount that they can request for the room being considered. Not all residents pay the maximum RAD - the RAD can be negotiated with the aged care provider.
For residents with lower means, the Commonwealth will ask the resident to contribute to the accommodation payment.
An alternative to paying a large lump sum, the family can choose to pay the equivalent Daily Accommodation Payment (DAP). This could be considered as a rental payment. Any payment of daily accommodation payments is not returned to the resident or the estate when the resident has left the aged care home.
For residents with lower means, the Commonwealth will ask the resident to contribute to the daily accommodation payment.
The aged care provider may charge the resident for extra services.
The aged care provider may charge the resident a fixed daily fee for upgrades to furnishings, or wine with the meals.
The aged care provider may also charge the resident for additional services such as additional physiotheraphy services.