What are the costs of permanent Aged Care?
*All figures stated in this article are current as at 1 January 2023.
When first entering the world of Aged Care the proposed costs can be complex and daunting. This article provides an overview of the different types of fees for Permanent Aged Care, what they relate to, along with an insight into what to look out for.
Basic Daily Fee
The ‘Basic Daily Fee’ or ‘Residential Care Fee’ is applicable to everyone regardless of the level of assets or income.
The basic daily fee is set at 85% of the maximum single Age Pension (minus the pension and energy supplements). This fee is indexed every six months, and if you ever notice an increase in the daily fee, you can assume your Age Pension payment will have increased at the same time.
This fee goes towards your basic daily living expenses including meals, cleaning, laundry, and utilities.
Means Tested Care Fee
The Australian Government will assess the financial situation of the resident to determine whether they are able to pay towards the cost of care. The assessment is done via Centrelink who require an up-to-date record of your income and assets to determine an appropriate fee. Your chosen facility may provide this form to you, or you can find it online. If you choose not to complete this form, you will be subject to the maximum fee.
The mean test fee is reviewed quarterly which is why it is important to ensure your Centrelink or Department of Veteran Affairs (DVA) records are up to date.
Fees can vary greatly depending on your financial situation. Some residents will not have to pay a means tested fee whereas others may have a high fee. If this is the case for you, it is possible to hit either the annual Means Tested Fee cap of $30,574 or the lifetime cap of $73,378. Both these amounts are indexed and current as at 1 January 2023.
Once the annual limit has been reached, the Means Tested Fee will cease for the remainder of that year, and restart on the anniversary of moving into care. The fee will cease altogether once the lifetime cap is hit.
Entry Costs – Refundable Accommodation Deposit (RAD) / Daily Accommodation Payment (DAP).
Much like buying a home, the entry cost for each facility will vary depending on the type of accommodation, facility location, room specifications and amenities provided.
Most facilities will advertise the entry cost for each type of room on the My Aged Care website.
The entry cost can be paid in the following ways:
- A lump sum, known as the Refundable Accommodation Deposit (RAD).
- Interest only payment on outstanding RAD amount (currently set at 7.06% pa until 31 March 2023) known as a Daily Accommodation Payment (DAP), or
- A mixture of both a part lump sum payment (RAD) and part regular interest payment (DAP) on the outstanding RAD amount.
For those that have assessable assets under $186,331 at the date of entry, you may not have to contribute towards the entry cost.
Your financial situation will determine which option is appropriate for you. Do you need to sell the home and how much should keep in the bank to cover ongoing costs are common questions which can be answered by an appropriately qualified specialist.
Seeking advice from a qualified financial adviser can help you understand the different impacts that these options have on your situation and provide you with insights prior to making these decisions.
Additional Service Costs
These can include anything from the cost of haircuts, physiotherapy, Foxtel and newspapers, even an extra glass of wine or beer with dinner. Not all facilities will charge for these services, but it is always worth asking if there are.
Personal Costs
In addition to the above costs which are paid to the Aged Care facility, residents generally have some personal out of pocket costs to consider including pharmaceuticals and private health insurance to name a few.
Understanding the financial implications.
Any decision regarding Aged Care will have financial implications. If you are unsure of the costs involved, general information can be found via the My Aged Care website. Alternatively, seeking advice from a qualified Aged Care Specialist can help provide you with the fees relevant for your situation. Please refer to our other articles on further steps that should be considered or taken when looking at aged care.