I continued to ask on a very
regular basis both inside and outside my work environment about the
complexities of residential aged care. So, I thought I would take the
opportunity in this week’s blog to quickly do a recap on some of the issue and
try to explain the basics.
When a person is no longer able to
continue living independently in their own home, they may need to move into a
residential aged care facility or will require assistance to remain living in
their own home.
These facilities and services are
heavily regulated by the government to ensure that care is accessible to all
Australians. The government will subsidise the cost of care and the person will
also pay a fee or fees based on their assessable income and assets.
Before being eligible to move into
a government subsidised aged care facility, a person needs to have approval
from an Aged Care Assessment Team (ACAT).
Note: In Victoria these are called Aged Care Assessment Service (ACAS).
This is a team of health
professionals, such as doctors, nurses or social workers, who will assess a
person’s needs and provide information, advice and assistance to older people
who are having difficulty living at home.
People moving into an aged
care home can be asked to pay:
A basic fee – paid by all people who
receive residential care. For some people, this is the only fee they may need
to pay. This fee equates to 85% of the single basic age pension
A means tested care fee – an extra
contribution towards the cost of care that residents may need to pay, on top of
the basic fee, depending on income and assets. Annual and lifetime caps have
been set to limit how much a person will need to pay in means tested care fees.
The annual cap is $27,532.59 (as at March 2019) Once a resident
reaches the annual cap, they will no longer have to pay any means tested care
fee until the next anniversary of the date they first entered the aged care
The lifetime cap is $66,078.27 (as at March
2019). Once a
resident reaches the lifetime cap they will no longer have to pay any means
tested care fees. The Government will pay for your care costs. If a resident
was paying an income tested care fee for a Home Care Package before they moved into an aged
care home, the amount they have paid in income tested care fees will count
towards their lifetime cap.
The caps only apply to means tested care fees
in residential care
An accommodation payment – a payment
for accommodation in an aged care home. Some people will have their accommodation
costs paid in full or in part by the Australian Government. Others will need to
pay the accommodation price they negotiate with their aged care home.
Refundable Accommodation Deposit (RAD) – a lump sum payment
for accommodation in an aged care home. This is the price of a room, in lump
sum form, that residents have agreed with their aged care home to pay.
Residents can pay their accommodation price in full by RAD or they can pay via
combination of a smaller RAD and Daily Accommodation Payment (DAP) or they can
pay in full by DAP.
Daily Accommodation Payment (DAP) – the daily payment for
accommodation in an aged care home. The aged care facility will work out the
DAP based on a legislated formula that converts the RAD price to a DAP price.
The resident makes this payment on a regular basis, up to a month in advance,
similar to paying rent.
Daily Accommodation Contribution (DAC)– the daily
contribution for accommodation in an aged care home that residents would need
to pay, if they also receive Australian Government assistance with their
accommodation costs. Residents make this contribution on a regular basis, up to
a month in advance, similar to contributing to rent.
Fees for extra or additional optional services
can be asked to pay an extra payment if a higher standard of accommodation is
chosen or additional services such as hairdressing or pay TV in rooms is
How do I know what my fees will be?
Everyone entering an aged
care home for the first time from 1 July 2014 will need to complete and lodge
an income and assets
assessment form which will
be used to determine their costs. You must lodge this form even if you
currently receive a means-tested income support payment from Centrelink or the
Department of Veterans’ Affairs.
The Australian Government
will conduct your income and assets assessment. They will advise you and the
aged care home of the fees that your service provider can ask you to pay.
If you do not complete
and lodge the income and assets assessment form, you can be asked by your
service provider to pay the maximum daily means-tested fee and/or an
accommodation payment. Also, you would not be eligible for any Australian
Government assistance towards your aged care home costs.
Residential aged care is extremely complicated. If you are not sure about your situation or the situation of a loved one please do make sure you talk to an expert who can provide the guidance that you will need.
PK believes people have the right to accurate, affordable and unbiased information that addresses all aspects of their preferred retirement lifestyle, thereby giving them the opportunity to make informed decisions that will empower them to live out their lives with dignity, certainty and security.