Moving into aged care is a big step. One of the areas that many older people can often be unsure or confused about is the financial cost of aged care. If this is you, you may be unsure about exactly how much you’ll have to pay for aged care, when you’ll have to pay it, and how much is covered by the government. This handy article will answer all your questions about the cost of aged care – so, read on.
Costs and funding
Aged care homes are subsidised by the Australian Government, to ensure aged care is affordable for all Australians – around $65,000 each year for each permanent aged care home resident. This amount increases each year. Subsidies based on your care needs are paid directly to the home. If you are eligible, you are expected to contribute to the cost of your care and accommodation if you can afford to do so.
To get an estimate of your likely fees, call My Aged Care on 1800 200 422 or use the aged care homes Fee Estimator on the website.
Costs you may need to pay
Fees are payable for every day you are in your aged care home, and are generally paid fortnightly or monthly. They may include:
- A basic, daily fee that covers living costs including power, meals and laundry. For some people, this is the only fee they need to pay. The Department of Veterans’ Affairs (DVA) will pay this fee for eligible former Prisoners of War (POW) and Victoria Cross (VC) recipients.
- Means-tested care fee – if you have income and assets over a certain amount, you can be asked by the Department of Human Services (DHS) to contribute an amount based on your income and assets assessment towards the cost of your care. Eligible former POWs and VC recipients are exempt from paying this fee.
- Accommodation costs for your accommodation in the home. The Australian Government may pay these costs in full or in part for some people, while others will need to pay the price agreed with the aged care home. Your income and assets assessment will determine which costing model applies to you.
- Fees for extra services – such as if you choose a higher standard of accommodation or additional services above your assessed care needs or the care and services your aged care home must provide. Your care needs will be assessed within four weeks of you moving into an aged care home using a tool called the Aged Care Funding Instrument (ACFI). This will help you to understand what care and services the home can and cannot charge you for. The fees vary from home to home so check with your aged care provider for details of these services and the fees that apply.
Your financial assessment
To determine your eligibility for government assistance and whether you need to pay a means-tested care fee, you will need to undergo an income and assets assessment. This process takes time, so arrange this assessment with DHS as soon as possible. Eligible members of the veteran community may have their assessment undertaken by DVA.
To apply for your income and assets assessment, you need to complete the Permanent Residential Aged Care Request for a Combined Assets and Income Assessment (SA457) form. This is available from DHS by calling 1800 227 475 or downloading a copy from the website. Once you have submitted this form, it will take at least two weeks to receive information about your fees. If you haven’t received information by this time, contact DHS on 1800 227 475 or DVA on 1800 555 254. The advice contained in this letter will be valid for 120 days, and you should take this letter with you to any discussions you have with potential aged care homes. If there is a change in your circumstances, your fee advice letter will need to be reissued by DHS or DVA after you have notified them about this change.
You won’t be eligible for government assistance unless you complete this assessment, and may have to pay the maximum means-tested care fee and an accommodation payment (up to their maximum published room price).
Once you have moved into your aged care home, DHS will send you a letter outlining the maximum fees you may be asked to pay, including the basic daily fee, the means-tested care fee and the accommodation contribution, if applicable.
There are three options:
- No accommodation costs if your income and assets are below a certain amount, as the Australian Government will pay these costs.
- An accommodation contribution, where you pay for part of your accommodation costs and the Australian Government pays the rest
- An accommodation payment, where you pay the full cost for your accommodation
DHS will advise which applies to you. If a payment is required from you, you have 28 days from the day you move into the home to decide on your payment method, which can include:
- Lump-sum refundable accommodation deposit (RAD) or refundable accommodation contribution (RAC)
- Rental-style payments known as a daily accommodation payment (DAP) or daily accommodation contribution (DAC)
- A combination of both lump-sum and rental-style payments
You must pay your accommodation costs by the rental-style payment method until you make a firm decision as to your payment method.
To find out more about accommodation costs charged by individual service providers, go to the My Aged Care website. You may be able to negotiate with your aged care home for a lower price than the maximum advertised price.
Financial hardship assistance
If you are having difficulty paying your care and accommodation costs for reasons beyond your control, financial hardship assistance is available. Depending on your situation, you can apply for financial assistance with your basic daily fee, means-tested care fee and/or accommodation costs. More information is available from the My Aged Care website, or call 1800 200 422.
The DHS Financial Information Service provides basic information about managing your finances and is a free confidential service. Call the DHS on 132 300 and say, ‘financial information service’ when prompted.
Click here to discover more about the steps to enter an aged care home.