Aged care is something that most of us will have to at least consider at some point in our lives – and there’s a lot to consider when it comes to aged care. What kind of facility should you live in, where should you live, when should you make the move, and which facility is the best choice for you? While the answers to all these questions are highly personal, there’s one vital question that’s not – how will you afford aged care? What are the costs involved? The costs of aged care seem non-negotiable, so what happens if you need to access aged care facilities but can’t afford it? Read on to find out all you need to know.
You will be expected to contribute to aged care costs
While aged care costs are subsidised by the Australian government, you are still expected to contribute to the cost of aged care and accommodation if you can afford to. The government subsidises costs to the tune of around $65,000 each year for every permanent aged care resident, with the aim of making aged care affordable for all Australians. This amount is paid directly to your aged care facility and increases every year.
Here’s what you’ll need to pay
Obviously, fees apply for every day you spend in your aged care home, as you are paying for the accommodation and services that you access. Not everyone pays all of these fees, but they can include:
- A basic, daily fee to cover all your living costs (such as meals, power usage and laundry). Everyone will pay this fee; and for some people, it will be the only fee they pay.
- Means-tested care fee – an amount you will contribute to the cost of your care if you have income and assets over a certain amount.
- Accommodation costs to cover the accommodation in your home.
- Extra service fees to cover additional services above and beyond your assessed care needs, or if you choose a higher standard of accommodation.
But what if you can’t afford to pay these fees?
Keep in mind that you won’t be required to pay all these fees if you are not able to. The means-tested care fee applies only if you have income and assets over a certain amount; otherwise, you won’t need to pay it. The extra service fees won’t apply to most people, as you can choose whether to use extra or higher-level services or not. And the Australian Government may pay your accommodation costs in full or in part, depending on your income and assets. In fact, there are three options when it comes to accommodation costs:
- 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
As well, if you are an eligible former Prisoner of War (POW) or Victoria Cross (VC) recipient, the Department of Veterans’ Affairs (DVA) will pay your basic daily fees for you, plus you will be exempt from paying the means-tested care fee.
How will the government determine my level of income and assets?
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 Services Australia 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 Services Australia 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. You won’t be eligible for government assistance unless you complete this assessment.
Once you have moved into your aged care home, Services Australia 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.
How to find out what your likely fees and costs will be
To get an estimate of your likely fees before you undergo this assessment, call My Aged Care on 1800 200 422 or use the aged care homes Fee Estimator on the website.
To find out more about accommodation costs charged by individual service providers, go to the My Aged Care website.
Financial assistance provided by the Government
The Australian Government can also provide you with financial assistance in a number of ways:
- The Aged Pension
- Disability Support Pension for those with a permanent physical, intellectual or psychiatric condition that stops you from working
- Pension Loans Scheme – this provides a voluntary non-taxable fortnightly reverse mortgage loan for those who own real estate in Australia, that can be used to supplement your retirement income
- Mobility Allowance to assist people who need to travel for particular (approved) activities but are unable to use public transport alone due to an illness, injury or disability.
If you really can’t afford to pay for the cost of your aged care, you can access financial hardship assistance, where the Australian Government will pay some or all of your fees and costs. Click here to find out what financial hardship assistance is available. You may also be able to access rent assistance and concession cards through Services Australia.
The important thing to remember is that you will never be denied a service that you need just because you can’t afford to pay for it. The Australian Government aims to ensure all older people have fair access to aged care – after all, you’ve earned it.
Where to get further help
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.