Aged Care Services FAQ
What are the fees and charges for aged care residential facilities?
Valid as at 1st April 2017 (reviewed every quarter)
There are 4 components to Aged Care Residential Fees:
- Daily care fees which every resident pays. These are pegged at 85% of the full age pension, currently $49.07 per day, and revised every March and September;
- Means tested daily fee which, as the name suggests, are calculated using a very complicated formula on the resident’s income and assets. These are calculated by Centrelink and residents are usually required to complete the relevant Centrelink form in order to be assessed for this fee. The fees range from $0 to $244.97 per day. There is an annual cap of $26,380.51 and a lifetime cap of $63,313.28. You can use the Government’s myagedcare fee estimator to estimate this fee. The means tested care fee is reviewed quarterly by Centrelink and changes with your financial situation;
- Additional fees (also called extra service fees, signature fees, additional service fees or capital refurbishment fees) which some facilities (but not all facilities) charge. These fees are set by the Aged Care Residential Facility and that facility must specify what is included in the fee.; and
- Accommodation Payment (what used to be called the bond). This can be paid to the facility in whole or in part as either cash which is called a Refundable Accommodation Deposit (RAD) or as a Daily Accommodation Payment (DAP). The DAP is calculated as an interest payment on the amount of Accommodation Payment that is not paid as a RAD. The interest rate is fixed by the Government, currently 5.78% per annum, and paid for each day in care. The RAD is guaranteed by the federal government and refunded when the resident leaves the facility. For example, if the Accommodation payment is $500,000, it can be paid wholly as cash and wholly as interest on the amount at the current interest rate of 5.78% which would be $79.18 per day. Alternatively, it can be paid partly as cash and partly as interest payments so if $200,000 was paid in cash, the daily interest payment on the remaining $300,000 would be $47.51 per day. The resident has 28 days to decide whether to pay wholly or partly in cash. The interest can be paid out of the RAD but that means that the DAP increases as the RAD reduces.
The RAD is guaranteed by the government and (the balance) returned to the resident or his or her estate when the resident leaves care.
What if a person cannot afford an aged care residential facility?
If the resident has low means, the resident may qualify for a supported bed. The term ‘low means’ is defined in the aged care legislation. If you have assets below the relevant thresholds, you will not be required to pay any bond (called an Accommodation Payment or Accommodation Contribution) at all unless you have an independent income source other than your pension. As at the date of publishing this article, the relevant asset thresholds are:
- for a single person below $47,500
- for a couple combined below $95,000.
If you have some, but not a lot, of assets and depending on whether you have an independent income source, you may be eligible for a partly supported bed meaning that you will be required to make a contribution towards the cost of your accommodation. This contribution is called an Accommodation Contribution. The amount you will be required to contribute depends on the amount of your assets and income. The relevant assets thresholds for a partially supported bed are:
- for single, assets from $47,500 to $162,087.20
- for couples combined assets from $93,000 to $324,174.40
The amount you pay towards your accommodation (whether you are paying nothing or something to begin with) changes with the resident’s financial situation whilst the resident remains in care .
If you qualify for a supported bed, you will not pay a means tested care fee unless your financial situation changes.
How is the home treated in the means test for aged care fees and charges?
The resident’s home is excluded for all of the asset thresholds mentioned above if a protected person will remain in the house. A protected person is a spouse or dependent child, a carer on income support who has lived there for at least 2 years or a close relative on income support who has lived there more than 5 years. If there will not be a protected person remaining in the home, the home is included and its value is capped. At the moment that cap is $159,631.20 which means that, if you own a home and no protected person will be remaining in it, you will most likely not qualify for a supported bed.
What is the difference between an aged care facility and a retirement village?
In an aged care residential facility, which used to be called a nursing home or hostel, care is provided to the residents according to their needs and it is included in the cost together with meals and most other living expenses. Retirement villages are primarily independent living units meaning that it is for people who can live independently and do not need care. It becomes confusing because some retirement villages provide meals and have some sort of care available, usually at additional cost. Most retirement village agreements have a provision in them saying that if your care needs increase, you can be asked to leave.
What is the difference in cost between an aged care facility and a retirement village?
An aged care residential facility is subsidised by the Australian Government. Because it is subsidised, you need to be assessed as eligible i.e. assessed as needing care. This is done through an ACAS or ACAT assessment. Most elderly folk who are struggling on their own at home will qualify. Being subsidised does not mean it is free – you have to pay if you can afford it but you only pay what you can if you have low means. See our FAQ above about the fees and charges
Retirement villages are not subsidised. You pay an entry fee (like buying a house or apartment) and you pay a monthly or weekly service fee. What you get for that service fee depends on the village. Some offer assistance in the home and some do not. There will be charges for the home assistance either within the service fee or separately. When you leave, most retirement villages take a percentage of the sale price or the original purchase price – and this could be as much as 40%. You also usually have to pay the monthly fee for a while after you vacate the village. We say to our clients that retirement villages are not an investment decision – they are a lifestyle choice. They are well suited to people who are feeling isolated or wish to enjoy village style living.