The Australian Government provides funding for residential aged care. While most residents contribute to the cost of their care, the amount of the contribution will depend on each resident’s income and assets.
MAIN TYPES OF FEES
Basic Daily Fee – For daily living expenses and is equal to 85% of the single rate pension.
Means Tested Care Fee – For personal and clinical care and is determined through an income and assets assessment.
Accommodation Fee – A contribution amount, or full payment, for your room depending on eligibility for Government assistance.
Basic daily fee
This fee is set by the Government and is equal to 85% of the single person rate of the basic age pension.
It helps pay for the day-to-day services and living costs such as meals, laundry and cleaning – the kind of things you pay for when living in your own home. Everyone is expected to pay a basic daily fee to cover these services.
The fee is paid directly to the Residential Aged Care Facility and applies for every day of residency, including days when you might be away overnight; for example, on holiday or in hospital.
|DID YOU KNOW?
If you are moving from a home care package into a residential aged care facility, any income-tested care fee you paid while you were receiving care at home will also be counted towards the annual and lifetime cap.
Means-tested care fee
This fee is determined by the Department of Human Services (Centrelink) through an income and assets assessment. The means-tested care fee is a contribution that some residents may need to make towards the cost of personal and clinical care. Personal care can include help with bathing, dressing and grooming. Clinical care can include services such as specialised nursing and medication assistance.
Some residents have this fee paid in full by the Government.
There are annual and lifetime caps on the amount any individual is required to contribute to means-tested care fees.
A contribution amount, or full payment, for your accommodation depending on eligibility for Government assistance.
Each Residential Aged Care Facility sets its own room pricing.
If you can afford it, the Government does expect you to pay for your own room. However, there is assistance with some or all the accommodation costs which is determined by the income and assets assessment. This is just like a mortgage payment or rent.
As a general guide:
- if you have an annual income below $27,730 and assets below $50,500, the Government will pay your accommodation fees;
- if you have an annual income above $27,730 and below $70,090 or assets above $50,500 and below $171,535.20, you will need to pay for part of your accommodation fees, the Government will pay the rest;
- if you have an annual income above $70,090 or assets above $171,535.20, you will need to pay for the full cost of your accommodation as agreed with the Residential Aged Care Facility.
HOW DO I WORK OUT WHAT I PAY?
Working out how much you will pay is a key step when deciding what aged care services are right for you. To determine what you need in terms of an income or means assessment visit this web page – https://www.myagedcare.gov.au/income-and-means-assessments/. There are a few questions to answer which will lead you to your next steps in the process.
In the meantime, you can work out estimated costs by visiting www.myagedcare.gov.au and search for the Fee Estimator.
Department of Human Services will issue a fee notification letter outlining any contributions you are required to make, which is valid for 120 days. This is sufficient time to find an aged care facility and enter into an agreement. The letter will include the
- Basic daily fee
- Means-tested care fee (if any)
- The accommodation fee (if any).
The fee notification letter is an important document and should be presented when meeting with a potential Residential Aged Care Facility.
|DID YOU KNOW?
If you are on a means-tested government pension, you do not have to complete the whole Income and Assets Assessment Form. The form will outline the areas that you are required to complete.
WHAT IF I CAN’T AFFORD IT?
If you are worried you might have trouble paying for your Residential Aged Care Facility fees, you can ask to be considered for financial hardship. Visit www.myagedcare.gov.au for more information.
If you are not eligible for Government assistance, the amount you pay will depend on:
- the price of the rooms at your preferred Residential Aged Care Facility;
- whether you choose a single or shared room, or opt to have a shared bathroom or ensuite;
- the size of the room; and
- the location.
While there is flexibility in how you pay for your accommodation, it is important to know that Residential Aged Care Facilities are required to publish their maximum accommodation fees for their various rooms. You cannot be charged more than the maximum published price.
DO I HAVE TO PAY THE FULL ACCOMMODATION FEE UPFRONT?
You have a choice in how you pay. The options available are:
- An upfront lump sum as a fully refundable accommodation amount (you get 100% returned to you).
- If the government is helping with the costs, this is called a Refundable Accommodation Contribution (RAC).
- If you are paying the full amount yourself, it is called a Refundable Accommodation Deposit (RAD).
- Rental-style daily payments as a Daily Accommodation Contribution (DAC).
- If the government is helping with the costs, this is called a Daily Accommodation Contribution (DAC).
- If you are paying the full amount yourself, it is called a Daily Accommodation Payment (DAP).
- A combination of both (for example, to make the total required of $300,000 you could choose to pay $100,000 as a refundable lump sum and the rest through smaller non-refundable daily payments).
IS IT BETTER TO PAY A REFUNDABLE ACCOMMODATION DEPOSIT (RAD) OR MAKE A DAILY ACCOMMODATION PAYMENT (DAP)?
|THE RAD IS FULLY REFUNDABLE
THE DAP IS NOT REFUNDABLE
A Refundable Accommodation Deposit (RAD) means you are paying for accommodation in aged care as a lump sum. It is Government guaranteed, therefore it is safe, and the RAD is 100% fully refundable. The Residential Aged Care Facility hold the RAD and earns, and retains, any interest gained on the amount.
A Daily Accommodation Payment (DAP) means that you will be charged a daily fee which is calculated at a Government maximum permissible interest rate (MPIR) as a percentage of the full lump sum room rate, which is non-refundable.
Whether it is better to pay the RAD lump sum, or the DAP daily rate, will depend on your individual set of circumstances. If you are unsure on the best option for you, seek financial advice from a financial adviser who specialises in aged care.
Comparison example on RAD/DAP payments on a room cost of $400,000.
|Payment options||Amount Paid on Entry – lump sum||Daily Accommodation Payment to be paid||Refund to be received|
|Full RAD Refundable accommodation deposit||$400,000||$0||$400,000|
|Part RAD Refundable accommodation deposit||$300,000||$11.23||$300,000|
|Part RAD Refundable accommodation deposit||$200,000||$22.47||$200,000|
|Nil RAD paid||$0||$44.93||$0|
*Based on MPIR of 4.10% (July 2020)
Select your room and enter the amount you would like to pay upfront and this will show the estimated Daily Accommodation Payment.
WHEN IS A LUMP SUM PAYMENT REFUNDED?
Coolibah Care refunds the lump sum payment in full on the first business day after the resident vacates.
ARE THERE ANY ADDITIONAL COSTS?
Coolibah Care offers additional services, such as hairdressing, which are not covered by a Government subsidy. Also, if applicable the cost of medications are charged directly by the pharmacy.