When considering aged care for yourself or a loved one, one of the biggest questions is: Can I afford it? The first step in answering this is understanding the various aged care fees and costs, particularly accommodation expenses.
What are accommodation costs?
Accommodation costs cover a resident’s room or bed in an aged care home.
A means test is conducted upon becoming a permanent aged care resident. This is based on your financial situation as of your date of permanent entry. For couples, the assessment includes the assessable assets and income of both partners.
There are three categories that determine accommodation costs:
- Low means – fully concessional/supported resident: If you are assessed under this category, the government will cover your accommodation costs.
- Low means – partially concessional/supported resident: You will not pay the full market rate for accommodation but will contribute an amount based on your assessed assets and income. This amount may increase or decrease as your financial situation changes. The maximum daily contribution is $69.79 (indexed).
- Accommodation-paying resident: You will pay for your accommodation at the market rate.
If you have been assessed as a low-means resident, your accommodation costs will always be supported by the government unless you move. However, the level of support may change between full and partial assistance.
In addition to accommodation costs, there are other aged care expenses you may need to pay.
Basic Daily Fee
This fee is payable by all residents to cover day-to-day services such as meals, laundry, and cleaning. It is set at 85% of the basic aged care pension for a single person.
Means-Tested Care Fee
This co-contribution helps cover a resident’s personal and clinical care costs. The government assesses how much a resident can afford to pay based on their assets and income.
Extra/Additional Services Fees (from 1 July: “Higher Everyday Living Fees”)
Many aged care homes offer additional services for a fee, providing extra comforts to enhance residents’ quality of life. This fee is set by the aged care home, and the government does not contribute to its cost.
What fees will you pay?
Low means – concessional/supported resident
- Accommodation:
- 100% concessional: The government will pay your accommodation costs.
- Partially supported: The government will assess how much you can afford to contribute towards your accommodation costs.
- You will pay the basic daily fee.
- You will initially have $0 means-tested care fee. However, if your financial situation changes in the future, you may be required to pay a means-tested care fee.
- You will need to pay for medicine and may also have to cover other services, depending on what is agreed upon with the aged care home.
Accommodation paying resident
- Accommodation:
- You will be required to pay an Accommodation Payment, determined by the residential aged care home. This amount is listed on the My Aged Care website, where you can search by location or provider.
- You can choose to pay this as a lump sum (Refundable Accommodation Deposit), a daily payment, or a combination of both.
- You will pay the basic daily fee.
- You may have a means-tested care fee. As your financial situation changes in the future, this fee may increase or decrease.
- You will need to pay for medicine and may also have to cover other services, depending on what is agreed upon with the aged care home.
What if I can’t afford care – financial hardship?
Aged care is designed to be affordable for everyone, with safety nets in place to ensure you can continue to receive the care you need as your financial situation changes.
Financial hardship assistance helps cover aged care costs. If you are eligible, Services Australia may pay for expenses such as accommodation costs, the means-tested care fee, and even the basic daily fee. However, financial hardship assistance does not cover extra service fees or additional service fees.
Eligibility for financial hardship assistance
To qualify for financial hardship assistance, you must meet specific criteria to lodge an application with Services Australia. Eligibility is assessed based on:
- Your current assets, which must be below the threshold (currently $44,811 per person).
- Whether you or your spouse have given away cash or assets in the past five years.
If you have a spouse, your home will be exempt from asset calculations while your spouse continues to live there. If you do not have a spouse living at home, you may be wondering whether to sell or keep your family home. More information is available in a previous article, written by Alteris Financial Group, here: https://alteris.com.au/should-i-keep-or-sell-the-family-home-when-entering-aged-care/
When financial hardship assistance may apply
If you are unable to afford your aged care costs for reasons beyond your control, financial hardship assistance may help. One common example is when you co-own a property with someone other than your spouse, and that person does not meet the protected person criteria to make the property exempt. In such cases, it may be considered unreasonable to force the other owner to sell or mortgage the property.
Seek financial advice first
If you think you may need to apply for financial hardship assistance, seek professional aged care financial advice from Alteris’ Lifestyle and Care Team before making any changes to your financial situation. This includes:
- Gifting cash or assets
- Changing ownership of assets
- Making an accommodation payment.
We are here to help, every step of the way
Alteris’ specialist division of financial advisers are accredited in aged care advice and can talk you through all available options and explain the various financial considerations. Their team can also provide full support with ensuring the fees and pension are correct by working directly with your accommodation provider, Services Australia and the relevant government departments. Learn more about Alteris’ accredited aged care financial advisers.