Residential Aged Care: The Costs
Now more than ever, ensuring quality aged care for loved ones is a priority concern for many Australians. With that in mind, we’ve partnered with Alteris Financial Group, specialists in aged care financial advice, to present a three-part series on financing residential aged care. In this Part 1, we look at how much residential aged care costs.
How much does residential aged care cost?
When a loved one needs to go into care their family is often met with a range of offers and costs. These can vary between aged care providers and are broken down into three areas: accommodation payments, living costs and additional services to be considered. How much a family will pay depends on the resident’s financial circumstances.
Accommodation payments provide for the resident’s room or bed in an aged care home. A person who has assessed assets and income above a certain threshold will be asked to pay a Refundable Accommodation Deposit (RAD) for their room. The RAD is set by the aged care provider and is listed on myagedcare.gov.au. The RAD varies depending on the room type, features and location. It is 100% refundable and guaranteed by the Commonwealth Government.
A resident is not required to pay the RAD in full. This lump sum can instead be calculated as a Daily Accommodation Payment (DAP) that is charged monthly. Interest is applied to the lump sum at a rate set by the government, which is currently 4.10% p.a. (as at 1 August 2020). It is also possible to pay a combination of part RAD and part DAP.
If the person entering care has assessed assets and income below a threshold, they may be required to pay a contribution for their accommodation cost. This is determined by the government and helps to ensure that no one is disadvantaged or denied care because of their financial circumstances.
There are two main daily living costs that can be payable by a resident.
The first is the Basic Daily Care fee, which is payable by all residents. This cost helps to provide for various day-to-day services such as food, bedding, laundry and cleaning. This cost is set at 85% of the single age care pension, less supplements, and, as at 1 August 2020, is $52.25 per day.
The second cost is a means tested care fee (MTCF), which can also be paid by a resident. This is a co-contribution to cover the resident’s personal and clinical care costs. It is not payable by everyone as it is assessed based on the resident’s assets and income. The MTCF has yearly and lifetime caps so it is not an open-ended payment.
Additional services are now being offered to residents by many aged care homes for a fee. They provide niceties to make life more comfortable for the resident. Examples of additional services include subscription TV, a daily newspaper, internet, aromatherapy, allied health services, alcohol, or a selection of gourmet meals. Residents can sometimes select the individual additional services they want or opt out completely depending on the operator.
Where can I find more information about residential aged care costs?
Moving to residential aged care can impact a person’s age pension, the resident’s home, care and accommodation costs, as well as their cash flow. It’s important that you are aware of all of your options for your loved one and how they apply to their particular circumstances.
This information wasfirst published by Alteris Financial Group, who are specialists in the area of aged care financial advice. We have partnered with Alteris Financial Group to provide our clients with financial aged care advice via their Lifestyle and Care team.
If you need financial advice about residential aged care costs for yourself or a loved one, please call us anytime on (02) 8268 2900 for an obligation-free chat.