How Aged Care Fees Work

Posted on December 17, 2018.

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How much you pay for a nursing home is determined by many factors including your circumstances and how much you can afford to contribute. The home you choose, its rooms, location, size, facilities and services will also have an effect on aged care pricing and amounts you pay.

Don’t worry, you won’t be expected to pay all these fees, because, though some are mandatory, others are optional or dependent on the services you choose. Some people do not have to pay the full cost of care and accommodation if they cannot afford it and the government has means to make payments too, but more of that later.

Broadly speaking there are four costs that affect the amount you may need to pay: the basic daily fee, the accommodation payment, means-tested fee and extra service fee.

The Basic Daily Fee

Everyone who moves into an aged care home will be asked to pay this fee. This is a payment towards the costs of day-to-day living of care home residents and covers such things as meals, cleaning, laundry and utilities like power, water, heating and cooling.

The Department of Human Services determines the basic daily fee and it is currently set at 85 percent of the single aged pension and applies even if you are in a couple.

That rate is the maximum allowable fee for government-subsidised aged care and equates to $50.66 a day as at September 2018 for non-remote areas.

Because it is linked to the age pension which should rise each year to account for costs of living, the basic daily fee rate is calculated twice a year – in March and September. For more information visit the Department of Human Services’ website.

Accommodation Payments

Aged care homes can charge for the accommodation they provide, in addition to the basic daily fee. Your income and assets determine the amount you will be asked to pay and the assistance you may receive to help pay for your accommodation.

Currently, if your annual income and assets are below $48,500 your accommodation costs will be met in full by the government.

Means Tested Care Fee

Your aged care home may also ask you to pay a Means Tested Care Fee towards your cost of care, which is based on your Centrelink income and assets assessment.

The outcome of this assessment determines how much you may or may not need to pay towards the cost of care. These costs may change over time depending on your needs and circumstances but there are limits in place: the maximum capped annual means tested care fee for nursing home costs currently is $27,232.33.

This annual payment is indexed twice a year by Government and it’s worth remembering that your care fees may increase if your care needs change or if there is a change to your income and assets. No matter what the changes are in your circumstances, you will not be asked to pay more than the cap.

It’s also worth noting that if you choose not to give any financial information, including your pension and Medicare details, or have not provided this information on admission to a home, you may be required to pay your means tested aged care costs in full.

When you enter into an aged care agreement, you can choose the way you pay these nursing home costs.

You can make this payment in a lump sum, by regular payment (usually monthly or fortnightly) or a combination of the lump sum and periodic payment.

Depending on your circumstances, the Australian Government may pay your accommodation in full or in part, or you may pay an amount agreed with your aged care home.

Once the Government has advised the amount you can pay, you can discuss payment methods with your aged care provider.

You have a number of choices – you can either make a refundable lump-sum payment, a daily instalment payment (much like a rental-style payment); or a combination of the lump-sum and daily payment.

This is entirely up to individual circumstances, for example, you can choose to pay a larger lump-sum and a smaller daily payment.

In a nutshell, with acronyms

The Accommodation Cost is the room price, and dependent on your assets and income assessment you may:

  • Be eligible to have your accommodation costs met in full or part by the Federal Government
  • Be required to pay the full accommodation costs.

If you are required to pay part of full accommodation costs you will have three payment options via:

  • A lump sum fully refundable deposit called a Residential Accommodation Deposit (RAD)
  • An interest only payment on the unpaid RAD called a Daily Accommodation Payment (DAP)
  • A combination of a portion of the RAD and a DAP payment on the unpaid portion of the RAD.

Extra Services Fees

Some aged care homes are approved to offer extra services that will attract additional payments from those who prefer to pay more for things like higher standard or larger rooms, specialised services or facilities like a cinema, gymnasium or library. Aged care homes must publish their costs for additional services or fee-for-services options. Please note some shared rooms can have extra service status.

What if I cannot afford to pay?

If you have no assets, this does not mean you cannot apply for residential care.

All applications are individually assessed based on the needs of each person, and the Government has made arrangements to help people work out how to pay for nursing home care if they are experiencing difficulty in covering the costs.

An aged care provider like Juniper is committed to providing for people who may be experiencing financial hardship.

More assistance

It is advisable that you do seek independent financial advice regarding your specific circumstances. The Government’s My Aged Care website and other sites offer information and calculators to enable to you to make informed decisions.

The friendly Juniper team is here to help. To find out more about our aged care homes or help in your own home, call us during office hours on 1300 638 022 or email juniper@juniper.org.au.