Nursing Home Payments Explained

Posted on April 15, 2019.

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Seeking the right home for yourself or elder loved one is big decision and paying for care can be confusing.

The amounts elders or family are required to pay for residential aged care and the subsidies available from the Australian Government depend on each individual’s situation and their needs.

A number of factors affect the amount you pay for aged care, including the type of accommodation you prefer and the kinds of care you may need in your new home, says aged care admissions coordinator, Sara.

On applying to an aged care provider, you will be asked to give relatively detailed information on your financial situation. To assist with the costs associated with providing care and accommodation, most residents will pay these fees and charges:

Basic Daily Care Fee

Payable by all residents regardless of their financial status, the Basic Daily Fee contributes to daily living expenses such as food and refreshments, supply of toiletries, linen and laundry, and use of electricity and water.

“The basic daily fee is calculated at 85 per cent of the single aged pension,” Sara explains.

“And because the fee is indexed to the pension, it does change twice a year, in March and September. It is payable to your aged care provider usually fortnightly or monthly and can be arranged by a direct debit from your bank account.”

Accommodation Payment

Sara tells us the Accommodation Payment is the cost of your room, which used to be known as the accommodation bond.

“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,” she said.

“The amount payable is dependent on an assets and income assessment by Centrelink. When you enter into an aged care agreement, you can choose the way you pay for your accommodation.”

Means Tested Care Fee

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

“If you have a higher income stream income, from a property, or an overseas pension for instance, then is where the means tested fee comes in and this fee is deemed by the Government,” Sara said.

The outcome of this assessment determines how much you may or may not need to pay towards the cost of your care. These costs may change over time depending on your needs and circumstances and there are annual and lifetime limits in place: the maximum capped annual means tested care fee for aged care accommodation currently is just over $27,500.

“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 care costs in full.

Your payment options

Depending on the outcome of your income and assets assessment by Centrelink, residents may be eligible to have their room costs met in full by the Government, subsidised in part by Government or be required to make payment in full.

If you are paying full accommodation costs for a room, this is called a Residential Accommodation Deposit (RAD) which is refundable after discharge. You can make an interest only payment on the unpaid RAD called a Daily Accommodation Payment (DAP) otherwise, a combination of part payment of the RAD and a DAP payment can be made.

If you a paying a partial payment for your accommodation cost this is called a Residential Accommodation Contribution (RAC) and this is also refundable after discharge.

The RAC works in two ways - as an interest only payment called a Daily Accommodation Contribution (DAC) or a combination of part payment of your RAC contribution and DAC daily payment.

Talking to your provider

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.

“How you pay is entirely up to individual circumstances, you can make a larger upfront payment or make a smaller regular contribution,” Sara said.

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 who may experience difficulty in paying for their care.

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 financial 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 aged care homes or help in your own home, call us during office hours on 1300 313 000 or visit juniper.org.au.