Understanding the Three Main Types of Fees
Before entering residential aged care, it's crucial to understand the different fees involved. Not everyone pays all three types, but they form the basis of the Australian aged care funding model.
1. Basic Daily Fee
This is a standard fee that everyone entering a government-funded aged care home must pay. The fee contributes to your daily living costs, such as meals, laundry, cleaning, and heating. The amount is set by the government and is 85% of the basic single Age Pension. This fee is non-negotiable and applies to all residents, regardless of their income or assets.
2. Means-Tested Care Fee
This is an additional contribution towards the cost of your personal and clinical care, and it is determined by a financial assessment. Your income and assets are evaluated by Services Australia to determine if you need to pay this fee. The amount can range from \$0 to a maximum daily rate, with annual and lifetime caps in place to protect residents from excessive costs. The means-tested care fee will be calculated based on the details provided in your Income and Assets Assessment.
3. Accommodation Payments
The cost of your accommodation is means-tested and depends on your financial situation and the aged care home you choose. Depending on the assessment, you might not pay anything, pay a contribution, or pay the full cost. The room price is agreed upon with the provider before entry. Accommodation payments can be made in two ways:
- Refundable Accommodation Deposit (RAD): A lump-sum payment, similar to an interest-free loan to the facility. This amount is refundable upon leaving the facility.
- Daily Accommodation Payment (DAP): A daily fee based on a government-set interest rate applied to the equivalent lump-sum amount. This is non-refundable.
You can also opt for a combination of both RAD and DAP to pay for your accommodation.
The Role of the Means Assessment
To determine your means-tested care fee and accommodation costs, Services Australia conducts an Income and Assets Assessment. This financial assessment evaluates your capacity to contribute to your aged care costs. It considers various factors, including:
- Income: This includes your Age Pension, superannuation, financial investments, rental income, and other sources.
- Assets: This includes your home (which may or may not be counted depending on your circumstances), savings, investments, and other properties.
For couples, your combined income and assets are assessed and then divided equally between both partners, even if only one is entering care. This ensures a fair and equitable assessment process.
Exemptions and Financial Hardship
If you have limited income and assets, the Australian Government will provide additional financial assistance to cover your aged care costs. In cases of significant financial hardship, you can apply for a financial hardship supplement, which can assist with your basic daily fee, means-tested care fee, and accommodation costs. This ensures that no one is denied necessary care due to inability to pay.
Comparison of Fees and Funding
To provide clarity, the following table summarises the different aged care fees and how they are funded.
| Fee Type | Who Pays | Basis of Payment | Payment Method | Additional Notes |
|---|---|---|---|---|
| Basic Daily Fee | All residents | Set by government (85% of single Age Pension) | Daily, fortnightly, or monthly | Standard cost for day-to-day living |
| Means-Tested Care Fee | Some residents | Determined by means assessment (income and assets) | Daily, fortnightly, or monthly | Capped annually and over a lifetime |
| Accommodation Payment | Some residents | Means assessment and agreed room price | RAD (lump sum), DAP (daily fee), or combination | Government subsidises for low-means residents |
| Extra Service Fees | Some residents | Optional higher hotel-type services | Regular fee, not subsidised by government | Not all homes offer these services |
Government Funding and Subsidies
The Australian Government provides substantial subsidies directly to aged care homes. The level of subsidy is based on the resident's assessed care needs and their capacity to pay, as determined by the means assessment. This model ensures a safety net is in place for those who need it most.
Information on aged care costs, including fee estimators and provider search tools, is available on the My Aged Care website. For more details on the means assessment and to begin the process, it is recommended to visit the official Services Australia website.
The Application and Assessment Process
To receive government funding for aged care, a series of steps must be completed:
- Contact My Aged Care: Start by calling My Aged Care or visiting their website to set up an assessment.
- Assessment: A face-to-face assessment will be conducted to determine your care needs.
- Financial Assessment: A financial assessment is completed by Services Australia to determine your means-tested fees and eligibility for government support.
- Find a Provider: Once you have your assessment outcomes, you can begin searching for and comparing aged care homes.
- Enter Care: Work with your chosen provider to sign an agreement and move into your new home.
What if Circumstances Change?
If your financial situation changes after you move into an aged care home, it is important to notify Services Australia. A change in circumstances, such as receiving an inheritance, can impact your means-tested fees. A new assessment will be conducted to ensure your fees are adjusted accordingly. Similarly, if your care needs increase, a reassessment can be requested to ensure you receive the appropriate level of funding and support.
Conclusion
Navigating aged care funding in Australia requires a clear understanding of the shared responsibility between the government and the individual. The system is designed to be accessible through government subsidies, with the final cost to the resident depending on a means assessment. By being informed about the different fees—basic daily, means-tested care, and accommodation payments—and understanding the assessment process, you can confidently plan for future residential aged care needs.
