• Bill Savellis

Residential Fees for Age Care Explained

With increasing life expectancies and improvements in medical technology, we can all expect to have longer and more productive retirements. But there is still a high chance of needing help with daily living activities and medical care, especially at older ages.


Accessing support services does not always mean you have to move out of your home.


Help to stay in your home longer is available through home care services.


However, these services do not work for everyone, especially those living alone or with high care needs. For some people, a move into residential aged care may be a better alternative.


Careful planning ahead of time can make a big difference in options available and remove a lot of the stress when a decision needs to be made.


What does care cost?

The cost of care for someone in a residential service is government-regulated and government subsidised. The schedule of fees is updated regularly.


The cost of care can vary by the requirements and support required. In your consultation with our team, we can review the current schedule and subsidies you or a loved one may be eligible for.


The Federal Government currently spends over $18 billion a year on aged care. With the percentage of Australia’s population over age 85 set to triple over the next thirty years, the pressure on finances is increasing.


What do the fees pay for?

The range of fees and calculation methods may appear complex, but fees can be divided into four categories:

  • Accommodation Payment

  • Basic daily care fee

  • Means-tested fee

  • Additional services fees

Please see our article on Residential Aged Care fees for a more in-depth look at each of these categories.


The important things to know about the current rules are:

  • There is no distinction between low care and high care, so the accommodation payment rules apply to all subsidised residential care places

  • The accommodation payment is quoted as a lump sum (called a refundable accommodation deposit – RAD) and an equivalent daily fee (called the daily accommodation payment – DAP

  • Once you have accepted a place and signed the Resident Agreement, you will have 28 days to decide which fee option to pay

  • If you pay the lump sum RAD, it is fully refundable when you leave care, and the Federal Government guarantees repayment provided you have paid the RAD to an approved service provider

  • Depending on your income and assets, you may be asked to pay a means-tested daily care fee

  • This increases how much you pay and reduces how much the government pays for your care. This fee is capped over a year and your lifetime (both indexed).

  • If you moved into care before 1 July 2014, the rules are different

  • The previous rules continue to apply unless you move from one service provider to another (without a gap of 28 days or more) and choose to have the new rules apply

Considerations

Financial aspects are only one consideration when preparing for your care years. It is also essential to find the right care service at the right time.


Your available options may depend on your family arrangements, health requirements and availability at the care facilities. But if your finances are carefully planned, you will have more choices and greater control over where and how you live and receive care.


Advice from an adviser who is experienced in aged care can help you see the bigger picture and take into consideration:

  • Your family needs and estate planning considerations

  • Strategies to generate sufficient cash flow, including access to government benefits and concessions

If you think your plans need to be reviewed or you require further information, please book a chat with Bill below.


Let us take away some of the stress. Contact us today to make an appointment to discuss your current or future aged care needs.


Any information contained in this article is general information and has been prepared without taking into account your objectives, financial situation or needs. Before acting on any information in this article, Infocus Securities Australia Pty Ltd recommends that you consider whether it is appropriate for your circumstances. Information in this article was correct as of 28/11/2021.

Infocus Securities Australia Pty Ltd ABN 47 097 797 049 AFSL and Australian Credit Licence No. 236523 trading as Infocus Financial Advice and Infocus Money Management.