Residential Aged Care Fees & Costs: How Much Should You Pay?

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Families and individuals often find themselves grappling with questions like, “How much should I budget for aged care?” or “What financial commitments am I signing up for?” The emotional and financial burden of ensuring the best possible care for ageing family members can be overwhelming.

Aged care encompasses a range of support services and accommodation options designed to meet the unique needs of older individuals who may require assistance with daily activities or healthcare. Understanding Residential Aged Care Fees is paramount for anyone involved in making decisions about the care of a loved one or planning for your own future. Auspire Care, a registered aged care provider, will guide you from breaking down the various fee structures to shedding light on hidden costs with our goal to equip you with the knowledge needed to navigate the complex terrain of aged care expenses confidently.

Get ready to alleviate stress and make informed decisions, as this blog will address all your questions and doubts, allowing you to focus on enjoying a quality life in your later years.

Factors that Impact the Fees and Charges for Residential Care

Choosing the right residential aged care facility involves navigating a complex landscape of fees and costs. While the specifics can vary, several key factors significantly impact the overall price tag, such as:

  1. Location: The geographical location of the residential aged care facility can significantly affect costs. Facilities in urban areas or regions with a higher cost of living may have higher fees compared to those in rural areas.
  2. Facility Type and Quality: Different facilities offer varying levels of service, amenities, and care. High-end facilities with better amenities, quality of care, and specialised services may charge higher fees.
  3. Level of Care Required: The level of care needed by an individual plays a crucial role in determining costs. Facilities often categorise residents based on their care requirements, such as low care, high care, or dementia care, and charge accordingly.
  4. Accommodation Type: Residential aged care facilities typically offer different types of accommodation, such as single rooms, shared rooms, or deluxe suites. The choice of accommodation can affect costs.
  5. Government Subsidies and Funding: Government subsidies and funding available for aged care services can impact out-of-pocket expenses for residents. The availability and extent of these subsidies vary.

residential aged care fee and cost

Understanding Residential Aged Care Fees and Charges Melbourne

According to aihw.gov.au, 59% of individuals aged 65 and above use residential aged care, indicating a growing requirement for such facilities as people age. It is essential to comprehend the charges associated with residential home care and accommodation to prepare for future needs and ensure that sufficient resources are available.

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Basic Daily Fee

The basic daily care fee is a standard charge set by the government to contribute towards the cost of your residential aged care. It is calculated as 85% of the standard full-age pension and is subject to periodic adjustments. This fee is remitted directly to your aged care residence, typically fortnightly or monthly. It is applicable for each day of your residency, encompassing even those days when you might be absent overnight, such as during a holiday or hospital stay. As per the Department of Health and Aged Care, the Schedule of fees and charges for residential and home care from 1 January 2024 is $60.86 per day or $22,213.90 per year.

Means Tested Care Fee

The means-tested care fee is an ongoing fee towards the cost of your personal and clinical care, determined by assessing your financial situation, including income and assets. It is different for everyone, and not everyone will have to pay for it. Your means-tested care fee will be between $0 and $416.05 per day. You can use the aged care fee estimator on my aged care website to determine how much you will pay a means-tested care fee.

The government performs a means test to calculate how much you can contribute towards your care costs. The calculation of this care fee takes into account various factors:

  • Status of marriage
  • Status of homeownership
  • Occupants of the residence, such as a partner, caregiver, or close relative
  • Yearly earnings
  • Total assets in money
  • Superannuation status
  • Loans or debts

According to myagedcare, there are annual and lifetime caps for the means tested care fee. Once these caps are met, no additional payment is required. Adjustments to the caps occur on March 20 and September 20 annually. The relevant values are established at the time of reaching the caps, not at the commencement of care. As of September 20, 2023, the highest annual fee is $32,718.57, with a lifetime cap of $78,524.69.

Plan ahead!

Reach out to Auspire Care to explore estimated fees and understand how the means tested care fee applies to your unique situation.

Accommodation Costs

Aged care facilities offer various accommodation options, such as standard or shared rooms, single rooms, or premium rooms, each affecting overall costs. The maximum charge for a room or part of it is $550,000 unless the provider has approval to charge more. Accommodation expenses are determined by the facility and payment methods include:

  • Refundable Accommodation Deposit (RAD): A lump sum payment, refunded upon departure, is capped by government-set maximum amounts, preventing facilities from charging more than specified limits.
  • Daily Accommodation Payment (DAP): is a daily payment.
  • Combination of both.

The costs can vary widely, and individuals should choose based on their preferences and financial capacity. If your income is below $32,331.00 and assets are below $58,500, the Australian Government will pay for residential accommodation costs. If your income exceeds $81,063.32 or assets surpass $197,735.20, you’re responsible for the full negotiated accommodation costs at the aged care home.

What is the 28-day rule of aged care?

The 28-day rule in aged care refers to a specific timeframe during which residents in elderly care facilities have the opportunity to decide on their preferred payment structure for accommodation costs. If you have not decided during this period, non-refundable daily payments are required. Opting for a lump sum payment within this timeframe grants you at least six months from your entry date to fulfil the lump sum payment.

Additional Service Fee

The additional service fee covers services and amenities beyond the basic care needs provided by the aged care facility. These might include premium food options, additional recreational activities, enhanced room features, access to paid TV services, or arranging a hairdresser. Some facilities allow you to choose which additional services you want to use, so you only pay for what you need. The fee is determined by the aged care home you choose and is not subsidised by the government. Before commencement, a mutual agreement between you and your provider is required.

Extra service fee

The extra service fee is charged when you opt for additional hotel-like services or higher standards of accommodation in nursing homes. Homes with this status can charge a regular extra fee, which covers a bundle of extra services. You will have to pay this fee if you choose to enter an extra service room, regardless of whether or not you use the full bundle of extra services provided. The fee is determined by the chosen aged care home provider and may vary depending on the level of extra services offered. The provider sets the fee, and without a government subsidy, you will have to pay the full amount.

What to do if you can’t afford it?

1. Negotiate Fees and Payment Plans:
  • Discuss with Providers: Talk to the residential aged care provider about your financial situation. Some providers may be willing to negotiate fees or offer payment plans based on individual circumstances.
  • Explore Lower-Cost Options: Inquire about more affordable aged care accommodation options within the facility and any available Australian government-subsidised beds.
2. Explore Alternative Care Options:
  • Home Care Services: Consider home care packages or the Commonwealth Home Support Programme (CHSP) as an alternative to residential aged care. Home care may be a more cost-effective solution while allowing individuals to remain in their homes.
  • Community Support Services: Explore community-based support services that can provide assistance with daily activities, reducing the need for full-time residential care.

Empower your independence! 

Contact us today to explore how home care services and community support can be customised to shape your personalised care plan.

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What is Residential Aged Care?

Residential aged care refers to a type of long-term care provided to elderly individuals who require assistance with daily activities and healthcare in a specialised facility. These facilities, often known as aged care homes or nursing homes, offer a supportive environment for seniors who can no longer live independently due to health or mobility issues.

Residential aged care provides 24/7 assistance to elderly individuals who require a higher level of support and supervision than what they can receive at home. The service includes personal care assistance, medication management, therapeutic services, and meal provision. The primary objective is to create a safe, comfortable, and supportive living environment that caters to the physical, emotional, and social needs of residents. The service is regulated, and funding may come from government subsidies, individual contributions, and accommodation fees.

With the term ‘Individual Contribution‘ this question can click in your mind.

Do I have to sell my house to go into a Nursing Home in Australia?

In Australia, you generally don’t have to sell your house to enter a nursing home. When you move into a nursing home in Australia, the treatment of your home in relation to the pension assets test changes. The pension assets test is a means test used by the Australian government to determine an individual’s eligibility for a retirement pension.

Here’s what it means:

  1. Home Exemption Period: After you move into residential aged care, your primary residence (your home) is exempt from the pension assets test for a period of two years. During this exemption period, the value of your home is not included in the assessment of your assets for the purpose of calculating your Age Pension entitlement.
  2. Impact on Age Pension: Exempting your home from the assets test during the initial two years can have a positive impact on your retirement pension eligibility. If the value of your other assessable assets is below the threshold, you may receive a higher retirement pension payment during this period.
  3. End of Exemption Period: After the two-year exemption period, the value of your home may be included in the assets test. If you continue to own your home while receiving residential aged care, it could affect the assessment of your overall assets and, consequently, your Age Pension entitlement.

Smoothly transition into residential aged care with Auspire Care! This journey demands careful thought, and we’re here to help you manage your aged care costs while prioritising the quality of life for you or your loved ones. Remember that the cost of care should not be the sole determining factor; it is the quality of care, support, and comfort that truly matters. Reach out to us today for a personalised consultation!

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