RESIDENTIAL AGED CARE
You may be faced with helping a loved one make the decision to move into a residential aged care facility. Often this situation arises unexpectedly when the older person has had a fall or a health scare. Or it may be that your loved one is physically healthy but is losing capacity due to a condition such as dementia. In this case you may have to make the decision for them to enter a residential aged care home.
Contemplating residential aged care is extraordinarily complex, and the consequences of getting it wrong are high, whether it be financially or in quality of life.
So, whilst we can’t ease the emotional pain, we can help you navigate the aged care maze by explaining the steps that need to be taken and some of the terms you will need to understand.
1. Accessing Residential Aged Care
It is not enough that your loved one needs to enter Aged Care, they also need to be formally assessed. This assessment is carried out by their state-based Aged Care Assessment Team to determine they need aged care, before they can move into an aged care facility.
2. Choosing a Residential Aged Care Facility
This is often a very difficult step as you will be faced with many decisions when looking at facilities with vacancies but here are some things you should consider:
- Do you need specialist care such as a Dementia ward? – some facilities don’t cater for the special needs of dementia patients.
- What is the staff to resident ratio? – some facilities may be reluctant to answer this question, but you do not want to send your loved one to a facility where there are few staff to look after a large number of residents.
- Is there always a registered Nurse or GP available? – there should be adequate medical care on offer for your loved one to access.
- What activities does the facility have for residents? – you need the aged care facility to offer activities that your loved one is interested in. Some people don’t mind watching TV, others will want to do activities and some may even value a ‘happy hour’.
- Does the facility charge an extra services fee? – you need to ask for details on what services are provided and whether the services are optional or not.
- End of Life options – does the facility provide care and support at the final stages of life or will they need to move your loved one to another facility.
3. What are the costs?
Typically, there are 4 fees to consider, but the amount you pay will vary based on your circumstances. Some fees are the same for all residents and other fees will change depending on your income and assets. If you are on a pension, and the type of pension, can also impact the amount you are required to pay.
- Basic Daily Fee
Everyone pays a basic daily fee as it helps pay for living costs such as meals, cleaning, power and laundry. As of February 2022 this is currently $53.56 per day which is equivalent to 85% of the maximum single age pension. This fee can change in line with Aged Pension indexation which occurs March & September each year.
- Accommodation Payment
This is essentially the ‘price of the room’. Depending on your situation you may need to pay a refundable accommodation bond (RAD) or a daily accommodation payment (DAP) or a combination of the two. Every aged care home sets its own accommodation pricing but must publish their maximum accommodation prices on the My Aged Care website. Some rooms are available for residents with low financial assets which are described as Low Means Residents. If your assets and income are very low, then the accommodation payment is fully paid by the Australian government. Or you may be asked to contribute a Refundable Accommodation Charge (RAC), or a daily accommodation charge (DAC) or a combination of the two.
- Means Tested Care Fee (MTCF)
This is an additional contribution towards the cost of care that some may have to pay based on your level of assets and income. Not everyone will need to pay it and as at February 2022 the rate can be between $0 and $259.26 per day. The upper rate is subject to change in line with Age Pension indexation which occurs March and September each year. The MTCF is subject to annual and lifetime caps. Once you have reached your lifetime limit you will no longer be charged this fee. Your means tested care fee does not remain fixed, it can change over time as your financial circumstances change. For example, as you sell down assets to pay aged care fees the MTCF can also reduce.
Additional Service Fees
Many aged care homes offer additional hotel-type services that you have to pay for. These services may include things like a preferred brand of toiletries, access to paid TV services, or arranging a hairdresser.
Some homes allow you to pick and choose what additional services you would like, so you only pay for what you use. Others may have a package of additional services they provide, and some of them must be agreed to as a condition of living in the home.
You and your provider must agree on a fee for additional services before you start receiving them. However, you can only be charged for additional services that you can make use of or benefit from. Because additional service offerings are specific to the provider, the fees for these services are set by the provider. They are not subsidised by the government.
Your home will be able to tell you what additional services they provide, their associated costs, and whether they are mandatory services that come with living at the home.
4. Determining how much the Government will pay towards your Aged Care costs
- If you own or part own your home AND receive a full or part payment from Centrelink or DVA, such as Age Pension, Disability Support Pension or a Service Pension you will need to complete a Residential Aged Care Property form.
Centrelink will collect details on your home and add this to the value of your other assets and income streams, so they can calculate how much the Government will pay towards your residential aged care.
- If you do not own or part own your home but receive a full or part payment from Centrelink or DVA, such as Age Pension, Disability Support Pension or a Service Pension then you don’t need to fill out any forms for Centrelink. They will use the information they have on your assets and income streams to work how much the Government will pay towards your residential aged care.
- If you are not receiving a full or part payment from Centrelink or DVA, such as Age Pension, Disability Support Pension or a Service Pension then you have two options. Which option you take will depend on your level of assets and income.
1.You can provide your income and asset details to Centrelink and they can calculate your Means Tested Care Fee. Depending on your level of assets and income, your fees could be less than your cost of care.
- 2. You can choose not to provide your income and asset details to Centrelink and the fees you pay will be equal to the cost of care.
KEY DECISIONS WE CAN HELP YOU WITH
- Keep or sell the family home
- Pay a Refundable Accommodation Deposit (RAD) or pay the Daily Accommodation Payment (DAP), or a combination of both
- Enter as a Low Means Resident and pay a Refundable Accommodation Contribution (RAC) or pay the Daily Accommodation Charge (DAC), or a combination of both.
- If both parents need care, decide if one goes in as Low Means and the other as full fee payer.
- Calculate whether it is more beneficial to provide or not provide details of your assets and income to Centrelink if you a full fee paying resident.
Trying to navigate Aged Care without expert guidance can be difficult, time-consuming and frustrating. Allowing an experienced, accredited financial adviser to help with the financial side of things can free you up to deal with what is an emotional decision.
Everyone wants the best care possible for their loved one but you need to know the financial details so you can be sure they can afford the aged care facility they like or choose.
Our accredited financial advisers, Michelle & Olivia, would be happy to have a chat to you about starting your Aged Care journey, either for yourself or on behalf of a loved one.
Please note that this is general advice only and there could be other scenario’s that don’t fit into any of the above. The contents are current to the date of publication only, and whilst all care has been taken in its preparation we accept no liability for errors or omissions. The application of the contents of specific situations will depend upon each particular circumstance. This publication has been prepared without taking into account the objectives or circumstances of any particular individual or entity is intended for information purposes only.