By Mark Teale
(Realise Your Dream)
I continued to ask on a very regular basis both inside and outside my work environment about the complexities of residential aged care. So, I thought I would take the opportunity in this week’s blog to quickly do a recap on some of the issue and try to explain the basics.
When a person is no longer able to continue living independently in their own home, they may need to move into a residential aged care facility or will require assistance to remain living in their own home.
These facilities and services are heavily regulated by the government to ensure that care is accessible to all Australians. The government will subsidise the cost of care and the person will also pay a fee or fees based on their assessable income and assets.
Before being eligible to move into a government subsidised aged care facility, a person needs to have approval from an Aged Care Assessment Team (ACAT).
Note: In Victoria these are called Aged Care Assessment Service (ACAS).
This is a team of health professionals, such as doctors, nurses or social workers, who will assess a person’s needs and provide information, advice and assistance to older people who are having difficulty living at home.
People moving into an aged care home can be asked to pay:
- A basic fee – paid by all people who receive residential care. For some people, this is the only fee they may need to pay. This fee equates to 85% of the single basic age pension
- A means tested care fee – an extra contribution towards the cost of care that residents may need to pay, on top of the basic fee, depending on income and assets. Annual and lifetime caps have been set to limit how much a person will need to pay in means tested care fees.
- The annual cap is $27,532.59 (as at March 2019) Once a resident reaches the annual cap, they will no longer have to pay any means tested care fee until the next anniversary of the date they first entered the aged care home.
- The lifetime cap is $66,078.27 (as at March 2019). Once a resident reaches the lifetime cap they will no longer have to pay any means tested care fees. The Government will pay for your care costs. If a resident was paying an income tested care fee for a Home Care Package before they moved into an aged care home, the amount they have paid in income tested care fees will count towards their lifetime cap.
- The caps only apply to means tested care fees in residential care
- An accommodation payment – a payment for accommodation in an aged care home. Some people will have their accommodation costs paid in full or in part by the Australian Government. Others will need to pay the accommodation price they negotiate with their aged care home.
- Refundable Accommodation Deposit (RAD) – a lump sum payment for accommodation in an aged care home. This is the price of a room, in lump sum form, that residents have agreed with their aged care home to pay. Residents can pay their accommodation price in full by RAD or they can pay via combination of a smaller RAD and Daily Accommodation Payment (DAP) or they can pay in full by DAP.
- Daily Accommodation Payment (DAP) – the daily payment for accommodation in an aged care home. The aged care facility will work out the DAP based on a legislated formula that converts the RAD price to a DAP price. The resident makes this payment on a regular basis, up to a month in advance, similar to paying rent.
- Daily Accommodation Contribution (DAC) – the daily contribution for accommodation in an aged care home that residents would need to pay, if they also receive Australian Government assistance with their accommodation costs. Residents make this contribution on a regular basis, up to a month in advance, similar to contributing to rent.
- Fees for extra or additional optional services – residents can be asked to pay an extra payment if a higher standard of accommodation is chosen or additional services such as hairdressing or pay TV in rooms is elected.
How do I know what my fees will be?
Everyone entering an aged care home for the first time from 1 July 2014 will need to complete and lodge an income and assets assessment form which will be used to determine their costs. You must lodge this form even if you currently receive a means-tested income support payment from Centrelink or the Department of Veterans’ Affairs.
The Australian Government will conduct your income and assets assessment. They will advise you and the aged care home of the fees that your service provider can ask you to pay.
If you do not complete and lodge the income and assets assessment form, you can be asked by your service provider to pay the maximum daily means-tested fee and/or an accommodation payment. Also, you would not be eligible for any Australian Government assistance towards your aged care home costs.
Residential aged care is extremely complicated. If you are not sure about your situation or the situation of a loved one please do make sure you talk to an expert who can provide the guidance that you will need.
PK believes people have the right to accurate, affordable and unbiased information that addresses all aspects of their preferred retirement lifestyle, thereby giving them the opportunity to make informed decisions that will empower them to live out their lives with dignity, certainty and security.
Tealey’s ambition is to change how people think about their retirement, he wants people to dream, plan and realise retirement is not defined by a magical age prescribed by the legislation.