As our parents or loved ones grow older, it’s reassuring to know they’ll always be safe, comfortable and well looked after. The time may come when they need the security of residential care, and it’s important to be clear well in advance about what’s available and the possible costs.
In Australia, government subsidies ensure that everyone can access the care they need. However, to ensure the system is fair, people who can afford to contribute towards the costs are expected to do so. The processes, options and calculations can appear quite complex, so here’s a breakdown to help you find your way through the maze.
As places in residential care are heavily subsidised, the government allocates them to people most in need.
To access government-funded age care you’ll need to go through a two-part assessment process to assess your eligibility as well as allowing the Department of Health to understand your needs. “The assessment process starts with a simple eligibility check which you can do online or over the phone followed by an in-person assessment performed by the aged care assessment team (ACAT) or ACAS in Victoria.
“The assessor will determine if you are eligible and if so, the type of care you are eligible for.” says Yvonne Chu, Head of Technical Services at Australian Unity. “The types of care that may available to you include short-term care options, home care services and aged care homes. This will also be determined by ACAT.”
As part of their assessment, ACAT considers:
When preparing for the assessment you should:
There are many different aged care providers some are run by not for profits or religious organisations, some are privately run. Providers that receives Government subsidies are regulated by the Aged Care Quality and Safety Commission and needs to meet a strict set of quality standards.
“Each aged care provider delivers their services differently and charges different costs. It is imperative to look around and compare providers before deciding where to go.” Yvonne says. “You can find an aged care provider by looking at — myagedcare.gov.au — where each provider will provide details on what the services they offer, including costs. When you are researching for an aged care provider, key considerations include location, service offering, fit and whether the services meet your needs.
There are four different components in the cost of residential aged care:
1. The accommodation payment
This secures the accommodation and can be paid in three different ways:
The cost of RAD and DAP varies considerably from place to place and even bed to bed. A survey by the accounting firm StewartBrown found the average RAD across Australia was over $400,000. In major cities such as Sydney and Melbourne it can be significantly higher— a million dollars or more for accommodation in the equivalent of a five-star hotel.
The government has a low-means provision to ensure that people with limited income and assets can also receive the accommodation and care they need.
2. A basic daily care fee
This covers day-to-day living costs such as meals, laundry cleaning and power. It’s set at 85 percent of the maximum aged pension — currently $52 a day — and everyone has to pay this, whether or not they receive the old age pension.
3. Means-tested care fee
Set by the government according to the income and asset level of each resident, this payment covers personal care and nursing.
“Currently, the means-tested care fee is capped at $28,087.41 a year,” says Yvonne. “There’s also a lifetime cap of $67,409.85, but only people with very substantial assets would be asked to pay the maximum amount.”
4. Optional extra services fee
Some providers offer “hotel-style” extra services ranging from a glass of wine with your meals, linen tablecloths and quality cutlery to hairdressing and trips to the theatre. These extras have nothing to do with the quality of care you receive but, for those who can afford them, they can bring extra quality of life.
You could find your parent needs residential care quite suddenly — for example, after an illness or serious fall.
“The better prepared you are the more likely you are to find the right aged care provider you’d like in the area you choose,” says Yvonne. “Aged care fees can be complex and decisions you make in relation to your investment or your former home can impact not only the fee payable but also you Age Pension entitlements. It is important to seek advice to compare options so you can make an informed decision.”
For some people, having the initial conversation about aged care can be difficult, but going through the process to understand the costs and options of aged care means you’ll be able to find the right level of care for your parents or loved ones early on, and you’ll be prepared if they need to enter a residential home.