Aged Care

What is Aged Care?

There may come a time when you or your loved one require assistance with day-to-day care. The level of care needed will vary - such as being able to continue at home with some government support services or requiring the additional support offered by an aged care facility. Here we consider what is required to enter an aged care facility and how the cost is structured and paid.

How does it work?

Steps to aged care

1. Decide on the services needed. Can the person stay at home and receive some in-home services through a home care package? Do they need to move into an aged care home? What will they need when they get there?
2. Get assessed. You need to check eligibility requirements and apply. If the person is new to aged care, they can apply online at www.myagedcare.gov.au or through the Government Aged Care Service line on 1800 200 422. If successful, they will be referred for a face-to-face assessment. This is done at home.
3. Assessment outcome. You will then find out what government funded services you are eligible for.
4. Find a service provider. You can apply to be on a waiting list prior to the assessment outcome. This may expedite the process once you are ready to apply. Aged care service providers vary greatly in services offered and cost. It’s important that you get some assistance throughout this process to help you choose the most appropriate aged care home.
5. Determine fee structure. This is discussed in more detail below. If the person is eligible for an aged care home, they may have to pay: a basic daily fee, a basic daily fee and accommodation costs, or a basic daily fee and a means-tested care fee and accommodation costs.‍
6. Enter into agreement with aged care provider and move in. You have a grace period of 28 days after the move to sign the contract. This will outline terms such as room type, costs and additional services to be included.

Costs involved

• Basic daily fee: This fee pays for day-to-day services such as meals, cleaning, facilities management and laundry. Everyone pays this fee and the current maximum daily fee is $56.87 per day ($20,757.55pa) or equivalent to 85% of the single person rate of the basic age pension. For home care, the maximum daily fee is $11.71 ($4,274.15 pa) and dependent on the level of in-home support you receive. These fees are updated on March 20 and September 20 each year, in line with the Age Pension.
• Means-tested fee: For those who exceed the income and asset assessment, an additional fee each day will be payable. This fee is used as required for personal and clinical care such as bathing,dressing, grooming and / or specialised nursing services and medication assistance. There is an annual cap and lifetime cap for this fee for both in-home and residential care. This helps to avoid over-charging by service providers.
• Accommodation: You can choose to pay a refundable lump sum deposit, rent-style daily payments or a combination of both. If the person receive government assistance (part or full), accommodation costs will be subsidised. If self-funded, the rates of accommodation costs can be negotiated directly with the aged care provider.
• Additional service fees: This fee covers ‘hotel-like’ services such as pay TV, hairdressing, preferred toiletries etc. This will depend on each provider and what is on offer. These costs are outside the standard fees.

What are the benefits?

• An aged care facility can provide you or your loved one with the level of care that is needed.
• Paying accommodation costs as a combination of a lump sum and a daily fee may free up cashflow to pay other costs.
• Refundable accommodation deposits are asset test exempt from the age pension means test which may increase the age pension entitlement.
• The family home can be maintained for up to two years before it will be included in the asset testing for age pension and aged care fees.
• The home value is capped for means test assessment purposes.
• Renting out the home can provide rental income to help meet living and aged care costs.
• A refundable accommodation deposit / charge will be paid to the Estate upon death.

What should I be thinking about?

• Navigating aged care providers, services and fees can be complex. Financial advice is highly recommended to determine the best outcome for your needs.
• The aged care fees paid are determined by the Department of Human Services and will reduce the income available for normal living expenses.
• The Aged Care facility must be notified within 28 days from entry, the combination of lump sum and daily fee that will be paid.
• The deposit/charge must be paid within 6 months of entry to the Aged Care facility. This gives you time to sell down assets / restructure as required.
• If payments are made periodically, the Aged Care facility may charge interest on these amounts.
• The combined income and asset assessment form must be completed, or no government subsidies will be applicable on the aged care fees.
• The person entering aged care can take up to 52 nights of social leave per year from the aged care facility. Anything beyond this can mean the government subsidy on fees can be lost.
• If you change aged care facilities and take more than 28 days to enter a new one, you will be treated as a first-time entrant.
• Rental income from the home will be assessed for the calculation of age pension and aged care fees.
• The home will be considered an asset for means testing purposes after two years. This will affect aged care fees.
• Centrelink must be notified of any significant changes, within 14 days, for a review of entitlements.
• Centrelink payments are subject to legislative change which may impact your entitlement in the future. A review of your income requirements will be needed should this happen.

This information is of a general nature. It does not consider your personal objectives, needs or situation. It does not represent legal, tax or personal advice and should not be taken as such. If it has been provided to you with a Statement of Advice (SoA), you should rely on the personal advice in the SoA.

Care has been taken to provide up to date and accurate information relating to the subject area however BR Advice Pty Ltd (ABN 30 612 056 523, AFSL 488655), Blue Rock Private Wealth Pty Ltd (ABN 95 166 927 055, AFSL 452733), Blue Rock Private Wealth (Melb) Pty Ltd (ABN 48 652 202 698, ASIC AFS No. 1298365) and their representatives make no representation as to its accuracy or completeness.

Published: September 2022.

© Copyright 2022.