Residential Aged Care
Formal residential aged care is accessible to people who require assistance with the activities of daily living.
Residents with the minimum care needs are usually able to move about indoors independently but may require some help with personal care and medication management.
Higher levels of personal support and nursing care are available in aged care facilities.
Some privately operated facilities offer the equivalent of aged care at commercial fee rates.
In Victoria, these facilities are “Supported Residential Services.”
What is the cost of living in aged care?
Do we have to sell the family home to finance aged care?
Formal residential aged care is accessible to people who require ongoing nursing care and/or personal support with the activities of daily living.
The first step towards entry to Commonwealth regulated aged care is an Aged Care Assessment (“ACAS”).
Only people who are assessed as requiring ongoing nursing care and/or significant personal support with the activities of daily living, may become permanent residents of Commonwealth regulated aged care facilities.
The distinction between Commonwealth regulated “Low Care” in “hostels” and ““High Care” in “nursing homes” was abolished from July 2014.
But each aged care facility determines the type and level of care to be offered to residents in each section of the home.
Some aged care residents may be unable to walk safely unassisted.
These ‘high care’ residents could be accommodated close to staffing for the extensive nursing care and intensive assistance with the activities of daily living they need.
In practice, residents with high care and nursing needs could be accommodated only in the ‘high care’ area of an aged care facility.
Residents who are independently mobile but experiencing dementia could be accommodated in a secure section with minimal risk of wandering away.
New aged care residents who need only the minimum level of personal support are expected to walk to the dining room for meals and communal activities.
The personal care attendants and nursing staff help these ‘low care’ residents with the activities of daily living including supervision of medications.
These residents could have independent access to courtyard gardens and indoor recreation lounges.
Residents whose health deteriorates so that they need more extensive personal support and/or additional nursing care can usually receive that additional care within their aged care facility.
A move to the ‘secure dementia’ section or the ‘high care’ area might be required.
Some privately operated facilities offer the equivalent of aged care at commercial fee rates.
In Victoria, these facilities may be registered as “Supported Residential Services”.
A typical SRS would provide the equivalent of ‘low care’ only for residents who could walk independently indoors. Some SRS are staffed and equipped to cater for people requiring additional support.
Make an enquiry now email info@financialcareservices.com.au … or call us on +61 3 9808 0338
What is the cost of living in formal aged care?
The cost of living in an aged care facility comprises the personal care costs and the hoteling costs.
The hoteling costs are divided into accommodation costs and the basic costs of providing day-to-day services.
Costs of basic services
All residents in Commonwealth regulated aged care pay the Basic Daily Fee.
The Basic Daily Fee is set as 85% of the Single person rate of Age Pension.
You could consider the Basic Daily Fee as paying for meals, recreational activities, cleaning, laundry, gardening, heating, air-conditioning and the other basic day-to-day costs of operating the aged care facility.
Accommodation costs
Aged care residents who have more income than the Age Pension and/or own significant assets contribute to the costs of their accommodation.
Residents with little additional income and no home to sell, or other significant assets, could be asked for an Accommodation Contribution.
Aged care residents who own a home not occupied by their spouse or another protected person, must pay their full accommodation costs.
Permanent residents of aged care facilities who have significantly more income than a full Age Pensioner and/or substantial assets are required to pay their full accommodation costs also.
The cost of aged care accommodation is a matter for ‘negotiation’ between the aged care facility and the new resident.
The maximum Accommodation Room Price for each bed in the aged care home must be published. The manager could negotiate a lower price than the published maximum.
Residents may choose to pay all or part of the Accommodation Room Price as a Refundable Accommodation Deposit or pay interest on the unpaid portion of the Accommodation Room Price.
The amount of your Accommodation Room Price “ARP” has a major impact on your cost of living in residential aged care.
A consultation with Christine Hopper at Financial Care Services could provide guidance about negotiating the Accommodation Room Price and the implications of agreeing a substantial ARP.
Care fees
In addition to the hoteling costs, aged care residents are expected to contribute to the cost of nursing care and personal assistance provided in the aged care home.
Ongoing daily care fees for residential aged care are set by the Commonwealth and include a means tested care fee assessed by Centrelink.
Residents with substantial income or assets are required to pay all or part of the costs of their nursing care and personal assistance.
The cost of nursing care and personal support is determined in accordance with the Commonwealth’s ACFI scale.
The actual amount that a resident pays for nursing care and personal assistance cannot exceed her actual care cost.
Once Centrelink have determined that the resident has a Means Tested Amount greater than the Maximum Accommodation Supplement, she may be required to pay a daily care fee.
The daily care fee is calculated as the lesser of her care costs, and her Means Tested Amount minus the Maximum Accommodation Supplement.
Residents and their partners, who choose not to disclose their full asset and income situation to Centrelink, cannot have a Means Tested Amount determined.
These residents must pay their full care costs until the maximum care fees have been accrued.
The total amount that an aged care resident could pay in care fees is capped at $32,720 (October 2023) for a care year and $78,525 (October 2023) over a lifetime.
A consultation with Christine Hopper at Financial Care Services could estimate daily fees based on your financial situation.
Commonwealth government subsidies for residential aged care
The Commonwealth subsidizes the aged care accommodation costs for residents with few assets and limited income. The Commonwealth could also partly subsidize the care costs of residents who have some assets and/or a significant level of income.
Residents with less than $58,500 (October 2023) of assets and only the Age Pension or DSP for income, pay only the basic daily fee.
These pensioners are not asked to contribute to the costs of their accommodation or their nursing care and personal support costs.
The Commonwealth pays the Maximum Accommodation Supplement for these residents.
People with some assets and/or more income than just the Age Pension, are required to pay part or all of their aged care accommodation costs.
To ensure that the aged care facility receives at least the Maximum Accommodation Supplement, the Commonwealth could pay a reduced Accommodation Supplement in respect of a financially constrained resident.
The resident would pay her Accommodation Contribution and the government would pay a supplement to make up a total accommodation payment to the aged care facility of the Maximum Accommodation Supplement of $66.94 per day (October 2023).
No Accommodation Supplement is payable in respect of by an aged care resident who still owns a home not occupied by a ‘protected person’.
The Commonwealth has prescribed rules about excluding a new resident’s former home from the asset assessment when a family member has been living with the person entering aged care.
Other residents with a Centrelink assessed Means Tested Amount of not less than the Maximum Accommodation Supplement are not entitled to any Accommodation Supplement and must pay the full costs of their aged care accommodation.
When an aged care resident’s ‘Means Tested Amount’ is low enough for the Commonwealth to pay some Accommodation Supplement then the Commonwealth would also pay that resident’s full care costs.
Residents who are not eligible for any Accommodation Supplement pay at least part of their nursing care and personal support costs.
The Commonwealth would contribute the remainder of the care costs.
Once the aged care resident has paid the care fees equivalent to the annual care fee cap $32,720 (October 2023), the Commonwealth would pay her care costs for the remainder of that care year.
Her care fees would start again on the anniversary of her entry to permanent residential aged care.
Once her total care fees for residential aged care and any earlier home care, reach the lifetime cap $78,525 (October 2023), the Commonwealth would then pay all of her care costs for the remainder of her lifetime.
Aged care residents who have substantial assets and/or large income would pay all of their accommodation costs and a significant part of their nursing care and personal support costs.
Your actual care fee depends on your Means Tested Amount and your care needs. Centrelink will recalculate your Means Tested Amount when your circumstances change.
A consultation with Christine Hopper at Financial Care Services could estimate daily fees and accommodation costs based on your financial situation.
Christine can show you how your costs of living in aged care could change if you sold your former home.
Remember that the aged care homes need you to pay your fees and accommodation charges promptly each month.
Christine Hopper at Financial Care Services can assist you to consider your aged care funding options and cash flow analysis to help you prepare to pay your aged care bill each month.
Christine Hopper at Financial Care Services is an independent advisory service specialising in aged care entrants and retirees of modest means.
Her core value in strategic lifestyle advice is the responsible management of assets and claiming of relevant Social Security benefits.
Christine at Financial Care Services understands both the DVA and Centrelink Pensions systems and the Commonwealth aged care fee arrangements.
What does a Supported Residential Service (SRS) cost?
Each SRS sets its own fee scale.
Many SRS facilities charge a flat all-inclusive weekly fee for residents who can walk to the dining room.
An additional weekly fee could be required where the resident is provided with a ‘high level’ of personal assistance or nursing care.
Some SRS facilities require the resident to “purchase” an apartment and then pay a lower weekly fee, such as 85% of the single rate of the Age Pension.
How does the cost of an SRS compare with the fees for formal aged care?
A typical SRS charges a weekly fee similar to the minimum care fee rate plus hoteling charges for an aged care home plus an allowance for some personal assistance and medication supervision.
Additional fees would be charged by the SRS if the resident is provided with nursing care and/or extensive personal assistance but not every SRS offers these higher levels of care.
A consultation with Christine Hopper at Financial Care Services could compare the costs of living in an SRS or formal aged care based on your financial situation.
Do we have to sell the family home to finance aged care?
The aged care fees need to be paid each month.
If the resident’s income including any means tested pension, is insufficient to cover the fees then the former home might be leased and/or an asset sold to generate adequate financial resources.
The Centrelink means tested fee for aged care and the DSP, Age Pension or Service Pension could be impacted by the leasing or sale of the former home.
A consultation with Christine Hopper at Financial Care Services could provide guidance about the impact of leasing, or selling, the former home on the means tested aged care fees and the DSP, Age Pension or Service Pension in your particular situation.
A consultation with Christine Hopper at Financial Care Services could estimate daily fees based on your personal situation.
Make an enquiry now email info@financialcareservices.com.au … or call us on +61 3 9808 0338