Aged Care Costs – The 3 most common questions answered

Aged care affordability – your questions answered

How will my loved one pay for accommodation and ongoing care costs when entering care?

It’s one of the most common questions we are asked, and the answer always depends on financial assets, cashflow requirements and the plan for the family home.

In this next webinar, aged care specialist Kerri Mendl will answer our most common questions and share some tips on how we help families feel comfortable with the financial decisions ahead.

Please join us and register for our webinar as we explore these questions in depth and answer your questions live.

How should I pay my aged care cost?

When moving into residential aged care, families are faced with numerous costs that include:

• An accommodation payment that pays for their selected room
• A basic daily care fee which is payable by everyone in care
• A means tested care fee that is based on a person’s assets and income
• An extra or additional services fee which may be charged by the facility

There are several ways to fund the accommodation payment:

• A Refundable Accommodation Deposit (RAD) often referred to a lump sum payment or
• A Daily Accommodation Payment (DAP) often referred to as an interest payment or
• Any combination of the two

Residents have 28 days after entering permanent residential care to advise their aged care provider how they wish to pay their accommodation cost. This is why it’s so important to have a thorough and informed discussion with a financial adviser who specialises in aged care at the start of the process to ensure you are clear on the options and understand what affordability in the shorter- and longer-term could look like.

Will I be a low means/concessional resident?

Pensioners (full or part) are assessed on their financial situation by Services Australia on the day they enter care, using the financial details Centrelink has on file for them.

If the person entering care, or their partner, owns a home or a retirement village unit, Services Australia will require them to complete a form to determine whether the home will be included in the assessment.

If the resident is not receiving a government means-tested pension, Services Australia will require personal and financial information in the required aged care form to avoid them being assessed as ‘means not disclosed’.

This assessment will determine if the resident is classified as a low means/concessional resident and, the DAC they will be required to pay (if any).

If I pay my accommodation costs as a lump-sum will I be able to afford the future costs?

Accommodation costs can be paid in numerous ways, which includes a lump sum, daily payment or any combination of the two.  Although RAD payments are exempt for age pension purposes, they do count as an ‘assessable asset’ for aged care purposes which is counted towards the means-tested care fee payable.

It is important to start with a resident’s financial position and to understand important objectives to assist them and their family understand future financial and estate planning. In some cases, they may have investments which also need to be taken into consideration.

When helping residents understand future costs, we take them through all the scenarios for their options over a five year period. This includes aged care costs, age pension changes and the impact on bank balances of that time. By demonstrating all the possibilities, we give families the confidence to take the next step.

What’s next? Register to our webinar