When a loved one needs to go into care the family is often met with a range of costs. These can vary between aged care providers and are broken down into three broad areas. There are accommodation payments, living costs and additional services to be considered, and how much is paid depends on the resident’s financial circumstances.

Accommodation payments

An accommodation payment provides for the resident’s room or bed in an aged care home.

A person who has assessed assets and income above a certain threshold will be asked to pay a Refundable Accommodation Deposit (RAD) for their room. The RAD is set by the aged care provider and is listed on myagedcare.gov.au. The RAD varies depending on the room type, features and location. It is 100% refundable and guaranteed by the Commonwealth Government.

This resident is not required to pay the RAD in full. This lump sum can instead be calculated as a Daily Accommodation Payment (DAP) that is charged monthly. Interest is applied to the lump sum at a rate set by the government. It is also possible to pay a combination of part RAD and part DAP.

If the person entering care has assessed assets and income below a threshold, they may be required to pay a contribution for their accommodation cost. This is determined by the government and helps to ensure that no one is disadvantaged or denied care because of their financial circumstances.

Living costs

There are two main daily living costs that can be payable by a resident.

The first is the Basic Daily Care fee which is payable by all residents. This cost helps to provide for various day-to-day services such as food, bedding, laundry, and cleaning. This cost is set at 85% of the basic age care pension for a single person.

The second cost is a means tested care fee (MTCF) that can also be paid by a resident. This is a co-contribution to cover the resident’s personal and clinical care costs. It is not payable by everyone as it is assessed based on the resident’s assets and income. The MTCF has yearly and lifetime caps so it is not an open-ended payment.

Additional services

Additional services are now being offered to residents by many aged care homes for a fee. They provide niceties to make life more comfortable for the resident. Examples of additional services include subscription TV, a daily newspaper, internet, aromatherapy, allied health services, alcohol, or a selection of gourmet meals. Residents can sometimes select the individual additional services they want or opt out completely depending on the operator.

Moving to residential aged care can impact age pension, the resident’s home, care, and accommodation costs as well as their cash flow. It’s important you are aware of your options and how they apply to your circumstances.