Understanding aged care costs and funding options

How much does aged care cost? Unfortunately, there isn’t a simple answer. Navigating the aged care system in Australia can feel overwhelming – especially when it comes to understanding the costs involved and the funding options available. Here, we’ll shed light on this complex topic to help provide clarity as you take this important next step.

Government subsidies and your contribution

The Australian Government subsidises aged care facilities across the country to make care affordable and accessible. The amount the government contributes depends on your individual circumstances, including your assessed care needs and your capacity to pay.

While the government contributes significantly to nursing home costs, individuals are also expected to contribute to the cost of their care if they can afford it. This contribution comes in the form of various fees and charges, which are determined based on a means assessment. Begin the process with the My Aged Care assessment.

Types of aged care costs

There are several types of costs associated with aged care accommodation in Australia:

• Basic daily fee: Everyone in residential aged care pays a basic daily fee directly to their aged care home, which covers everyday services like meals, cleaning, and laundry. This fee is set at 85 percent of the single person rate of the basic age pension and is adjusted twice a year.

• Means-tested care fee: This fee is an additional contribution that some people pay towards the cost of their personal and clinical care. The exact amount is determined by a means assessment and varies depending on an individual’s income and assets. Notably, there are annual and lifetime caps on the means-tested care fee to limit the financial burden.
• Accommodation costs: These costs relate to your room in your chosen aged caring community. Depending on your means assessment, you may need to pay the full cost of your accommodation or make a contribution, while the government covers the rest. You have three options for paying your accommodation costs: a refundable lump sum, non-refundable daily payments, or a combination of both.
• Additional service fees: These fees cover optional hotel-type services that go beyond the minimum care requirements, like preferred brands of toiletries or paid TV channels. These fees are set by the provider and are not subsidised by the government.
• Extra service fees: Some aged care homes offer a higher standard of hotel-type services in “extra service” rooms or wings. If you choose an extra service room, you will have to pay a regular extra service fee, regardless of whether you use all the bundled services. Like additional service fees, extra service fees are not subsidised by the government.

What is a means assessment?

A means assessment is crucial in determining your eligibility for government assistance and the fees you will pay. Services Australia and the Department of Veterans’ Affairs (DVA) conduct means assessments for aged care.

During a means assessment, your income and assets are considered to determine your capacity to pay for aged care accommodation and 24-hour nursing care facilities. This includes your financial situation at the time of entering care and any changes that occur later. Based on your My Aged Care assessment, you will receive a ‘fee advice’ letter outlining the fees you can be asked to pay.

Assistance for financial hardship, and how to seek advice

If you find yourself unable to afford the nursing home costs, you can apply for financial hardship assistance. This assistance can cover various fees, including the basic daily fee, means-tested care fee, and aged care accommodation costs.

Navigating the complexities of aged care costs can be challenging. Seeking professional financial advice is highly recommended. Services Australia offers free financial information services, including the Financial Information Service (FIS) and Aged Care Specialist Officers (ACSOs). These services can provide personalised guidance and support in understanding your financial obligations and options.

Finding the right aged caring community

Once you have a clearer understanding of your financial situation and potential costs, you can start looking for an aged care residential home that meets your needs and budget. The My Aged Care website provides a useful ‘Find a provider’ tool, which allows you to compare different aged care facilities and their fees.

Remember: Understanding your options and planning ahead are essential for navigating residential aged care and ensuring you receive the care you need, within your financial means, when you need it.

We’re here to help

Whether you are seeking residential aged care, dementia care, palliative care or respite care services, Palm Lake Care is here to help. Simply Google ‘Palm Lake Care aged care near me’ to find your nearest community, or click here to learn more about the care that we offer. As always, please get in touch if you have any questions.