SEARCH FOR AN
AGED CARE HOME
How much you pay for residential aged care depends on your financial situation, but you won’t be denied care if you have limited income and assets. You may be asked to pay one or more of the following for your residential aged care:
The maximum basic daily fee is 85% of the single person rate of the basic Age Pension. From 20 March 2015, the single rate of the basic Age Pension is $782.19 per fortnight, and 85% of the single rate of basic Age Pension is $664.86 per fortnight or $47.49 per day. This applies even if you are a member of a couple. This rate increases on 20 March and 20 September each year in line with changes to the Age Pension.
The amount of your means- tested care fee (if any) will be calculated by the Department of Human Services based on an assessment of your income and assets. There are annual and lifetime caps in place to limit the amount of the means-tested care fee you will need to pay. As at 20 March 2014 the annual cap was $25,000 and the lifetime cap was $60,000.
The amount of your accommodation payment (if any) will be determined by the Department of Human Services based on an assessment of your income and assets. If you are required to make a payment, you will need to agree the amount with the service provider. The amount that a service provider can ask you to pay is subject to a maximum, which was $550,000 on 4 May 2015. The current maximum amount can be confirmed on the Aged Care Pricing Commissioner website. If a service provider wants you to pay more than this amount they must get the approval of the Aged Care Pricing Commissioner before they can do so.
If you have to make an accommodation payment, you have 3 choices:
There is an "equivalence" between the lump sum and daily amounts in the sense that one can be converted to the other and vice versa by applying a set formula. Basically, the daily amount equals the lump sum multiplied by a rate, called the “maximum permissible interest rate”, and then divided by 365. The "maximum permissible interest rate" is calculated by deducting 3% from the annual "general interest charge rate" for the relevant day under section 8AAD of the Taxation Administration Act 1953. The latter rate is set and published quarterly and the current rate can be found on the Australian Taxation Office website. It was 9.36% for the April to June quarter of 2015, so it follows that the “maximum permissible interest rate” during that period was 9.36% less 3% = 6.36%.
So the calculation to convert a lump sum of $100,000 to a daily rate using the above "maximum permissible interest rate" is as follows: daily rate = $100,000 x 0.0636 / 365 = $17.42
Some aged care homes offer a higher standard of accommodation and/or services than they are required to provide. These fees are not subsidized.
The amount you have to pay will largely depend on an assessment of your income and assets. It’s reasonably complicated and there are a number of rules, thresholds, limits and deeming provisions. However, the following diagram prepared by the Department of Social Services is a useful starting point. The takeaway points are:
To estimate the likely fees that you will have to pay, the Department of Social Services has created a very useful Residential Care Fee Estimator for people who enter residential aged care after 1 July 2014.
Please see the following pages of this Aged Care Guide for further information: