The costs involved with residential aged care
When a family member has to move into residential aged care, the knee-jerk reaction can be to sell the family home.
But in fact, this doesn’t always have to be the only option. There is also the possibility of renting out the family home, and using the rental income to pay for the aged care accommodation.
The best scenario for the individual will depend on their assets, as this affects how much they have to pay for their care.
If the individual has assets over $157,987 they can be asked to pay a refundable lump sum deposit for their accommodation. This can be anywhere between $200,000 and $1 million. In some cases it can be an equivalent daily accommodation payment, or it may even be a combination of the two options.
A resident at any aged care facility will pay a daily fee for care, and then might also be required to pay a further fee for care and extra services depending on their assets.
The charges depend on the assets that the individual has (besides the family home). This could be shares, savings, or investment properties.
Once a care home has been chosen and the paperwork signed, the individual has 28 days to decide how to pay for their accommodation.
If they decide to choose the refundable accommodation deposit (RAD) there will be six months to pay, with interest added to the sum from the first day.
Each facility is expected to publish their RAD on the myagedcare.gov.au website. The RAD can be thought of as the value of the room that the occupant is living in.
The resident can choose to pay the RAD in total, or pay off the amount with the interest rate (currently 6.22 per cent) which is set by the government.
As the interest rate is high, it may be worth considering paying the RAD in total if possible. As well as being refundable, it can also work in your favour when it comes time for Centrelink to decide how much aged pension the resident has access to.
In terms of the basic daily fee, the amount is charged at 85 per cent of the single age pension. Currently this is $47.86 per day, leaving only a small amount of available cash for other costs. This is payable by everyone.
The other means tested fee for care depends on the financial situation of the resident. At most it can be $211.40 per day, capped at $25,731 per year.
The extra fees can vary and include ongoing or ad hoc charges such as pay TV or hairdressing services.
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