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Once you’ve chosen your home, it’s natural to start thinking about the costs involved. How much will I have to pay? What is covered by the costs? Are there flexible payment options? How do I get started?
The answers to these questions can vary depending on your personal circumstances. For example, the type of room you’d like and your personal financial situation can alter the amount you’re required to pay.
The best way to understand your specific situation, and the costs involved, is to get in touch with the Resident Liaison Officer (RLO) at your chosen home. The RLO can explain your options clearly and in detail.
Although the exact costs will vary for each person, we have outlined the basic terms and fee structures to help you get a sense of your options and how the general costs work.
There are two basic costs you need to consider: your care fees and your accommodation cost.
If you’re moving into any residential aged care home, you are required to contribute something towards your daily living expenses. The amount you pay depends on your financial circumstances: while the Australian Government subsidises a range of aged care services, there is an expectation that you will contribute to the costs of your care if you can afford to.
Every person pays a basic daily care fee. If the Department of Human Services determines you can afford to pay a little extra as a result of your income and assets assessment, you will also need to pay a means-tested care fee. Both fees are outlined below:
Determined by the Australian Government, this fee covers your basic daily living costs. The basic daily care fee is currently about 85 per cent of the basic age pension. The amount is indexed with the age pension and reviewed twice a year by the Australian Government. The basic daily care fee is paid by every person moving into a residential aged care home.
The things you receive for the basic daily care fee can include:
The Department of Human Services determines if you are required to pay this fee based on an assessment of your personal income and assets. The means-tested care fee is additional to the basic daily care fee (outlined above).
However, there are limits in place — including annual and lifetime caps —to control the amount you pay. Once you reach these limits, you cannot be asked to pay any more means-tested care fees.
If you are part of a couple, the assessment will consider half of your combined income and assets.
The assessment is based on your completion of an income and assets assessment form.
We strongly recommend completing the income and assets assessment form with the assistance of an independent financial adviser specialising in aged care, and lodging the form prior to your move to allow time for processing by the Australian Government.
If your completed income and assets assessment form is not actioned by the government prior to your move, you will be charged the full Daily Accommodation Payment for the room you have chosen to move into, as the government will be unable to subsidise any aspect of your accommodation costs. Once the income and assets assessment form is actioned, the fees relating to the full Daily Accommodation Payment will be refunded.
In addition to your care costs, you are required to contribute to the cost of your room.
Each of our homes offers a variety of rooms for you to choose from. The Resident Liaison Officer will be able to explain your specific options and the associated costs.
For some people, accommodation costs can be subsidised by the Australian Government. Others will need to pay the accommodation cost as determined by the home. The Department of Human Services will advise which option applies to you based on your income and assets assessment.
Once your accommodation cost is established, you have four flexible payment options to choose from:
The RAD is a one-off lump sum accommodation payment that is fully refundable at the end of your stay, minus any amounts you agree to have deducted.
Imagine the RAD like bond money in the context of a leasing agreement. As with bond money, you receive your RAD back at the end of the living arrangement. Your refund is guaranteed by the Australian Government.
For example, if you are paying your accommodation cost using the RAD, you would pay the full cost in an upfront lump sum within 28 days of moving into your room. If you decide to leave our home at any point, you or your family receive the sum of the lump payment back as a refund.
The DAP involves converting your accommodation cost into an ongoing daily payment that is billed monthly. The daily payment is charged periodically at the maximum permissible interest rate (MPIR) as set by the Australian Government.
Imagine the DAP like rental payments in the context of a leasing agreement. As with rent, you make an ongoing number of payments that are smaller than the initial outlay associated with a one-off lump sum outlined above (i.e. the RAD). As with rental payments, payments made through the DAP are not refunded at any point.
For example, if you are paying your accommodation cost using the DAP, you might make ongoing monthly payments to pay off the total accommodation cost. If you decide to leave our home at any point, you do not receive any of your payments back as a refund.
Combination payments involve making a one-off lump sum payment that is less than your total accommodation cost (RAD), and then making smaller ongoing payments (DAP).
You can choose the amount of the one-off payment (RAD) you would like to contribute initially, and we will calculate the ongoing payments (DAP) required to cover the remainder of the accommodation cost. As with the RAD, the amount of the one-off lump sum is refundable to you or your family if you decide to leave at any point.
For example, if you are paying your accommodation cost using a combination payment, you might pay half of the total cost upfront within 28 days of moving into your room. The remaining cost could be paid in 12 monthly installments. These 12 payments would be lower than the example above (see DAP), because of the contribution of the upfront RAD payment. If you decide to leave our home at any point, you or your family would only receive the initial upfront payment of half the accommodation cost as a refund (being the RAD component of the combination payment).
The drawdown is similar to a Combination Payment, but the Daily Accommodation Payment (DAP) is taken from your Refundable Accommodation Deposit (RAD). As a result, the refundable amount of your initial one-off lump sum payment (the RAD component of the accommodation cost) decreases over time. If you decide to leave our home at any point, the amount you or your family receive as a refund will be less than the amount you paid initially.
This tool is designed to help you understand the way your general payment options work and how they can affect one another. Remember, the Resident Liaison Officer of your chosen home can use their expertise to explain your specific costs clearly and in detail. We also recommend seeking the advice of an independent financial adviser specialising in aged care prior to making any financial decisions.
The RAD is a one-off lump-sum payment that is fully refundable at the end of your stay. The amount of RAD you pay up front can affect your ongoing DAP payments. Slide the cost up and down to get an indication of the relationship between RAD (1) and DAP (2) payments.
The DAP involves converting your accommodation cost into an ongoing daily payment that is billed monthly. Payments made through the DAP are not refunded at any point.
Using a drawdown payment method, the amount of DAP you pay is deducted from your initial lump-sum payment in the RAD. As a result, your refunded amount will be lower than your initial upfront lump-sum payment
The amount of money you pay upfront via the RAD is guaranteed as a refund by the Australian Government, minus any payments you agree to have deducted (via the drawdown, for example)
If you are unable to pay for care because of financial difficulties, you can apply for financial hardship assistance from the Australian Government. If your application is successful, the Government will pay some or all of your care fees and costs. Each case is assessed on an individual basis.
You can read more about how the Government can help lower your costs at My Aged Care.
For specific room costs and a more comprehensive breakdown of your options, please contact the Resident Liaison Officer at your chosen home.
Our knowledgeable team can explain your payment options, but we also recommend you engage the services of a financial advisor specialised in aged care to support your financial decision-making.
Alternatively, learn about the Next steps involved in moving into your home.