Understanding the fees associated with residential aged care can be daunting, particularly with looming due dates or the inevitable pressures associated with such a major life decision. The costs can be generally summed up in three main categories:
- the basic daily fee
- any income tested fees, and
- the accommodation payments.
Basic daily fee
The basic daily fee is an amount that everyone has to pay when living in residential aged care. The maximum daily fee is set by the Australian Government and reviewed regularly. The current maximum is 85% of the Age Pension.
Income tested fees
For those earning over a certain threshold, an additional amount may have to be contributed towards care at a residential aged care facility.
Accommodation payment
The accommodation payment amount varies depending on your personal financial circumstances (assets and income). This is usually the largest amount that needs to be paid and there are different payment options to choose from.
- Refundable Accommodation Payment (RAD)
This option is a lump sum payment of the entire accommodation payment amount. When you leave the facility, the balance of the RAD is refundable to you or your Estate, once all agreed fees have been deducted.
- Daily Accommodation Payment (DAP)
This option is similar to paying rent. A daily fee is calculated, which you may be required to pay monthly. This amount is non-refundable, so you or your Estate won’t be entitled to receive anything when you leave.
- A mixture of the above
You can choose to pay using a combination of the above options, depending on your personal financial circumstances.
If it is not possible for you to pay the accommodation fees, you can apply for financial hardship assistance and the government may lower the costs but this is difficult to obtain. Generally speaking, the decision on how to pay for the accommodation must be made within 28 days of moving into the facility.
The decisions that come with a move to residential aged care have significant financial, taxation and legal implications. It is highly advisable to speak with an experienced legal professional beforehand and if possible well before a person goes into care, so that you fully understand your choices.
Our experienced Wills and Estates team can provide you with advice and guidance with all your Estate Planning needs. Get in touch to make an appointment.
*The legal information in this article is of a general nature only and not intended to be legal advice to rely upon
