Understanding Aged Care in Australia
Aged care in Australia can be a complex and emotionally charged topic, especially when making decisions for yourself or a loved one. This guide aims to provide an overview of the key aspects of aged care, including how to access services, the costs involved, and important financial considerations. It is essential to seek advice from qualified professionals to ensure that your decisions are well-informed and tailored to your unique circumstances.
Accessing Aged Care
Before you can access most aged care services, you will need an assessment by the Aged Care Assessment Team (ACAT). This team, composed of healthcare professionals such as doctors, nurses, social workers, and therapists, evaluates your care needs and determines your eligibility for various services. You can initiate contact with ACAT through MyAgedCare by calling 1800 200 422 or visiting their website at www.myagedcare.gov.au. The assessment is free and can be conducted at your home or ACAT offices.
Care at Home (Home Care Packages)
Home Care Packages (HCP) offer a range of services to help you stay at home. To qualify for an HCP, you must undergo an ACAT assessment. The costs are based on your income and, if applicable, your partner’s income, as determined by Centrelink income tests. Full pensioners are exempt from income-tested care fees, while part pensioners and self-funded retirees are capped at a maximum contribution.
Residential Aged Care Fees and Charges
Residential aged care involves several fees:
Basic Daily Fee: Covers daily living costs such as meals and laundry, set at 85% of the Age Pension.
Accommodation Payment: Can be paid as a Refundable Accommodation Deposit (RAD), a Daily Accommodation Payment (DAP), or a combination of both.
Means-Tested Care Fee: Assessed based on your income and assets.
Additional Services Fee: For optional extras such as hairdressing or enhanced meal options.
What is a RAD and a DAP?
You can pay for your accommodation with a RAD (a lump sum), a DAP (a daily payment), or a combination of the two. RADs are market-priced and may require approval if they exceed $550,000. The DAP is calculated on any unpaid RAD amount at the Maximum Permissible Interest Rate (MPIR). RADs are government-guaranteed and will be refunded when you leave the aged care facility.
Daily Fees and Means-Tested Care Fees
The Basic Daily Fee is mandatory for all residents. The means-tested care fee is calculated based on your income and assets, with special considerations for the former home if a protected person lives there. There are caps on the means-tested care fee, ensuring it does not exceed the cost of care.
Affording Accommodation Payments
Low-means residents, those with assets and income below certain thresholds, may not need to pay an accommodation payment. Instead, they can opt for a Daily Accommodation Contribution (DAC) or a Refundable Accommodation Contribution (RAC).
Gifting Money or Assets
Gifting is allowed but must adhere to strict rules. Gifts exceeding $10,000 per financial year or $30,000 over five years will be assessed as assets, impacting your pension entitlement and other aged care costs.
Selling Your House
You may not need to sell your house immediately. Its value is exempt from pension calculations for two years after moving into care. Rental income from the home is considered income for pension and care fee assessments, and the property may be subject to Capital Gains Tax upon sale.
Impact on Pension Entitlement
Funding aged care can affect your pension entitlement. Payments towards accommodation are exempt from pension asset and income tests. Couples may qualify for a higher pension rate if one or both partners are in aged care.
Seeking Advice
Given the complexity of aged care decisions, professional advice is crucial. Financial arrangements vary, and what works for one person may not be suitable for another. Advisors can help you understand the costs, evaluate affordability, and explore your options to make informed decisions.
General Advice Warning:
Any general advice on this page does not take account of your personal objectives, financial situation and needs, and because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. Information contained on this page was correct at the time of posting.