To properly assess and answer the question ‘how much does aged care cost in Australia?’ requires some understanding of the resident’s care need and their individual financial position and budget. With a variety of care options available, each with unique costs and funding mechanisms, it’s necessary to weigh these against the residents own personal financial position, to make informed choices. This blog explores the primary components of aged fees and charges in Australia, outlining the costs associated with different services and offering advice on managing these expenses effectively.
Understanding the Basics of Aged Care Costs
When exploring aged care options, the starting point is to understand the basic structure of costs involved. Aged care expenses in Australia generally fall into three main categories: home care, residential aged care, and respite care. Each of these services has its unique cost components, and the total expense can vary significantly based on individual needs and preferences.
Home Care Costs
Individuals can access home care services to receive necessary assistance while residing in their own homes via a Home Care Package. Home Care Packages are funded by the Australian Government and aimed at subsidising home care expenses so an elderly person can be cared for in their own home. These services cover a spectrum of support, from aid with daily tasks to comprehensive nursing care. These packages are categorised into four levels, with each level offering varying funding amounts according to the recipient’s requirements. The levels span from basic care needs (Level 1) to high care needs (Level 4).
Income Tested Fee:
A Home Care Package recipient can be asked to pay a Basic Daily Fee and an Income Tested Fee for their Home Care Package. The Basic Daily Fee is based on the package level and the Income Tested Fee is based on an individual’s assessable income and includes income such as, Government support payments, income from superannuation, income streams, overseas pensions and deemed income from financial investments. The income tested fee is the recipient’s contribution towards the cost of their home care.
Private Home Care Services
If a Government Funded Home Care Package does not meet all the needs of an elderly person, private home care services can be employed to add some extra hours of care.
Private home care services are not Government funded and are a personal expense to the recipient.
Cost:
The expenses for private care are contingent upon factors such as the service provider, the frequency of care, and the nature of required services. Hourly rates for private home care can vary widely, typically ranging from $30 to $100 per hour or more, depending on the level of care complexity.
Respite Care
Respite care serves as a temporary solution for primary caregivers seeking relief by offering care for their loved ones. This service can be administered in various settings, including residential aged care facilities, community centres, or within the individual’s home. The type of respite care will determine the cost.
Respite Care in an Aged Care Facility
Respite care in an aged care facility is 24-hour care and often for one or two weeks at a time. Respite care is subsidised by the Australian Government. Once a person is assessed as eligible for respite care they are entitled to 63 days per financial year.
Cost:
When on respite care in an aged care facility, the recipient will be required to pay the Basic Daily Fee of $61.96 per day (as at 20 March 2024) and the aged care facility may also charge a daily extra or additional services fee.
Residential Aged Care Costs
Residential aged care facilities, commonly called nursing homes, offer comprehensive support for individuals who require 24-hour care. A future resident will be asked to pay accommodation costs and ongoing care fees.
Aged care fees are in part, determined by the individual’s assets and income.
Accommodation Costs
The costs associated with staying in a residential aged care facility can vary significantly depending on several factors such as the facility’s location, the type of accommodation chosen, and the amenities offered. Accommodation fees can typically be paid through different methods, including a lump-sum known as a Refundable Accommodation Deposit (RAD), a daily payment termed as a Daily Accommodation Payment (DAP), or a combination of both. These payment options provide flexibility to residents and their families in managing the financial aspect of residential aged care.
A ‘low means’ resident’ will not be asked to pay a lump sum, they may only be required to make a daily accommodation contribution towards their accommodation costs.
Ongoing Care Fees
Basic Daily Fee: Every resident is required to pay the Basic Daily Care Fee. This fee is set by the Australian Government. The basic daily fee serves as a contribution toward covering essential living expenses, including meals, cleaning, and laundry services. The Basic Daily Fee is currently $61.96 (20 March 2024) and is indexed twice a year in line with the age pension.
Extra Services: This extra daily fee is set by the individual aged care facility, so differs from facility to facility. The extra services offered by the aged care facility for this fee could include, Foxtel, newspapers, wine with dinner, choice of meals and extra social activities.
Means-Tested Care Fee: The means tested care fee is based on the resident’s assets and income and will be different for every resident. The means tested care fee is the resident’s contribution towards their care costs. Your Aged Care Financial Advisor will calculate this fee and build a cashflow and budget so that this fee is planned for.
The Role of Aged Care Financial Advice
Aged care finances are complex, making expert guidance invaluable. Specialised advisors provide personalised counsel to navigate costs across various care settings like in-home, respite, and residential facilities. Their knowledge spans funding sources such as government aid, insurance, and personal savings. Utilising their expertise allows crafting tailored financial plans that account for individual goals and desired care levels. Professional advice ensures informed decisions and confidence in managing aged care expenses without jeopardising financial security.
Creating Long-Term Financial Plans
Seeking guidance through aged care financial planning can help create long-term plans that consider potential aged care expenses. These plans can include investment strategies, retirement income planning, and tax-efficient approaches to maximise your financial resources.
How Can Yield Financial Planning Help?
Gaining insight into the expenses linked with aged care in Australia is crucial for making well-informed choices and securing financial stability. Delving into the various options available, including home care, residential aged care, and respite care, while also tapping into government support initiatives, allows for effective management of aged care expenses. Planning for the future and seeking aged care financial advice from industry professionals can offer reassurance and empower you to confidently navigate the intricate landscape of aged care costs. Ready to take control of your financial future? Contact Yield Financial Planning today to learn more and gain peace of mind.
