Confronting the intricacies of ageing and the necessity for aged care for our parents and grandparents is an undeniably heart-wrenching challenge. The decision to make this transition isn’t one to take lightly, whether it’s a looming realisation or a sudden, forced reality. And, of course, there are the financial considerations along the aged care journey.
At Step Up Financial, we acknowledge the significant responsibility involved in caring for elderly loved ones, and we recognise the financial concerns that often accompany this responsibility.
Many families find themselves questioning whether Nan can even afford aged care. Avoid this uncertainty with proactive planning. To navigate the complexities of aged care, it’s crucial to be well-informed. Here are the critical factors you need to know.
Aged care costs in Australia
The Australian Government heavily funds aged care homes to ensure accessible care. Nevertheless, significant expenses can still arise, including basic daily care fees, means-tested fees and accommodation costs.
What is a basic daily care fee?
All residents must make a compulsory contribution known as the basic daily care fee, which covers daily living expenses like meals, laundry, cleaning and personal care. This fee is not subject to means-testing.
The government determines the amount. The aged care facility receives the basic daily care fee, amounting to 85% of the standard full age pension. Presently, this fee is set at $58.98 per day.
What are means-tested fees?
Some individuals must make contributions based on a means assessment conducted by Centrelink, considering income and assets, including the family home. These payments support the expenses associated with ongoing clinical and personal care.
What are accommodation costs?
Accommodation costs are the sum some individuals contribute toward their room expenses, and their means assessment determines the specific amount. If you’re eligible for government assistance, they will contribute some or all of these costs to your provider. If you aren’t eligible, you will pay the agreed room price to the aged care home.
What is a RAD or DAP?
A refundable accommodation deposit (RAD) is a lump sum payment made to secure accommodation when entering an aged care facility. The amount varies among facilities. Individuals with income and assets exceeding the threshold will need to pay the RAD. Alternatively, those above the threshold who prefer not to pay the applicable RAD can opt for a daily accommodation payment (DAP). Those opting for the DAP will need to pay it periodically, and it is non-refundable. It’s also possible to arrange a combination of RAD and DAP.
Having the conversation and planning ahead
Navigating the complexities of aged care, including fees, contributions and deposit options, often calls for professional advice. Our best suggestion? Plan ahead – it’s the smart move to make sure you’re well-prepared for the journey ahead.
Proactively preparing for aged care also enhances estate planning, effectively managing assets to support future care needs and prioritising the interests of beneficiaries.
A well-organised financial plan also eases the burden on family members, sparing them the scramble to make last-minute financial arrangements on your behalf.
While some discussions may be uncomfortable, having open and candid conversations now can alleviate stress later. Ensure you honour everyone’s preferences and that your family members are well-prepared by talking to them about estate planning and your wishes regarding aged care.
At Step Up Financial, our team includes financial planners with Aged Care Step accreditation, offering specialised expertise in the financial aspects of planning for aged care. Determining the optimal financial structure to cover the costs of aged care often requires professional guidance.
We are here to provide a clear and effective solution. As your family gathers over the holidays, make planning for a financially secure future for everyone a priority. If someone you love requires aged care, and you’re uncertain about affordability, we can assist you.
Contact Step Up Financial to start an important conversation today.