Aged Care Costs in Australia

Financial advice for aged care becomes more common when you, your partner or your parents can no longer live at their home, and it becomes time for moving to an aged care home or facility where ongoing care and support is available 24 hours a day. While this can be a short-term stay, usually it is a permanent and final residence around 80% of the time.

Aged care costs can be difficult to navigate if you have never experienced them before. There are different fees and deposit amounts, and options and aged care financial advice can help you or your parent’s deal with complex financial issues when the health and welfare of a loved one is likely your main concern.

Financial matters are further complicated once the impact aged care has on entitlements such as age or disability pensions are considered, plus the decision to sell or rent the current home needs to be considered, and starting the process of downsizing possessions.

Financial advice is recommended for aged care by the government on myagedcare.gov.au, as they understand the complexity – they created it after all! Financial advisers who offer aged care services (not all do) understand the rules and how to make them work for the individual circumstances of those in need of additional care. They will consider the following to develop a strategy and provide advice around the best options for accommodation funding:

The current residence – rent, sell or retain one family member there
Accommodation payments (lump sum or daily payments)
Care fees (basic and means tested)
Investments (Retirement income and estate planning considerations)
Cashflow (Cover expenses and provide lifestyle and medical needs)
Age pensions (impact of assets and income tests)

A financial adviser will help you understand all of the above, and how much it can have an impact on aged care costs and cashflow, explain the pros and cons and various options and recommend a strategy that best suits the situation.

Are you finding the aged care process confusing and intimidating?

We’ll walk you through every step of the process, so you can relax knowing that your loved one is in good hands.

Financial advisers charge a fee to help with strategies to fund you or your parent’s aged care. However, if you’re experiencing financial difficulties or have little income, you may be eligible for free financial counselling services. Financial counsellors usually operate with community organisations and can provide you with independent information, support and advice. Financial counselling is also confidential. To learn more about financial counselling, visit Financial Counselling Australia, or call the National Debt Helpline on 1800 007 007.

First steps of your aged care journey:

– Obtain an aged care assessment, through local aged care assessment team

– Research care services or residential facilities that best meet your needs

– Seek a clear understanding of the aged care costs

– Schedule a meeting with a financial professional to ensure the decisions you make are the best for all involved

Aged care is one of the most complicated areas of financial advice because there are many different options to choose from depending on your situation. You often must make decisions quickly, either because you are urgently in need of care or because of the time limits in the government assessment process. A financial adviser can help you make the right decisions about your aged care options or those of your parents if you are responsible for them.

What are the aged care costs in Australia?

You may have to pay:

Basic daily fee — a standard amount that everyone has to pay with a fixed cost
Means tested fee — an amount that will vary depending on your income and assets
Accommodation payment — an amount for your room, varies based on quality and features

The accommodation payment is the biggest cost, and why you should talk to a few providers. You can pay this as a “RAD” or a “DAP”.

Refundable Accommodation Deposit (RAD) – bond or lump sum up-front, which is refundable
Combination of the two
Accommodation payment — an amount for your room, varies based on quality and features

As well as government subsidised aged care homes, there are also private retirement accommodation options, where you pay the full amount yourself.

Some examples of their services are:

As many of us live longer due to medical advancements, aged care can become a component of you or your parent’s retirement. Aged care is not assessed on age, rather by needs. More than 1.2 million people over 65 accessed aged care in 2017-18, and as the population of baby boomers age, this is expected to increase.

The largest component of this is the Commonwealth Home Support Programme (CHSP), which provides some basic services to help people remain in their homes and keep their independence and involvement in the community. Homecare packages are available for those who need more support on an ongoing basis.

Pre-made meals and help with food preparation.
Help with showering, self-care, hygiene, and grooming.
Help with medicines and telehealth support.
Health and therapy services.
Respite care
Help with chores around house.
Changes to home to improve safety.
Items to help you get around or adapt.
Community transport
Social support groups
Homelessness support linking to housing and care services.

Aged care clients in residential care are typically in their 80s and 90s, although sometimes much younger. 59% were older than 85. Those with home support or home care are often in late 60s and 70s. Aged care is a significant system with more than 3000 aged care providers in Australia, most of these providers are “for-profit services” in the residential care program.

The aim of the aged care system, as described by the Productivity Commission (2018), is to promote the wellbeing and independence of older people (and their carers), by enabling them to stay in their own homes or by supporting their care needs in residential care. This overall aim is implicit in the Aged Care Act 1997.

A Royal Commission into Aged Care in Australia began in 2018 and continues through 2020 with the most common concerns being around staffing, isolation and unmet needs. The final report and recommendations are expected in 2021, and this will hopefully result in a higher standard of services for older Australians.

Starting to consider aged care? Get help making the right decision.