Costs of aged care homes

Submitted by AgedCarer on Mon, 29/12/2008 - 3:53pm

It can be very confusing working out the various types of fees and charges involved in residential aged care. Always seek financial advice before committing yourself to a particular type of residential aged care.

The costs associated with aged care will largely depend on the facility chosen, individual assets and income. The Australian Government pays for the cost of residential care by giving funding to some government funded homes.

Be prepared for charges and fees to change throughout the year. The amount a residential aged care home charges for an accommodation bond will also vary. An aged care home may have their own assessment process.

To help you navigate the aged care system seek the help of a financial advisor who specialises in aged care.

You may be asked to contribute toward the cost of care by way of:

An accommodation payment (either bond or charge)
A basic daily fee
An income tested fee
"Extra service" places will charge an additional fee

Accommodation payments

An accommodation payment is a sum used by a residential aged care home to fund any maintenance of a building or to improve services in some way.

The amount of accommodation payment you will have to pay is determined by the level of care a person requires and their assets.

Low level care: If a person has been assessed as needing low level care or they are in an "extra service" place they will need to pay an accommodation bond.

High level care: If a person has been assessed as needing high level care they will need to pay an accommodation charge except for a fully supported resident.

Accommodation charge

The rate of the accommodation charge your family member will be expected to pay will vary according to your loved one's assets and when they first entered the aged care home.

Currently a resident who enters into an aged care home with assets above $36,000 will be asked to pay an accommodation charge.

There are a number of ways to pay an accommodation charge and it is advisable to seek good financial advice before an agreement is made.

Everyone's situation will be different. Talk to a financial advisor before organising care as personal circumstances and assets will affect a family member's pensions and the fees charged.

A person can also pay in agreement with the aged care home, an accommodation charge at a later date from a person's estate. In this case interest will be charged.

Accommodation bond

If a resident is entering low level care or an "extra service" facility you may be asked to pay an accommodation bond. An accommodation bond is used as capital by the facility to fund repairs, building maintenance and improve services and standards.

A resident should be able to arrange to pay an accommodation bond as a lump sum or by periodic installments or a combination of both.

A facility keeps the bond for the length of a resident's stay. The facility is allowed to deduct a certain amount from the bond per month called a retention amount. The rate is fixed at a resident's date of entry and the government sets a maximum amount that the facility can retain for a period of 5 years.

The balance of the bond will be refunded when a person no longer requires care.

If a resident moves from one facility to the next they may be able to transfer the accommodation bond to the second facility. The accommodation bond set for the second facility cannot exceed the amount refunded by the first facility.

If a resident's level of care increases from low level care to high level care, the balance of the accommodation bond should be transferred to the new facility or you will have to pay an additional accommodation charge.

People who cannot afford an accommodation bond will not be denied care. The government provides assistance to facilities to provide for residents that need extra financial assistance. Accommodation bonds will vary greatly between homes and there is no fixed amount for a bond.

The Australian Government ensures that you cannot be charged an accommodation bond where you would be left with less than a certain amount in assets. An agreement will need to be made between yourself and the facility to determine the amount payable.

You need to be sure that you understand a residential agreement made regarding bonds, fees and charges and that any fees payable are clearly stated along with the method of payment. Seeking legal advice at this point can be beneficial.

Basic daily fee

In addition a resident will pay a daily care fee. Daily care fees help toward a resident's daily living and personal care expenses. These fees contribute towards meals, laundry, assistance with personal care, furnishings and bedding.

An income tested fee

An income tested fee may also be charged in addition to the basic daily care fee for those residents with higher income. The amount payable depends on a resident's private income and the level and cost of a resident's care.

Assets

An assets assessment test is not compulsory. However, it will help you gain an understanding of the options available to your family member before you make any choices and help plan for future care.

If your family member is seeking a government subsidised place to help with the payment of accommodation costs, they will need to have their assets assessed. Centrelink or The Department of Veterans Affairs completes this assessment.

Anyone who chooses not to have an asset assessment will be asked to pay an accommodation bond and accommodation charges as requested by the residential aged care facility.

Resources

For more detailed information about the costs of residential care go to the department of health and ageing website agedcareAUSTRALIA
Call the Aged Care Information Line for information about aged care homes on 1800 500 853
Contact Centrelink on 13 23 00