Aged care in Australia is not cheap. When you enter aged care, you are paying for somewhere to live, your meals, electricity and also a number of people to look after you. Aged care fees involve accommodation fees and also ongoing care fees.
A lot of the cost is paid by the government, and you only pay a portion of the cost of your care. The more you have in assets and income, the more you can be asked to pay. However, what if you don’t have a lot of assets or income?
A “Low Means Resident” is an aged care recipient who is either fully supported or partially supported. This refers to anyone who is eligible to receive any government contribution toward the cost of their accommodation. A low means resident is NOT required to pay a means-tested care fee.
To assess whether you qualify as a low means resident, thereby determining the amount a resident and /or government pays toward the cost of accommodation, a Means Test applies and combines an income test and an assets test. Means testing is used to calculate your means-tested amount, which in turn determines whether you are classified as a:
- Fully supported resident
- Partially supported resident
- Unsupported resident
All residents (including low means residents) must pay the Basic Daily Care Fee. This fee covers living costs such as meals, laundry etc., and is set by the government at 85% of the Single Basic Age Pension (not including supplements). This is currently $50.66 per day (indexed 20 March and 20 September every year in line with increase to Age Pension). For a “fully supported resident”, this is the only fee you have to pay.
Apart from the basic daily care fee, a “partially supported resident” will also be required to pay a contribution toward the cost of their accommodation. This is based on your “means-tested amount” and is calculated by Centrelink. This amount can change whenever there are changes to your means-tested amount (i.e. if your income and/or assets change). The accommodation contribution can be paid either as a lump sum, a daily payment or a combination of the two.
Unsupported residents pay an accommodation payment based on the maximum room price as advertised by the residential care facility, along with the basic daily care fee and also a means-tested care fee.
Aged care can be complex and confusing. Seeking advice from a financial planner who specialises in aged care will help you make decisions regarding the best way to structure your assets, whether to sell or retain the family home and how much income you need.