4.2

What are the main costs of an aged care home?

The four types of fees and costs are explained in detail in this section:

  • Basic daily fee
  • Means tested care fee
  • Accommodation costs
  • Fees for additional services

Basic daily fee

What is the basic daily fee for?

The basic daily care fee covers day to day living costs such as meals, laundry, cleaning and utilities like power and basic telecommunications. 

 

How much does the basic daily fee cost? 

The basic daily fee is set by the Department of Human Services at 85 per cent of the single Age Pension.  

 

While aged care homes (nursing homes) can charge less than the maximum allowable daily fee in theory, very few do. You should expect to pay 85 per cent of the single Age Pension as your basic daily fee.  

Because the Age Pension is increased or ‘indexed’ twice a year to keep up with rising costs of living, the basic daily fee increases twice a year too.

 

The daily fee is the same for everyone.  It doesn’t matter whether you:

  • receive the full Age Pension;
  • receive a part Age Pension; or 
  • are a self-funded retiree with no pension at all.

Remember, you can never be charged more than 85 per cent of the single age pension for your basic daily fee at a government subsidised aged care home (nursing home). 

How much is it, exactly?

As of 20 March 2017, the maximum basic daily fee was:  $49.07.

Because it is tied to the Age Pension rate, this amount goes up twice a year on the following dates each year and you will be notified of the new fee each time:

  • 20th March
  • 20th September

The Department of Human Services also publishes the current schedule of fees and charges.  You can click on the following link to check the current Schedule of Fees and Charges for Residential and Home Care at any time.

For some people, the basic daily fee will be the only fee they will need to pay.

For example, at 20 March 2017, a single person on an annual income below $26,072.80 (or $25,604.80 for each member of a couple) and whose assets are less than $47,500 will pay only the basic daily fee at an aged care home (nursing home). 

Means tested care fee

What is the means tested care fee for?

The means tested care fee is an additional contribution you might be required to pay toward your day to day personal care and nursing costs.  It only applies to people who are in a stronger financial position and able to afford it.

 

How much will it be?

The amount will vary depending on your financial situation. The Department of Human Services will work out if you have to pay this fee and if so, how much you need to pay, based on an assessment of your income and assets.  Then they will let you know.

 

“If you have wealth it is wise to plan ahead and prepare your submission to the Department of human services”.

Kate Golder, Director, Affinity Aged Care Financial Services

 

Do I have to have the income and assets test?

If you want to go into a Commonwealth-subsidised aged care home (nursing home), and you want the government to contribute to your care costs, you MUST have an income and assets test.  

Remember, you can choose not to have one but you will not receive any government subsidy towards the costs of your aged care and you will be asked to pay the full amount yourself.

 

“Often wealthier people decide the completion of the 132 question income and asset assessment document is not worth the effort because they expect to pay top rates. This can be an expensive mistake with unexpected ramifications, including which care homes you have access to”.

Kate Golder, Director, Affinity Aged Care Financial Services

 

Things to note about the means tested care fee

  • If you are a member of a couple, your means-tested care fee will be based on half of your combined income and assets, regardless of which of you earns the income or owns the asset.
  • There are annual and lifetime caps (or maximums you can be charged) on the means-tested care fee. Like other fees regulated by the government, the capped amounts are indexed twice a year.  Once you have reached these caps, you can’t be asked to pay any more means-tested care fees. 
  • At 20 March 2017, the maximum means tested care fee you can be asked to pay in a year is $26,380.51 and the maximum means tested care fee you can be asked to pay in a lifetime is $63,313.28
  • If you were receiving a Home Care Package before moving to an aged care home (nursing home) and have been paying an income-tested care fee related to that, it counts toward to your annual and lifetime caps.

 

"Across 52,134 residents covered in our Quarterly Financial Performance Survey (March 2016), the average profit (or surplus) the operators made on providing care services was just $10.43 a day, or $3,806 a year."

Stuart Hutcheon, Managing Partner, StewartBrown

 

Accommodation costs

What are the accommodation costs for?

The aged care home (nursing home) can charge a fee for the accommodation provided to you.  It’s the bricks and mortar, the physical amenities and maintenance that the aged care home (nursing home) provides.

The accommodation price is set by each individual aged care home (nursing home).

All Aged Care homes (nursing homes) have to clearly advertise their accommodation price on their website, as well as on the government’s My Aged Care website.

 

"Aged care homes (nursing homes) require constant maintenance given high health standards plus the heavy wear and tear. They must also renovated every 15 years or so to comply with standards and stay fresh. The cost to build a new aged care ‘bed’ today is around $250,000 plus the cost of the land. Its making provision for these costs that the ‘administration cost’ is charged to today’s residents."

Stuart Hutcheon, Managing Partner, StewartBrown

 

How much does the accommodation cost?

Each home can set the amount they want to charge.  There can be a lot of variation in the accommodation costs because the amount is based on commercial factors, including:

  • local property prices in the area
  • the costs of the building and construction 
  • the type and size of the room (eg single room with ensuite bathroom, shared rooms, smaller or larger rooms)
  • the amenities provided (eg. gym, swimming pool, gardens, facilities)
  • the standard of finishes used, including fixtures
  • prices charged by competitors and market demand.

Remember:

  • While the aged care home (nursing home) cannot ask you to pay more than the maximum accommodation price advertised on their website, they can charge you less than that amount.  You can negotiate with the home to see if they will agree to a lower price.
  • You cannot be asked to pay both an accommodation payment and an accommodation contribution at the same time.
  • While Commonwealth subsidised aged care homes (nursing homes) can set the price they want to charge for accommodation, if they want to charge more than $550,000 as a Refundable Accommodation Deposit or its equivalent (see How do you pay accommodation costs below), it needs to be approved by the Aged Care Pricing Commissioner.

While the aged care home (nursing home) cannot ask you to pay more than the maximum accommodation price advertised on their website, they can charge you less than that amount if you negotiate.

How much do you have to pay?

Depending on your personal financial situation, you might have to pay the whole amount of the price of your accommodation.  But if you qualify, the Australian Government will pay some or most of your accommodation costs.

Like the means tested care fee component of the costs, this is decided by the Department of Human Services based on their assessment of your income and assets.

You will be advised by the Department of Human Services what you will be expected to pay, which will be one of the following:

  • Subsidised accommodation costs: if your income and assets are below a certain amount, the Australian Government will subsidise your accommodation costs.  The amount that is subsidised will be based on how recently the aged care home was refurbished.  The maximum accommodation supplement amount is $55 per day.  If the room is not newly built or significantly refurbished then the subsidised cost will be less.  If the Daily Accommodation Payment of the room is more than the maximum accommodation supplement, then the resident will be liable to pay the shortfall.
  • An accommodation contribution: you might be required to pay part of the cost of your accommodation and the Australian Government will pay the rest.
  • An accommodation payment: if you are required to pay for the full cost of your accommodation.

 

“One of the first questions you will be asked when searching for an aged care home (nursing home) is whether you can afford the accommodation costs. It is important to know your budget before you start searching to avoid wasted time and frustration”.

Kate Golder, Director, Affinity Aged Care Financial Services

 

How do you pay accommodation costs?

If you are paying an accommodation payment or an accommodation contribution, there are three ways you can pay:

 


You can move into an aged care home (nursing home) before you have decided which way you want to pay your accommodation costs.  However, once you have moved into the home, you have 28 days from the day you entered, to decide your payment method.

Until you have decided your ongoing accommodation payment method, you will have to pay a daily accommodation payment.

Remember:

  • If you have moved to the aged care home (nursing home) at short notice and you have not completed the income and assets test or have not yet received an outcome from your income and assets test, you can be asked to pay the Daily Accommodation Payment (DAP) during the interim period. This amount will be refunded back to you if it is later determined from the income and assets test that you are not required to pay it.
  • If assessed as able to pay the full accommodation price, the entry price you pay is fixed for the duration of your stay. Any price rises will apply only to new residents.
  • A resident's accommodation contribution is not fixed at entry.  A resident's contribution is capped at the lower of their means tested amount or the maximum rate of accommodation supplement applicable to the service on any given day.  It may vary over time if the resident's income and assets vary or if the facility becomes eligible for the higher accommodation supplement.
  • You can’t be charged for your accommodation if you are receiving respite care.

 

"The average amount collected in ‘administration costs’ was $26.99 a day by the nearly 700 aged care homes (nursing homes) in our Quarterly Financial Performance Survey (March 2016). After maintenance, depreciation and other direct costs they were left with just $2.35 a day for future investment."

Stuart Hutcheon, Managing Partner, StewartBrown

 

Fees for additional services

What are additional services costs for?

There are additional optional costs if you make certain choices:

  • You choose an ‘Extra services’ place
  • Some aged care homes (nursing homes) offer ‘extra services’ rooms that are a higher standard than other rooms and come with extra inclusions.  They have to have approval from the government to offer these additional services for a higher daily fee. 
  • Extra services rooms must be advertised on the My Aged Care website, as well as on the home’s own website and documentation, including the price.

Extra services rooms can include, for example:

  • larger rooms
  • increased entertainment options like cable/satellite television
  • phone, internet
  • onsite hairdresser, beautician
  • special therapies available such as massage, aromatherapy, hydrotherapy 
  • leisure/entertainment facilities like a gym, pool, cinema, workshop, library etc.
  • a bigger choice of meals and  inclusions such as beer, wine and spirits

 

Some aged care homes (nursing homes) offer all extra services rooms. Others offer a range of different room types, including a number of extra services rooms that might be part of a separate building or wing, for example.

You choose optional ‘Fee for Service’ services

Extra services homes or rooms may charge extra fees for certain services on a ‘fee for service’ basis which is additional to the higher basic daily fee charged for extra services rooms.

This might apply for things like:

  • hair and beauty services
  • dry cleaning
  • special outings and events
  • entertainment options like Foxtel

Unlike the extra services fees and other costs in aged care, fee-for-service charges are not regulated by the government.  When you are choosing an aged care home (nursing home), you will be given choices about ‘fee for service’ options and the prices will be agreed between you and the home.

 

Even if you don’t choose an extra services room, you can still choose to pay for any additional extras on a fee-for-service basis.

To understand more about the different fees and costs and how they might affect you, see 4.7 – Doing the sums

 

“It is important to clearly understand your cash position before taking up additional services. Later you may need essential medical services such as physiotherapy and may not have the funds left to make these payments”.

Kate Golder, Director, Affinity Aged Care Financial Services

   


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