There is a single fee structure for Aged Care as follows:
1. Accommodation Payment (upfront or ongoing)
- Refundable Accommodation Deposit (RAD) or
- Daily Accommodation Payment (DAP) or
- Combination of a RAD and a DAP
2. Ongoing Fees
- Basic Daily Care Fee
- A Means-Tested Care Fee – calculated based on your assets and income.
- Extra Services Fee – for additional services such as access to cable television, wine with meals etc. You can opt in and out of these and it may be deducted from your RAD if this is provided for in your agreement.
All lump sum accommodation payments are guaranteed by the Government, should the care provider become bankrupt. If you are required to pay a means tested care fee there is an annual cap of $25,000. Further, a lifetime limit of $60,000 applies where once you have paid means-tested fees beyond this limit, no further means tested care fees are payable.
Refundable Accommodation Deposit (RAD)
If you choose to make your payment as a lump sum, this is called a ‘refundable accommodation deposit’ or RAD. A refundable accommodation deposit works like an interest-free loan to an aged care home. The balance of the deposit is refunded when you leave the aged care home less any amounts you have agreed to have deducted.
You can choose to pay for your accommodation as a part lump-sum refundable accommodation deposit and part rental-type payment known as ‘daily accommodation payments’.
Each aged care facility is required to publish their maximum RAD. You can visit Accommodation Option in the Hume Region North East Victoria or the Find a Service in the Government website My Aged Care and search for facilities in your area to see what that facilities maximum RAD is. The RAD is refunded to you or to your estate when you leave the facility. There is a requirement that you must be left with a minimum asset amount of at least $45,000. You can agree with the aged care facility to deduct certain expenses from your RAD.
Daily accommodation payment (DAP)
Instead of paying for your accommodation as a lump sum you can choose to pay as periodic payments. The amount you pay is based on a daily rate which is why this type of payment is called a daily accommodation payment. However, you will pay in installments up to a month in advance, as agreed with your service provider. Daily accommodation payments, unless you have paid in advance, are not refundable if you leave the aged care home.
You can also agree with the aged care facility whether you will pay the full RAD as a lump sum payment or alternatively you can pay part as a RAD and pay a Daily Accommodation Payment (DAP) on the balance.
The facility charges you interest on the balance not paid as a RAD and the interest rate is capped at the Maximum Permissible Interest Rate (MPIR currently 6.69%p.a.)
The DAP is calculated as follows:
- RAD payable x MPIR/365
Combining RAD & DAP
Your Aged Care Financial adviser and relevant staff at the residential aged care facility will be able to provide support and information to enable you to select the best opt for you and this may include a combination of the RAD and DAP.
Assessment at Entry into Residential Care
If you are single your total income and assets is assessed at the time of entry into Residential Aged Care facility. If you are a member of a couple, 50% of your combined income and assets is assessed.
The value of your home will be included as an asset for you unless a ‘protected person’ still lives there including:
- a spouse or dependent child
- close relative on income support (if they have lived there for more than 5 years) or
- a carer on income support (if they have lived there for at least 2 years).
Basic Daily Care Fee
Applies to all residents and is calculated as a maximum amount of 85% of the single rate of age pension. It is indexed with inflation (CPI) twice a year on 20 March and 20 September. Current rate for standard and phased residents is $46.50 per day.
Ref1: My Aged Care website at ‘Paying for accommodation in an aged care home’ . We recommend that you visit this site for more information about residential aged care fees..
Contact Better Ageing at Hume Health & Lifestyle – if you would like to contribute to this page and while you are here please visit our other Better Ageing pages:
Better Ageing in the Hume Region North East Victoria Home Care Packages Living with Family Retirement Villages Residential Aged Care Fees Aged Care Means Testing Entering Aged Care Aged Care Accommodation Options Falls Prevention Improving Care for Older People Better Ageing Links