2024-25 Aged Care Guide

Income tested care fee

An extra contribution toward the cost of care that people may need to pay, on top of basic fee – depending on assessable income. The Department of Human Services (Centrelink) will assess whether consumers need to pay this fee and how much.

Full pensioners and people with an income up to $33,735.00 do not pay an income tested care fee.

You could pay up to $18.77 per day, if you:

• are single earning over $33,750.00
• are a member of a couple living together earning over $26,102.20
• are a member of a couple living apart due to illness earning over $33,059.00

You could pay between $18.77-$37.55 if you:

• are single earning over $65,020.80
• are a member of a couple living together earning over $49,691.20
• are a member of a couple living apart due to illness earning over $64,355.80

Residential Care

Moving into an aged care home, you can be asked to pay:

Basic daily care fee

Paid by all people who receive residential care. For some, this is the only fee you may need to pay. This fee equates to 85% of the single basic age pension. Based on current rates, the maximum basic daily fee is $63.57 per day, or $23,203.05 per year.  

Means tested care fee

An extra contribution towards the cost of care that you need to pay on top of the basic fee, depending on your income and assets. Annual and lifetime caps have been set to limit how much you will have to pay in means-tested care fees.

• The annual cap is $34,174.16. Once you reach the annual cap, you will no longer have to pay any means-tested care fee until the next anniversary of the date you first entered the aged care home.
• The lifetime cap is $82,018.15. Once you reach the lifetime cap, you will no longer have to pay any means-tested care fees. The Government will pay for your care costs. If you were paying an income-tested care fee for a home care package before you moved into an aged care home, the amount you paid in income-tested care fees will count towards your lifetime cap.
• The caps only apply to means-tested care fees in residential care and any income-tested care fees in home care paid.

Accommodation payment

A payment for accommodation in an aged care home. Some of you will have your accommodation costs paid in full or in part by the Australian Government. Others will need to pay the accommodation price you negotiate with your aged care home.

If you’re not eligible for government assistance with your accommodation costs, you will pay the room price you agreed to with your aged care home as an accommodation payment through a Refundable Accommodation Deposit or Daily Accommodation Payment or a combination of both.

• Refundable Accommodation Deposit (RAD) – a lump sum payment for accommodation in an aged care home. This is the price of a room, in lump sum form, that you have agreed to pay with your aged care home. You can pay your accommodation price in full by RAD or you can pay via a combination of a smaller RAD and Daily Accommodation Payment (DAP) or you can pay in full by DAP.
• Daily Accommodation Payment (DAP) – the daily payment for accommodation in an aged care home. The aged care facility will work out the DAP based on a legislated formula that converts the RAD price to a DAP price. You make this payment on a regular basis, up to a month in advance, similar to paying rent.
•  

If you are eligible for government assistance (low means), the government will pay some or all of your accommodation costs to your provider. You will be asked to pay an accommodation contribution if the government does not pay the full amount through a Refundable Accommodation Contribution or Daily Accommodation Contribution or a combination of both.

• Refundable Accommodation Contribution (RAC) – a lump sum payment for accommodation in an aged care home if you also receive Australian Government Assisstance with your accommodation costs and the government does not pay the full amount. You can pay your accommodation price in full by RAC or you can pay via a combination of a smaller RAC and Daily Accommodation Payment (DAC) or you can pay in full by DAC.
• Daily Accommodation Contribution (DAC) – the daily contribution for accommodation in an aged care home that you would need to pay if you also receive Australian Government assistance with your accommodation costs. You make this contribution on a regular basis, up to a month in advance, similar to contributing to rent.

Extra or Additional Service Fee

An extra payment you can be asked to pay if a higher standard of accommodation is chosen or additional services such as hairdressing or pay TV in rooms are elected.

How are the fees calculated?

When you enter an aged care home for the first time from 1 July 2014 onwards, you will need to complete and lodge an income and assets assessment form which will be used to determine your costs. You must lodge this form even if you are currently receiving a means-tested income support payment from Centrelink or the Department of Veterans’ Affairs.

The Australian Government will conduct your income and assets assessment. They will advise you and the aged care home of the fees that your service provider can ask you to pay.

If you do not complete and lodge the income and assets assessment form, you can be asked by your service provider to pay the maximum daily means-tested fee and/or an accommodation payment. Also, you would not be eligible for any Australian Government assistance towards your aged care home costs.

Income, for the purposes of aged care, is not the same as taxable income. Your assessed income can include:

• income support payments from the Australian Government such as the Age Pension, a Service Pension or an Income Support Supplement
• deemed (not actual) income from financial investments
• net income from rental property
• War Widow or Widower Pensions and some disability pensions
• net income from businesses, including farms
• superannuation and overseas pensions, and income from income stream products such as annuities and allocated pensions
• family trust distributions or dividends from private company shares
• deemed income from excess gifting.

All of your assets are considered but special rules apply in some situations.

Financial assets include:

• bank, building society and credit union accounts
• cash
• term deposits
• cheque accounts
• friendly society bonds
• managed investments
• listed shares and securities
• loans and debentures
• shares in unlisted public companies
• gold and other bullion.

Other assets include:

• household contents and personal effects (these are typically valued at $10,000)
• foreign assets including investments, business interests and real estate
• investment property
• special collections such as stamps, art works or antiques
• superannuation balances
• private trusts, family trusts and private companies
• net retirement village entry contributions
• refundable accommodation deposits.

How is your home treated?

A capped value of your former home may be counted in your assets assessment, but there are some exceptions to this. It won’t be counted as an asset if:

• your partner or dependent child is living there, or
• a carer eligible for an Australian Government income support payment has been living there for at least two years, or
• a close relative who is eligible for an Australian Government income support payment has been living there for at least five years.

The full value of your home will not be included in the assessment of your assets. Instead a capped amount of $206,039.20 will be included or the net market value of your house, if lower.

There is special treatment of rental income if you are paying a Daily Accommodation Payment and entered an aged care residential facility prior to the 1^st of January 2016. In this situation, rental income from your former home will be exempt in full, from the pension income test and for aged care fees while you are paying the Daily Accommodation Payment.

At Progressive Financial Solutions, our goal in the Aged Care space is to remove the added financial challenges you will face when placing a loved one into an Aged Care facility, allowing you to focus on the care of your loved ones. You can read more about our Aged Care advice services here.