The level of aged care that individuals need is determined by a government-approved aged care assessment team (ACAT).
The outcome will either be low care in a hostel or high care in a nursing home. If a person has a choice of facility, they may opt for one with government-recognised “extra services”, which include everything from a daily newspaper to a glass of wine with dinner.
An accommodation bond is paid for low care (and high care with extra services), and anyone entering high care accommodation pays an accommodation charge.
In all cases there is a basic daily care fee and a daily income-tested fee, both of which are determined by the Department of Health and Ageing based on assets and income data collected from Centrelink.
The income-tested fee is not necessarily paid by everyone. For example, full pensioners will not pay an income-tested fee (but everyone pays the basic daily care fee).
The maximum basic daily care fee adds up to about $14,700 a year, while the maximum income-tested fee is $23,600 a year (as at 2011).
Extra services fees can range from $50 to $100 a day, depending on what the facility has on offer.
Accommodation bonds and charges
The average accommodation bond for metropolitan areas is about $300,000. This is set by the facility and can be negotiated. It is refundable when the resident leaves, minus a retention amount kept by the provider. This is standard across the country and is now $307.50 a month for a maximum of 60 months.
High-care accommodation charges can be up to $11,150 a year.
iPac Financial Care adviser Paul Intagliata generally works on people having to find at least three years of aged-care expenses. The average number of years spent in low level care is 3.2 years and 1.8 years in high level care, he says.
Assuming you will pay the maximum daily care fee, you’d need about $75,000 to cover the daily fee and accommodation charge for three years in a high-care facility. Three years in high care with extra services might cost $130,000, assuming the average extra services fee is $50 per day. In both cases an income-tested fee would also be charged, based on the level of income-generating assets. Few people pay the maximum income-tested fee.
For low care, the cost for three years would be $44,000 plus any income-tested fee plus the bond. While aged care facilities charge an amount to cover a residents’ living costs, there will be out-of-pocket expenses for such things as make-up, haircuts and medicine.
Val Nigol, aged-care specialist and director of Financial Freedom Solutions, suggests his clients allocate $50 to $100 a week for these.