Full Pensioner - Michael
Michael is 79 years old and receives the full age pension. He rents an apartment and does not own a home. After a stroke, Michael needs full time care. An Aged Care Assessment Team (ACAT) finds him eligible for a Government-funded place in an aged care home.
Michael has $2,150 in the bank and an annual income of $27,000.
Michael cannot be asked to pay a means tested care fee or an accommodation payment because, as a full pensioner:
- his annual income is below the income free area ($30,204.20) and
- his assets are below the asset free threshold ($55,000).
The Australian Government will pay his accommodation costs and contribute the full Government subsidy to the cost of his care.
When Michael chooses an aged care home, he will still need to agree on a room price with the provider, but he will not pay the agreed room price upon moving in.
Given his current personal and financial circumstances (and using the rates effective from 20 March 2023 to 30 June 2023), Michael is eligible to pay a basic daily fee of $21,527.70 per annum or $58.98 per day.
Depending on the aged care home and the type of room he chooses, Michael might also be asked to pay:
- an extra service fee if he accepts a place in an extra service room
- an additional service fee if he agrees to purchase additional services beyond those his aged care home is required to provide.
Part Pensioner - Jane
Jane, 84, and her husband, Roger, 85, are part-pensioners who live in their family home. Jane has limited mobility and is finding it difficult to manage without full-time care at home. She and Roger have decided that she should move into an aged care home. Jane is approved for a subsidised place in an aged care home by an Aged Care Assessment Team (ACAT).
After receiving her ACAT approval letter, Jane and Roger look for suitable aged care homes in their area and start to investigate the fees she will need to pay.
Services Australia already has Jane’s income information as she is on a means tested Government pension. However, because she owns her own home, Jane will need to provide Service Australia with details about her home which were not collected when she applied for the age pension. Jane completes Service Australia’s Aged Care Calculation of your cost of care form (SA486) to find out what aged care fees she is eligible to pay. She then sends it to Services Australia to give them the information they need about her finances to complete her means assessment and determine her maximum aged care fees.
Roger and Jane’s family home is valued at $600,000. As Roger will continue to live in the home once Jane moves out, Service Australia will consider it occupied by a ‘protected person’; it will not be included as an assessable asset. Jane and Roger have other combined assets valued at $142,000 and a combined annual income of $88,000. As a member of a couple, half of their combined income and assets is taken to belong to Jane. This means Jane has assessable assets valued at $71,000 and an assessable income of $44,000.
After choosing an aged care service, Jane agrees on a room price of $440,000 with her provider.
Under her current personal circumstances (and using the rates effective from 20 March 2023 to 30 June 2023), Jane is eligible to pay:
- a basic daily care fee of $21,527.70 per annum or $58.98 per day
- an accommodation contribution of $31,065.15 per annum or $85.11 per day (if she chooses to pay by DAC).
Depending on the room she has chosen and her negotiations with her provider, Jane might also be asked to pay:
- an extra service fee if she enters an extra service place in her aged care home
- an additional service fee if she agrees to purchase additional services beyond those her aged care home is required to provide.
Jane and Roger should seek financial advice before Jane signs the agreement with her chosen aged care home to help them determine the best way to pay for her care.
Self-funded Retiree – Sophia
Sofia, 92, is a self-funded retiree who owns her own home. Her husband has passed away. She has been approved for a Government-funded place in an aged care home.
Sofia completes the Services Australia’s Aged Care Calculation of your cost of care form (SA486) to find out what aged care fees she is eligible to pay. She then sends it to Services Australia to give them the information they need about her finances to complete her means assessment and determine her maximum aged care fees.
Sofia’s annual income is $62,000. Her home is valued at $860,000 and her remaining assets are valued at $240,000. In the aged care means assessment, the assessable value of her home is capped at $193,219.20, the home exemption cap. This puts her total assessable assets at $433,219.20.
Under her current personal and financial circumstances (and using the rates effective from 20 March 2023 to 30 June 2023), Sofia can be asked to pay the following when she enters her chosen aged care home:
- a basic daily care fee of $21,527.70 per annum or $58.98 per day
- a means tested care fee of $20,020.25 per annum or $54.85 per day
- the accommodation payment she agreed with her provider. She can choose to pay this as a lump sum RAD of $550,000, a DAP of $106.38 per day, or any combination of RAD or DAP.
Depending on the room she has chosen and her negotiations with her provider, Sofia might also be asked to pay:
- an extra service fee if she enters an extra service room in the home
- an additional service fee if she agrees to purchase additional services beyond those her aged care home is required to provide.
Sofia can benefit from seeking financial advice to determine the best way to fund her aged care costs.
Part Pensioner - Roger
Roger, 85, has been approved for a place in an aged care home. He is on a part pension and has lived alone in his family home since his wife, Jane, moved to an aged care home several months ago. He will join her in the same home.
Services Australia has Roger’s income information because he is on a means tested Government pension. However, because he owns his own home, Roger will need to provide Services Australia with details about his home which were not collected when applied for the age pension. Roger completes Service Australia’s Aged Care Calculation of your cost of care form (SA486) to find out what aged care fees he is eligible to pay. He then sends it to Services Australia to give them the information they need about his finances to complete his means assessment and determine his maximum aged care fees.
As Roger intends to move out of the family home, it will no longer be occupied by a ‘protected person’. This means Service Australia will include it as an assessable asset at a capped value of $186,331.20, the home exemption cap. Any value above this amount will be excluded from the assessment of Roger’s (and Jane’s) assets. This cap on the value of a home applies separately to both members of a couple.
Roger and Jane have a combined annual income of $88,000. Their home is valued at $600,000, and their other combined assets are valued at $142,000. As a couple, half of their combined income and assets is taken to belong to Roger. This means, Roger’s assessable income is $44,000, and his assessable assets are valued at $257,331.20.
Roger and his provider agree on a room price of $450,000.
Under his current financial circumstances (and using the rates effective from 20 March 2023 to 30 June 2023), Roger is eligible to pay:
- a basic daily care fee of $21,527.70 per annum or $58.98 per day
- a means tested care fee of $10,811.30 per annum or $29.62 per day
- the accommodation payment he agreed with his provider. He can pay this as a DAP of $87.04 per day, a RAD of $450,000, or any combination of DAP and RAD.
Depending on the type of room he has chosen and his negotiations with the provider, Roger might also pay:
- an extra service fee if she enters an extra service place in her aged care home
- an additional service fee if she agrees to purchase additional services beyond those her aged care home is required to provide.
Jane and Roger should seek financial advice to determine the best way to pay for their aged care costs. As a couple, each of their aged care payment methods may impact the other’s aged care fees. Their chosen payment methods may also affect their age pensions.