Moving into an aged care centre is a big decision for you and your loved one. It is important to gain an understanding of the costs and fees associated with residential aged care.
The cost of your residential aged care depends on the style of accommodation you choose and your individual financial circumstances.
The Australian Government regulates and helps with the cost of receiving residential aged care services. This ensures that people who can afford to do so, contribute to the cost of their care and accommodation. It also provides a safety net for people on low fixed incomes, like pensioners.
The basic daily fee (BDF) is paid by all our aged care residents and covers your daily living costs such as meals, power, laundry, cleaning and personal care.
This fee is determined by the Government and is set at 85% of the single Age Pension.
Note: The BDF is the same for each resident, whether or not you receive the Age Pension.
The daily fee is adjusted by the Government each year in March and September in line with increases to the Age Pension. As of March 2022, the maximum basic daily fee is capped at $56.69 per day.
Depending on the outcome of your income and means assessment, you may be asked to pay this additional fee. This is on top of the cost of the basic daily fee and is determined by Services Australia.
Unlike the basic daily fee, this isn’t a fixed cost and it varies from person to person. The amount you pay depends on your personal financial situation, and if your assets, income or cost of care change, your fee may change too. Additional income and assessment tests might be required to ensure you are paying the right amount. The means-tested care fee is capped annually and over a resident’s lifetime, meaning once you have reached these caps, you no longer need to pay any further means-tested care fees.
Note: If you were receiving a Home Care Package before moving into care and had been paying an income-tested care fee, this will count towards your annual and lifetime caps.
Depending on your income and assets you may be asked to pay an accommodation fee determined by Services Australia. As you probably can guess, this fee helps cover the cost of your accommodation.
This fee is only payable if your income and assets exceed a certain amount. Your fees may be fully or partly covered by the Government depending on your financial circumstances.
Note: This fee will differ across each aged care centre and the room type you choose.
If you need to pay an accommodation fee, there are three ways you can do so:
Refundable Accommodation Deposit (RAD)
A lump sum payment that’s refunded in full once you leave, as the name suggests. The RAD differs by aged care centre and is based on room pricing.
Daily Accommodation Payment (DAP)
A daily ongoing payment paid periodically (i.e. fortnightly or monthly) that’s based on a daily interest rate called the maximum permissible interest rate (MPIR). The DAP differs by aged care centre and is based on room pricing. This payment isn’t refundable when you leave.
What is the Maximum Permissible Interest Rate?
Put simply, the Maximum Permissible Interest Rate (MPIR) is an interest rate set by the federal government and is reviewed every quarter. If you choose to pay a Daily Accommodation Payment, the amount of interest you get charged is the MPIR.
Note: The applicable MPIR is fixed on the day you sign your agreement with your chosen residential aged care centre, meaning your rate won’t change if the MPIR goes up or down over the time you are in the residential aged care centre.
Combination payment
This is where you may choose to pay for your accommodation by using a combination of RAD and DAP payments, so you would pay a nominated lump sum and the rest of the balance as a daily payment. Only the RAD payment is refundable when you leave.
Ingoing Resident Example
Here’s an example of how it might work to help you understand your payment options
Mary is looking to move into her local aged care centre. She’s completed an income and assets test and is required to pay an accommodation fee.
The room she chose has an advertised accommodation payment of a $410,000 lump sum (RAD) or $45.38 per day daily payment (DAP) based on an MPIR of 4.04%.
Mary can choose to either:
Additional services may be provided to support and enhance your care experience. Depending on the location, these additional services may include extra recreational activities, entertainment and other options tailored to your lifestyle and interests.
If there are extra service fees, we'll explain them in writing.
Before you can move into a residential aged care centre, or access residential respite care, you’ll need to apply for what’s known as an ACAT assessment. This assessment is used to recommend the type and level of care that will best meet you or your loved ones needs.
Getting assessed for government funding support is easy, to help you start your aged care journey, we’ve outlined the process in three easy steps.
At IRT we want to make your aged care journey as easy and stress-free as possible.
We understand how complex the aged care journey can be, and our team is here to offer support during each step of your journey.
Get in touch today using the button below, and our team will be able to assist with any questions you might have.