The Aged Care means test: a comprehensive guide to financing Aged Care

If you’re thinking of moving into an Aged Care Residence, or you have a loved one who is, there are many factors to think about. One of the big ones is Aged Care costs, and how you’ll fund it. 

Aged Care costs in Australia can be broken down into four categories:

1. Basic Daily Fee – The basic daily fee applies to everyone and covers your basic daily living costs such as meals, cleaning, laundry, heating, and cooling. It is set by the government and is currently capped at 85% of the single person rate of the basic age pension. 
   
2. Means Tested Fee – If your financial circumstances allow, you may be required to pay a means-tested fee to contribute towards your living costs. The amount is determined by assessing your income and assets. If they are under the set threshold, it is unlikely that a means tested fee will apply. There are also annual caps that apply to this fee, so it’s important to note that once these caps are reached, you can’t be asked to pay any more.
   
3. Accommodation Fee – The accommodation fee covers the cost of your room, bathroom facilities, and access to communal areas. Those with total assets below a certain amount and pensions as their only income may have their accommodation paid in part, or in full, by the government. You have three options to pay this fee – a Refundable Accommodation Deposit, also known as the RAD, a Daily Accommodation Payment, or DAP, or a combination of both.If you choose the RAD option, which is a lump sum payment, it’s important to note that it is Government Guaranteed, so if your chosen facility is government accredited and something goes wrong, you won’t lose your money. And, as the name suggests, the RAD is fully refundable at the end of the resident’s time in care. Alternatively, you can opt for the DAP, which is a daily charge calculated using the government-approved interest rate. You can also choose a combination of RAD and DAP.
   
4. Additional and/ or Extra Services Fee – These fees cover optional extra services beyond basic aged care, such as higher-standard rooms, entertainment equipment, and additional food services. The costs for these services are determined by the Department of Health. Some residences may also offer premium services like newspapers, magazines, pay TV subscriptions, and technology requirements.

You can learn more about these Aged Care fees on the TriCare website, and if you need advice, an independent financial advisor can help. But for today, let’s focus on the Residential Aged Care means assessment, how it works, and how you can get started. 

The Residential Aged Care means assessment

The Australian Government pays for the bulk of Aged Care in Australia but residents are expected to contribute to their Aged Care costs if they can afford to do so.

The way that the government decides how much they will support you is by conducting a means assessment. This helps them to make sure the people who need help the most are taken care of, and keeps Aged Care affordable for everyone. 

It’s advisable to make your application for a means test as early as possible, to ensure you have an arrangement in place and you’re not unnecessarily out of pocket. 

It’s important to note that, before you apply, you’ll need an ACAT (Aged Care Assessment Team) assessment  to determine your needs and eligibility to access Aged Care. 

Making your application

The first thing you’ll need to do in order to be assessed for government assistance in paying Aged Care fees is to go to Services Australia and print out your Residential Aged Care Calculation of your cost of care form (SA457).

If you don’t have access to a printer you can either call Services Australia’s Aged Care Line and ask them to post the form to you, or go to a service centre and ask for the form.

Services Australia uses this form to collect your financial details, so they can then work out how much assistance they will provide for you to pay for Aged Care. 

Note: You don’t need to fill in this form if you don’t own a home and get either a means-tested payment, such as the Age Pension or Disability Support Pension, or a Department of Veteran Affairs income support payment. 

Supporting documents

Services Australia will ask you to provide a variety of documents to support your application, ranging from details of any homes or assets you may own and how much money you have in the bank to your latest tax return, and details of any businesses you may own. You can also fill out a form authorising someone else to act on your behalf. 

You can see a full list of supporting documents on the Services Australia website. 

Submitting your application

When you have filled out the form and gathered your documents, you can submit your application via your Centrelink online account, through MyGov, by post, or by going into a service centre. (If you don’t provide all of the information requested, your application could be delayed.)

Services Australia will then assess your application and tell you in writing how much they will pay towards your Residential Aged Care costs. Assessments can take four to six weeks after you’ve submitted your application.

Choosing residential Aged Care

When choosing an Aged Care Residence, you will need to factor in their Aged Care fees schedule. Although the level of care is the same across all options, costs vary for the accommodation fees (the RAD), depending on the size of the residence, as well as the facilities and room inclusions, so it’s important to do your research, and factor in the assistance you’ll be receiving. 

You can take a look at our Aged Care cost calculator to get an idea of how it works, and how prices can change depending on your accommodation. 

Then, you’ll need to provide your means test assessment to the Aged Care provider, so they can provide you with your options and your Aged Care means tested fee.

Respite care

For those seeking Respite Care, special consideration can apply and you may be able to use your home care package to cover residential care costs. To determine your eligibility for residential Respite Care, call Carer Gateway on 1800 422 737. Commonwealth funding for Respite services is available to eligible persons for up to 63 days each financial year.

Can we help?

Do you have questions about the Residential Aged Care means test? Call 1300TRICARE (874 2273) to speak with one of our friendly Aged Care Specialists who can help you with the process of getting assessed.

Or make an enquiry below.