Having a loved one go into aged care, or needing to go into aged care yourself, is an emotional time for everyone involved. One of the last things you want to be thinking about is how much it is going to cost. While the government provides support through various programs and subsidies, understanding how to navigate the costs associated with aged care can be daunting and often confusing.

From home care services to residential aged care facilities, there are several avenues to explore when it comes to funding the care of our elderly loved ones and eventually ourselves.

Determine Your Level of Care

Before you can figure out how much aged care is going to cost, you need to establish what level of care is required. A thorough assessment, typically conducted by an Aged Care Assessment Team (ACAT) or an Aged Care Assessment Service (ACAS), will determine the level of care required, whether it be home care or residential aged care. Once the level of care needed has been identified, you can then begin to explore how it can be paid for.

Understanding Government Support

The Australian government offers a number of subsidies and financial assistance programs to support aged care. The type of Government support you or your loved one are eligible for will depend on the personal and financial circumstances. Types of support you may be eligible for include:

Home Care Packages: These packages provide funding for in-home care services tailored to individual needs. The level of government subsidy depends on the assessed care needs and the package level. Package level ranges from Level 1 (low-level care) to Level 4 (high-level care).

Residential Aged Care: The government provides subsidies to approved aged care providers to help cover the cost of care for residents. The amount of subsidy is means-tested based on the resident’s financial situation. The subsidy is paid directly to the aged care home. The amount of funding that a home receives is based on:

• An assessment of the person’s care needs by an independent assessor
• How much they can afford to contribute to the cost of care and accommodation (using a means assessment)

To be able to access the funding, subsidised aged care homes have to meet Aged Care Quality Standards to ensure quality care and services are provided.

Pension and Benefits: Eligible individuals may receive Age Pension or other benefits, such as the Commonwealth Seniors Health Card, which can provide concessions on healthcare costs. People can be eligible for benefits they make not be aware of. It is best to consult with a specialist in this area who can advise which benefits you are eligible.

Means Testing: For both home care and residential aged care, individuals may be subject to means testing to determine how much they will need to contribute towards the cost of their care. This assessment considers income, assets, and other financial factors to determine the level of support they are eligible for.

Selling Assets and Income Streams

In some cases, people may need to sell assets or rearrange their finances to cover the costs of aged care. This could include selling the family home or accessing equity through a reverse mortgage. It’s essential to seek financial advice to understand the implications of these decisions as they will impact the level of Government support (if any) that they are eligible for.

Rental Income from the Family Home

If the individual moves into residential aged care and their home is rented out, the rental income may contribute towards the cost of care. However, it is important to be aware that this income could also affect government subsidies and means-tested fees.

Seeking Professional Advice

Navigating the complexities of aged care financing can be overwhelming. Seeking advice from financial planners, aged care specialists, or legal professionals who specialise in providing advice in this area can provide valuable insights and assistance in making informed decisions. Not all advisors are familiar with this area so it is essential you find an advisor who can provide the advice you need.

Planning Ahead

It’s never too early to start planning for aged care. Considering long-term care options, discussing preferences with family members, and exploring financial strategies can help alleviate stress and ensure that appropriate arrangements are in place when the need arises. Someone needing to go into a care facility can often come about quickly and is highly emotional not only for the person going into care but for their loved ones as well. For this reason it is important to plan early and have a clear plan in place.

Regular Reviews

As circumstances change, it’s important to review aged care arrangements and financial plans regularly. This ensures that the chosen options continue to meet the individual’s needs and financial circumstances.

Paying for aged care in Australia is different for every person. It often involves a combination of government support, personal contributions, and ideally careful financial planning. By understanding the available options, seeking professional advice, and planning ahead, individuals and their families can navigate the complexities of aged care financing with greater confidence and peace of mind during an emotional time of transition.