Aged Care – Finding Your Way Through the Maze

By Jamie Luxton, Principal of Wealthwise
Aged Care - Finding Your Way Through The Maze
At some point in our lives or in the life of a loved one we may have to consider moving into residential Aged Care.

It can be a daunting prospect and your mind will be full of questions:
How do I work out all these different fees? Do I need to pay a lump sum? Which facility should I choose? Can I negotiate over fees? Will this impact on my Aged Pension?

As if that isn’t enough to get your mind spinning, sometimes a condition or illness may mean there is precious little time to get a handle on all the issues. Sometimes the chosen facility may not have a room or a bed available at that point in time or they have a room but want a decision in a very short space of time.

The best way to help you find your way through this maze is to look first at how the Aged Care process actually works.

Before entering Aged Care a person must be assessed and approved by the government’s Aged Care Assessment Team (ACAT). ACAT helps older people and those who care for them decide what kind of care will best meet their needs when they can no longer manage on their own. ACAT is made up of a range of health care professionals who help to assess whether an individual requires Low Care or High Care.

If the evaluation indicates that Low Care is required the following can apply:

• An Accommodation Bond, which is a lump sum paid to the facility for the duration of the resident’s stay. This will be refunded upon leaving (less an annual retention amount).
• Daily Care Fee (maximum of $41.34 per day for standard residents).
• Income Tested Fee (depends on the level of income but up to $66.43 per day).

The alternative assessment is High Care, where the following costs can apply:

• Accommodation Charge (a maximum daily fee of up to $32.38 per day depending on assets).
• Daily Care Fee.
• Income Tested Fee.

The resident may request extra services in High Care which then also incurs an Accommodation Bond instead of the charge. If this is the case, the resident will also be charged a daily fee for those extra services.

So, does it all still seem too hard to navigate?

Basically, there are 2 choices defined by the ACAT team – Low Care or High Care. The latter does have an extension where you can elect to have extra services – a daily newspaper, a couple of glasses of wine or perhaps even a regular manicure. For these extras you would pay an additional daily fee and an Accommodation Bond rather than the charge.

It’s that simple!

Or is it?

All those fees could be more than the budget allows and a change in circumstances could mean a reduction or even loss of the Age Pension which could then exacerbate the cashflow problem. You might look at negotiating with the residence over the fees but, frankly, it’s not a high profit industry so that outcome is unlikely, unless you can demonstrate a clear benefit to them.

So is there anything you can use as a bargaining chip?

Well, one possible strategy is that you could try to negotiate to pay a higher bond, in which case you may get a reduction in fees and possibly improve your Age Pension. It’s not a strategy that can work for everyone but it’s certainly something to consider.

Conversely, some people may not have to worry about fees other than the Daily Care Fee if they have less than $40,500 in assets and are classified as a fully-supported resident.

Looking at all these considerations the message that comes through loud and clear is that, wherever possible, you should prepare early. Your action plan might include visiting a number of facilities to develop a sense of where you or your relative may be comfortable. It should also include getting specialist advice to help negotiate with the residence and to see how you might structure your financial affairs to maintain or maximise your Age Pension.


The information within this article contains general financial product advice and factual information only and is not intended to constitute personal financial advice. It has been prepared without taking into account the personal circumstances, financial needs or objectives of any one person. Individuals are advised not to rely on this information when making their own investment decisions. Instead, they should seek professional advice. Where appropriate, you will be provided with a Product Disclosure Statement in relation to the product recommended. You should consider this document before making a decision to acquire the product in question. Whilst all care has been taken in the publication of this article (using sources believed to be reliable and accurate), no person, including Wealthwise or Financial Wisdom or any other member, accepts responsibility for any loss suffered by any person arising from reliance on this information.