A quick guide to aged care costs

The cost of home care and living in a retirement village or nursing home can vary depending on the level of care you need, the lifestyle and services you want and the provider you choose.

Here is our quick guide to costs you can expect for retirement villages and aged care:

Retirement village costs

There are a number of charges and fees you can expect to pay to live within a retirement community.

These costs can differ between retirement villages, so it is important to have an understanding of what you may need to pay at the villages you are considering.

Comparing the cost between different villages can help you find the best community for you that fits within your budget.

Entry payment or ongoing fees

What you pay will depend on the type of tenure you are entering within a retirement village for a home.

If you are moving into a retirement village with strata, community or company titles, then you will likely be paying for the title of the property. You will need to pay the ‘purchase price,’ for the property within the village.

If the tenure of the home within the village is a leasehold or license tenure, then you will be paying an entry payment, which is usually the market value of the property.

Before you even move into a village, you will need to pay a deposit for your new home. You can receive a refund on your deposit if you change your mind, but make sure you know the period of time you have to make that decision.

Some villages also have rental options, which gives you access to the retirement lifestyle without having to pay the purchase price. Instead, you will pay rent towards the cost of living in the home and community.

Stamp duty

Similar to houses you have had over your lifetime, if you are buying a house in a retirement community that is either strata, community or company title, you will need to pay stamp duty.

However, this can differ between states and territories, you should clarify this with the retirement villages you are considering. You will not have to pay stamp duty on leasehold properties in villages.

Additional fees and charges

While living in a retirement village, you will need to contribute to the day-to-day running costs and regular maintenance of the facility.

This can include facility upkeep, staff, water rates, security, insurance for common areas and public liability.

Depending on what your retirement village offers, you may need to pay for additional services, like laundry or personal care.

There are also extra costs and fees you may need to pay when you leave the retirement village. You can learn more about retirement village costs in our article, ‘How much can a retirement village cost?‘

Home care costs

The Commonwealth Home Support Programme (CHSP) and Home Care Package (HCP) program are subsidised by the Australian Government, but you are expected to contribute to the cost of your care if you can. Any fees or charges from your provider are discussed and agreed upon before you commence services with them.

If you are unable to contribute to the cost of your services due to financial hardship, there is assistance available. You can learn more about this in our article, ‘Financial hardship options for older people.’

Home Care Package funds are administered by your service provider on your behalf. All services provided to you must be within your budget, unless additional contributions are agreed upon.

If you don’t want to go through the government for home care support, you can utilise private home care providers, which operate on a fee‑for‑service basis and you are required to pay the full cost of your care.

It’s important to keep track of your budget and how funds are being spent across the home care services you receive, no matter if the services are government-subsidised or private.

Your provider must provide monthly statements that outline charges for care and services, administrative and case management costs from your provider and any leftover balance that will be transferred over to the following month.

You can learn more about the cost of home care in our article, ‘How much can home care cost?‘

Aged care costs

Aged care homes charge a range of fees to cover the cost of care, accommodation and living expenses and these can vary enormously between facilities and from resident to resident.

Both your income and financial assets affect your entitlements. The income and asset tests have been combined, to ensure a consistent fees policy.

This will address the issue of asset-rich, income-poor residents paying for all of their accommodation and nothing for care, along with the income-rich, asset-poor residents paying for their care but not for accommodation.

The cost of care is divided into three parts — daily care fees, accommodation payments and means-tested fees.

Basic Daily Fees

As a resident in an aged care home, you are asked to pay a daily fee as a contribution towards the cost of care and living expenses, such as meals and refreshments, cleaning, laundry, heating and cooling, as well as social activities.

In addition, the daily fee contributes to the costs for personal care, including assistance with daily living such as bathing, dressing and toileting, assistance with mobility aids, therapy and certain medical and pharmaceutical services.

The maximum Basic Daily Fee for all permanent residents who enter an aged care home is 85 percent of the maximum base rate of the Age Pension for a single person.

This is the same amount you will be charged if you’re staying in a nursing home for a temporary stay as a respite resident. It is generally adjusted each March and September at the same time as the Age Pension.

Depending on your income and level of care, you may also be asked to pay an income-tested fee as part of the daily fees. However, this does not apply to respite residents.

If you do receive income other than your pension, you will be assessed by Centrelink or Veterans’ Affairs if you are a veteran, to determine how much extra you can be asked to pay as an income-tested fee.

Accommodation payments

Accommodation payments are different from daily care fees. They are used by the aged care home as capital funding to improve the quality of the buildings and services they provide.

Not everyone pays an accommodation payment. It depends on the value of your assets and income at the time of entry into care.

If you have more than $59,500 in assets and income, you can be asked to pay an accommodation payment, but you must be left with at least $59,500 in assets after your payment (rates as of March 20, 2024).

Means-tested fees

The third fee you may pay is the means-tested fee that takes a snapshot of your financial assets and income to determine if you can contribute towards the cost of your care while living in a facility.

There is a limit to how much you would pay in means-tested fees, within a year you won’t pay more than $33,309.29 and over your lifetime you won’t pay more than $79,942.44 (rates as of March 20, 2024).

How much you pay in means-tested fees will depend on your income and assets, which can or may, fluctuate over your time in aged care.

How much will I pay?

If you can afford to, you will pay a basic fee of up to 85 percent of the maximum base rate of the Age Pension for a single person, a means-tested contribution to your accommodation and a means-tested contribution to your care.

The maximum means-tested contribution will be allocated toward your accommodation payment until the full cost is paid and then toward your care fee.

The family home will continue to be exempt from the aged care assets test if occupied by a spouse or other protected person.

No one will need to pay a care fee greater than the cost of their care and there are annual and lifetime caps that impact on how much you will pay.

Understanding the rules and seeking specialist advice from an aged care financial advisor to minimise costs is recommended.

You can learn more about nursing home costs in our article, ‘What costs are involved in nursing homes?‘

What retirement or aged care option are you considering for yourself? Tell us in the comments below.

Article originally published by Liz Alderslade — updated 14/06/2024

Related content:

How much can home care cost?
Understanding aged care costs
What costs are involved in nursing homes?