Paying for nursing homes while financially disadvantaged

Key points:

• You can access financial hardship assistance for aged care accommodation costs and daily fees
• Financial support may cover all of your costs, or just some, depending on your situation
• There are strict eligibility criteria and seeking professional financial advice is recommended

Nursing homes can be expensive and include major costs for your accommodation, daily living expenses and other related fees.

If you do find yourself facing any financial difficulties, there are support options available to help you access aged care. The Government ensures that all older Australians are able to access aged care when they need it.

If you would like to find out more about the available support and how to apply for it, we have outlined the important facts below.

Your residential aged care expenses

One of your main aged care costs will be accommodation, which can be paid as either the upfront single payment, called a lump sum, or a per day payment.

For a person who is financially disadvantaged, you would either pay a lump sum, called the Refundable Accommodation Contribution (RAC), or the daily payment, called a Daily Accommodation Contribution (DAC).

If you are not financially disadvantaged, you would pay either the Refundable Accommodation Deposit (RAD) or the Daily Accommodation Payment (DAP). You can learn more about this in our article, ‘What costs are involved in nursing homes?‘

The RAC and DAC were put in place for low means residents, to ensure they are able to access aged care fairly.

The RAC is a single payment, much like an interest-free loan. The Government will assist you to cover the cost of this lump sum for agreed services in a nursing home and the deposit is mostly refundable when you leave the home.

Meanwhile, the DAC is a rental-style payment, typically paid monthly, calculated on a per day basis. As there is no upfront payment it is not refundable. The Government will help you pay for this daily payment so you can live in aged care.

You don’t have to choose one option, you can decide to do a combination of a lump sum and daily accommodation payment. You choose the option that best suits your own needs and your financial situation. More information is available through our article, ‘What costs are involved in nursing homes?’.

If you are eligible for a DAC or RAC, Services Australia will contact your provider directly to let them know, so they can calculate how much you need to pay.

Daily living fees and means tested fees

There is also a daily living cost to pay either fortnightly or monthly, known as the basic daily fee. This covers services like:

• Meals
• Cleaning
• Laundry
• Heating and cooling
• Some medical care
• Some personal care

The basic daily fee has a set maximum price that’s reviewed twice a year by the Government. It is based on the Age Pension and is capped at 85 percent of the annual single basic Age Pension.

While financial assistance is available for your daily fee, extra or additional services are not covered by Government support.

Finally, you may be asked to pay a means tested fee as an extra contribution, but only if you can afford to. Your fee is based on individual financial circumstances and will be between $0 and $358.41 per day, with annual and lifetime caps in place.

It is likely that if you are facing financial hardship, you will not have to pay a means tested fee.

You can use the AgedCareGuide.com.au nursing home fee estimator to calculate your fees. You can learn more about means and income testing fees in our article, ‘Means testing or income testing: What does it mean?’.

Who can access financial assistance?

The Federal Government can provide financial assistance to eligible aged care residents and may pay some – or potentially all – fees and charges if you are experiencing financial hardship.

To be eligible for aged care financial hardship support, you must:

• Not have assets valued at more than $40,033.50 (excluding unrealisable assets, such as a property that has been unsold on the market)
• Not have gifted more than $10,000 in the past 12 months or more than $30,000 in the past five years
• Have completed and lodged the Aged Care Calculation of your cost of care form

Unrealisable assets are inaccessible assets that are unable or unreasonable to be sold or borrowed against, such as a jointly owned property, frozen assets or a house that you own that has been on the market for over six months.

It is possible to have your asset assessed as unrealisable when you apply for financial support with the Government.

If you do meet the above eligibility criteria, you can complete and lodge your application. It will be reviewed by Services Australia who will also determine whether you can receive support from other Government services, such as the Age Pension or Home Equity Access Scheme.

Services Australia will also assess your essential expenses, which include:

• Private health insurance
• Ambulance cover
• Medical expenses
• Funeral plan payments
• Mobility aids, prosthetics, hearing aids, etc

If you have access to more than 15 percent of the basic Age Pension ($140.52 per fortnight) after paying for essential expenses, you may not be approved for financial hardship assistance.

The application process

When applying for financial hardship assistance through Services Australia, you will fill out an Aged Care Claim for financial hardship assistance form. This can be done online or by hand. Follow the instructions to ensure you fill in the paperwork correctly.

To request a printed copy of the form in the mail, or for any questions regarding your application, you can also call Services Australia on 132 300, or 1800 227 475 for regional callers.

Your claim will be assessed within 28 days and you will receive confirmation via the mail. There is a chance additional information is required, and any follow-up assessment will be completed within 28 days of that information being received.

It’s recommended that you speak to a financial advisor as they can assist in clarifying your eligibility and financial situation prior to filling in any application.

Have you accessed financial assistance to live in an aged care home? Tell us in the comments below.

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Related content:

What costs are involved in nursing homes?
Means testing or income testing: What does it mean?
Financial hardship options for older people