If you have low levels of income and assets you might qualify as a low-means resident. The amount you pay towards your accommodation will be based on your income and assets. The government will also pay some of the cost.  

As a general rule, you’ll likely only qualify if you do not own your own home or if your spouse or other “protected” person will continue living in your home and you have income and assets under certain thresholds. A protected person includes carers or close family members who qualify for income support from Centrelink or Veterans’ Affairs and have already lived in your home for at least two years as a carer or five years for a close family member.  

If you think you might be eligible, you will need to fill in the assessment form and send to either the Department of Human Services (DHS) or Veterans’ Affairs (DVA).  

If you do qualify, you should ask your chosen service provider whether a place is available for a low-means resident and check the fees that you’ll be asked to pay for your accommodation.   

One option to pay for your accommodation is to pay the requested lump sum. This is called a refundable accommodation deposit or a RAD for short.  

You can check the service provider’s website to see the maximum RAD you may be asked to pay if you accept an offer of a place.  

But paying the lump sum is only one option. You can choose to pay the RAD in full or pay a daily accommodation payment (DAP) on any amount not paid. The DAP is like paying rent or interest on an outstanding loan. You could also choose to pay a part RAD and part DAP. Paying for advice from a qualified financial planner may help you to make this choice.  

If you choose to pay a RAD, the service provider will hold this money in trust for you. The full amount is refunded when you leave or pass away. 

The Federal Government guarantees the repayment of refundable accommodation deposits (RADs) which have been paid to an approved residential aged care service.  

This means if the service provider goes into liquidation or faces bankruptcy and cannot afford to repay your RAD, the Government will pay you back the full amount owing. This makes your money very secure. 

You should always check that the service provider is an approved service to make sure it is covered by the guarantee.  

If you pay for your accommodation with a RAD, you will receive this money back after you move out.  

If you pass away, the RAD is repaid to your estate. The service provider will generally ask to see a copy of probate for your estate. The full RAD should be refunded to your executor within 14 days of seeing probate.  

The full amount that you paid as a RAD is refunded unless you have asked the service provider to deduct any other fees from the RAD or you have unpaid fees outstanding which the provider is able to deduct from the RAD. Your accommodation agreement will explain which outstanding fees can be deducted from the RAD.  

If you receive a payment from Centrelink or Veterans’ Affairs, you need to update your records every time your circumstances change. This includes when you move into aged care.  

The amount you receive after moving into care may change. It may increase or decrease depending on your circumstances and how your income and assets change.  

If you are a member of a couple, you’ll still have combined income and assets assessed but you’ll both start to be paid at the higher single rate of pension.  

If you keep your former home, you may continue to be assessed as a homeowner for up to two years. Your home will remain an exempt asset for Centrelink and Veterans’ Affairs. However, the assessment of rental income for aged care fee purposes will depend on when you entered permanent care.  

If you sell your home, you will become a non-homeowner, but the amount you pay to the service provider as a refundable accommodation deposit (RAD) is exempt from Centrelink and Veterans’ Affairs assessment. This may help to maximise your age pension. This amount is still assessable however, when calculating your means-tested daily care fee.  

To ensure you maximise your Centrelink or Veterans’ Affairs entitlements, it’s important to seek advice from a qualified financial planner. They will help you ensure the arrangements are structured properly and determine whether it’s more effective for you to sell or keep your home.  

How much you pay for accommodation will depend on the residential service that you choose. This is much the same as buying a house – a bigger house with better facilities, or one in a better location, is likely to cost more.  

You can compare the cost of accommodation for all service providers on the government website www.myagedcare.gov.au.  

The basic daily care fee is the same for all residents in all services. This is a flat fee set at 85% of the basic rate of single age pension (indexed every six months).  

The amount you will pay for the means-tested fee depends on your income and assets, not the service you choose to live in. Department of Human Services (DHS) or Veterans’ Affairs will calculate your assessable income and assets and use a formula to work out the fee you will be asked to pay.  

The fees for any extras you choose to access will vary.  You can ask for a schedule of fees to help you decide if you want to pay for any extra services.  

Most people don’t encounter this problem. 

Before accepting an offer of a place, you should check that you have enough assets to pay the RAD. If you don’t, you can consider your ongoing income to pay the DAP, or use a combination of both assets and income to pay a part RAD/part DAP.  

If you have lower means, you may qualify as a low-means resident and pay lower fees. Financial advice can help you to structure your finances to ensure you can continue to meet your payments. 

The amount you contribute towards your ongoing care is based on your income and assets. If your income or assets reduce, your fees may also reduce or vice versa. The government has also introduced caps on the means-tested fee to limit how much you will pay. There is a daily, annual and lifetime cap.  

If circumstances beyond your control do place you in financial hardship and you can’t meet your ongoing fees, you can apply to the government to have fees waived or reduced.