Aged care costs are soaring but you can still do it on a budget. Here's how
Not everyone moving into aged care has a house they can sell, or superannuation to draw down. For many senior Australians their only income is the age pension, and the thought of paying $750,000 for aged care can be overwhelming.
But the good news is there is financial support for those of limited means – if you meet the criteria at the right time.
The aged care means test, which looks at your assets and your income, determines how much you can pay and what government support you're eligible for. Under the income test your accommodation contribution is calculated at 50c per dollar above that of a full pensioner, which is about $33,800 a year.
When it comes to your assets, the first $61,500 is exempt and assets between $61,500 and $206,663 have a contribution rate of 17.5 per cent. The outcome of the two tests are then added together.
Put simply, if you are a full pensioner you just need to have assets below $206,663 to qualify.
As a low-means resident you pay the basic daily fee, which is 85 per cent of the age pension. Currently, that's just under $64 a day. The big difference is in what you pay for your accommodation. While the aged care home may have advertised prices of $750,000 or more, the amount you will pay is based on your assets and income.
If you are funding aged care on a shoestring, start with a means assessment, find homes that have low-means places, and get advice early.
Let's look at an example.
Sally is a full pensioner with $95,000 of assessable assets. Under the income test her contribution is zero – as a full pensioner her income is under the threshold. Under the assets test her accommodation contribution will be $16 per day. On the other side, the government will pay up to $54 a day to the aged care home for her accommodation.
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