Understanding the switch to Aged Care package

SOONER, later, or perhaps right now, you will most likely be exploring the Government's changes to Aged Care packages.

If your journey has just begun, then you won't notice the changes, it's a matter of becoming familiar with a system so you can get the best results.

If you, a friend or family member is already in the system, there are some changes you need to know about.

In Australia, up until these recent changes, the Federal government provided financial subsidies directly to nursing homes/ caregiving services on behalf of patients.

Now, there's been a switch - the Federal Government provides subsidies directly to the patient/client and they make their choice of nursing homes/caregiving services/ facilities.

Obviously, this is intended to empower the individual and like make caregiving services more competitive for your dollar.

For example, after suffering a brain aneurism, an adult male was left with lifelong brain disability and requiring 24 hours care.

For 15 years, he spent his time in three different nursing homes. The family weren't particular happy with any of them. Due to the situation, they requested money be paid to family members to care for the man at home, until this request could not be actioned.

However, the family's approaches to the government were taken into account when creating the new system. He is now living in a home and two family members are being paid to care for him.


If a loved one is ready to receive a Home Care Package (services received at home) or go into an Aged Care Facility (usually this decision is made when it is determined that 24 hour a day care is needed), there are steps you need to follow.

Organise an assessment

When Francis' mother Margaret-Ann began to show signs of requiring more help than the occasional pop in from the neighbour, and daily visits to cook and clean from Francis, she was unsure as to what level of care her mother was eligible for. Her GP advised her to seek an ACAT assessment.

This assessment determines the care needs of an older person and what level of care they are eligible for.

The assessment, which is free, helps ascertain whether they require access to a Home Care Package; transition care; respite care in an aged care home; or a permanent placement in an aged care facility.

Through this assessment, Francis was able to determine that her mother could stay in home, with access cleaning and meal assistance.

"Right now, that level of care suits mum," Francis said. "If her carers and I see the need at any point in the future, we will organise another assessment to determine if an aged care facility is more appropriate."

To find your local ACAT or for more information about ACAT assessments, call 1800 200 422 or visit myagedcare.gov.au

Review a variety of care options and facilities

Once you are approved for a HCP you can choose any provider from the departments list of preferred approved service providers. Your package is your own, and the Government funding goes to the provider you choose. Your package is portable and should you chose to change providers, you simply take your package with you.

Choosing the right care providers for you or your family member - be they at home or in a facility - is essential.

Personal recommendations are always a good start.

Your ACAT assessment should list the care needs of your loved one. Use the letter of assessment from the ACAT as your guide and make it available to potential carers or facilities to let them know what care is needed based on your loved ones personal situation. Talk to family members and carers to make sure you have thought of everything.

Once you have a list of places or care givers, call each one and arrange a visit or interview.

When looking for an appropriate aged care facility for her aunt, Maria visited several facilities and completed a check list she had prepared, taking notes as she toured each facility.

"I was pretty emotional just making the decision, and I didn't want to forget anything so I tool lots of notes about each place," Maria said.

Organising payment

The new accommodation payments arrangements give residents and providers the flexibility to negotiate an accommodation price that is greater than a resident's net assets. Residents can choose to pay for their accommodation by a lump-sum refundable deposit, rental-style daily payments, or a combination of both.

Certified practicing account Frank Knudson says the financial considerations and implications of entering an aged care facility are complex, and advises family members to seek professional help through an accountant or financial advisor.

"The process is a little complicated if you have never done this kind of thing before, and when you factor in the emotional stress that many people are under while making these decisions, it pays to have sound financial advice and assistance in navigating the process and paperwork," Mr Knudson said.

"Even giving examples is a little dangerous, as each situation, facility and circumstance is unique and subject to a host of variables."

Generally speaking, Mr Knudson advises that to be eligible for any Australian Government assistance towards your care or accommodation costs, you need to undergo an income and assets assessment which will consider factors such as income (including pensions), and the value of any assets such as the family home. This will determine how much, if any, of your care the Government will subsidise.

"Your assets and income, as well as any government subsidies if applicable, will determine the level of care you can afford," Mr Knudson says. "If you have no assets or income, other than the pension, the Government will fully subside your aged care (utilising a percentage of your pension), but you will be limited in your choice of facilities, based on what you can afford."

If you do have assets and/or income, you will enter into an agreement with your chosen provider, placing a deposit, known as an RAD (Refundable Accommodation Deposit). This amount is negotiated with the care provider and is dependent on your assets and income.

The daily cost of aged care are made up of the DAP (daily accommodation payment) and the DAC (daily accommodation contribution.)

The DAP (daily accommodation payment) is calculated as follows: the amount of your deposit (RAD) x the MPIR (the Maximum Permissible Interest Rate which is set by the government, currently 5.78%) divided by 365 (days).

The DAC is set by the Department of Human Services.

For example, if Margaret moves into an aged care facility with a RAD of 400'000 (made up from funds of the sale of her family home), her daily rate is 400,000 x 5.78 percent ($23,120) divided by 365, which amounts to a DAP (daily accommodation payment) of $63.34. 

With a DAP of $63.34, and a DAC of $35 (indicative only), Margaret's total charge per day would be $98.34, which can be deducted from her RAD, or paid using outside income.

The balance of the RAD is refunded to the person if they wish to change facilities or in the event of their death it is refunded to their beneficiaries.

Mr Knudson stresses again that these examples are indicative only and advises seeking expert assistance in navigating the process. 

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