Aged Care Planning

Residential aged care has four main fee components: a basic daily fee (around $63/day), a means-tested care fee (up to about $405/day, capped annually), accommodation (either a lump sum RAD typically $300K-$750K+ or a Daily Accommodation Payment equivalent), and optional extra services. Total costs vary enormously based on your means assessment and the facility. Budget $100K-$200K a year for mid-range care, before accommodation.

It depends. Paying a full RAD means less interest cost (the DAP is essentially the interest on the unpaid RAD), but ties up capital that could otherwise generate income or stay exempt from pension assessment. A partial RAD with the balance as DAP is often the right answer. We model the cash flow and pension implications of each option before recommending one.

You have options: keep it (and potentially rent it), sell it, or transfer to a family member (with major tax and pension implications). For Age Pension purposes, the home is exempt for the first 2 years after entry to care, then becomes assessable if still owned. Rental income from the former home is exempt from pension income testing while the home itself is still pension-exempt. It’s an area with many interacting rules, so getting advice before making decisions matters.

It’s based on a combination of income and assets. The formula applies different rates to different components (deeming on financial assets, rental income, super, the value of the former home above a threshold, and more). The fee is capped at around $34,000 per year and around $82,000 over a lifetime. Working out where you sit requires running the Services Australia SA457 form, which is detailed but manageable with help.

A RAD (Refundable Accommodation Deposit) is a lump sum you pay upfront. It’s fully refunded when the resident leaves (less any agreed drawdowns). A DAP (Daily Accommodation Payment) is the daily equivalent if you don’t pay the full RAD, calculated at a legislated rate (currently around 7.9% p.a. of the RAD amount). You can split: pay part as RAD and the balance as DAP. Most families end up with a combination.

The Support at Home program replaced Home Care Packages in July 2025. It has 8 service levels (1 being lowest, 8 being highest) with different government contribution levels. Co-contributions are means-tested. It’s designed for older Australians who want to stay in their own home but need assistance with personal care, domestic help, meals, or nursing. Eligibility is assessed through My Aged Care.

It’s generally a bad idea. The gifting rules and asset transfer provisions mean Centrelink will still treat the home as yours for five years, and it may trigger capital gains tax and stamp duty with no actual protection benefit. In most cases, good structural advice (how the home is held, what other assets exist) is more effective than trying to hide assets.

Entering residential care can meaningfully change your pension in several ways: the spouse rules change if one partner enters care, the former home becomes assessable after 2 years, and care fees can reduce assessable income. We coordinate the aged care transition with the pension strategy so the overall outcome is optimised. Often this means timing decisions carefully around specific dates.

If the aged care resident is a veteran or war widow receiving DVA support, DVA (not Centrelink) handles their pension and aged care means assessment. The forms and timelines are slightly different but the principles are the same. We have experience coordinating with both agencies.

Often very quickly. A parent may need care after a hospital discharge, with a week or two to find a facility and commit. We offer urgent consultations where needed and can turn around a written aged care strategy in days rather than weeks. The worst outcomes we see come from families making rushed decisions without advice, then discovering the financial consequences later.