How to Fund Residential Aged Care - Southern Cross Care (WA)

Understanding how residential aged care is funded

The amount and the types of costs residents are required to pay is determined by an assessment of their income and assets (means assessment).

The different types of aged care home costs are:

Basic daily fee: An amount that everyone pays for the day-to-day services they will receive at the aged care home.
Means tested care fee: A contribution that some people pay toward the cost of their care, determined by a Centrelink income and assets assessment.
Accommodation costs: An amount that some people pay to contribute towards or cover the full costs of their room, depending on their means assessment.
Additional service fees: Fees for services that go beyond the minimum care and service requirements. This fee is only applicable to residents at Southern Plus East Fremantle.

For more information about additional services at SPEF click the button below.

View Southern Plus – East Fremantle

After the assessment

Following completion of a means test individuals will receive a Fee Advice letter from the Government which will outline their basic daily fee, whether they are required to pay the agreed room price, their maximum accommodation contribution and their means tested care fee (if applicable).

A fee estimator is available on the My Aged Care website here.

We encourage all residents and their families to seek independent financial advice prior to entering into an aged care accommodation agreement.

Residents do not have to pay the full amount of their accommodation deposit upfront and have a choice on how they wish to pay.

Payment options include:

1. A refundable lump sum

This is a refundable accommodation amount. There are two types of lump sums, depending on the outcome of your means assessment:

Refundable accommodation contribution (RAC). This is when the Government helps with the costs.
Refundable accommodation deposit (RAD). This is when the resident pays the full amount themselves.

2. Rental-style daily payments

This is a daily accommodation charge. There are two types of rental-style daily payments, depending on the outcome of your means assessment:

Daily accommodation contribution (DAC). This is when the Government helps with the costs.
Daily accommodation payment (DAP). This is when the resident pays the full amount themselves.
If you choose to pay for your accommodation by DAP, the amount is worked out by applying the maximum permissible interest rate (MPIR) to your agreed room price and dividing the amount by 365.

3. A combination of refundable lump sum and rental-style payments

Residents can choose to combine the two payment options any way they choose to meet their costs.
For example, if the agreed room price is $500,000, you could choose to pay $100,000 as a part RAD refundable lump sum, and also pay a reduced non-refundable DAP on the remaining $400,000.
For this combination payment, your reduced DAP would be calculated as follows:
Reduced DAP = ((agreed room price − RAD paid) × MPIR) / 365
= (($500,000 − $100,000) × 6.31%) / 365
= ($300,000 × 6.31%) / 365
= $51.86
Note: The MPIR used in this example (6.31%) is current as at 1 October 2022. Current and previous MPIRs can be found on the Department of Health and Aged Care website.

Eligibility and application process

Eligibility for residential aged care is based on need, determined through an Aged Care Assessment Team (ACAT) health assessment.

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How to Fund Residential
Aged Care