Paying for aged care home fees can be difficult, and often places significant stress on a family’s finances.

Old age is inescapable, this is why it is crucial to plan for aged care ahead of time, especially when your loved ones require specialised medical treatment.

If you do not have an income that can comfortably support you, your family and the cost of aged care, it is vital you learn more about the options available.

In this article, you will learn 3 options to help pay your parent’s nursing home fees and relieve some of the pressure placed on your shoulders.

3 Tips to Help Pay for Residential Care for the Elderly

  1. Draw Daily Payments From Refundable Deposits

People moving in to residential care homes may be required to pay a one off refundable fee along with other ongoing fees, like:

  • The basic daily fee
  • The means-tested care fee
  • Accommodation fees
  • Addition services fees

It is possible to use the refundable accommodation deposit (RAD) to help pay residential care home fees, where daily accommodation payments (DAP) are covered by drawings against the RAD, reducing the balance over time.

As your RAD is reduced, you may be asked by your aged care accommodation provider to replenish your deposit, or pay a higher accommodation fee, to compensate for the decreased balance.

It is important to note, the Australian Government requires aged care home providers to publish their maximum accommodation fees, i.e. the max RAD and DAP, on their website, in any organisation materials and on the My Aged Care website. This will allow you see and better understand the options available when paying care home fees.

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  1. Selling the Family Home

 This isn’t the most popular option for many people, but in some cases it can be the only viable one available.

Often, the majority – if not all – of your parent’s assets are tied up in the family home. If they are no longer able to live in it, it can prove to be more of a financial burden in the long run.

Although, the problem with selling the family home is that the money gained from the sale will now be counted towards assets and means tests carried out by Centrelink to calculate any government assistances available.

Assets exceeding the thresholds for ether individuals or couples are deemed as receiving an income of 3.25% on those assets, even if that number isn’t actually earned in interest.

This deemed income is then used in asset and means tests by Centrelink and will affect your parent’s age pension payments.

To avoid reductions in age pension payments, due to surplus assets from selling the family home, your parents can choose to either:

  • Gift the money – as long as it doesn’t exceed the amount of $10,000 in one year or $30,000 over five years
  • Prepay funeral costs
  • Invest in a funeral bond
  • Investing in investment bonds within a family trust
  1. Sell Other Assets

For some people, selling the family home just doesn’t feel right; either for sentimental reasons or because of the financial hoops they need to jump through in order to minimise aged care fees and maximise pension benefits.

For those people, it may be a wiser option to keep the family home and sell off other assets and investments.

As the value of the family home and the money earned from rent is exempt from income and assets tests, your parents could use the income earned from renting the home towards residential aged care fees.

Although, rent may be exempt from asset testing, it is not exempt from means tested care fees, which will increase by 0.50c per dollar of rent earned after expenses.

As you can see, there are a few options available when looking to pay for your parent’s accommodation in a residential aged care home.

To gain more information specific to your parent’s situation, and to be prepared with the very best strategy available, it is always a good idea to consult a professional aged care financial planner first who will be able to advise and guide you along the way.

Hi, I hope you found this article useful.

If you wish to discuss your situation and what strategies may be of benefit please contact us here 

Thanks - Shane