Case Studies
Note: Figures are accurate as of the publication date
Can My Parents Afford Two Rooms in an Aged Care Facility? Exploring Affordable Pathways
This is one of the common questions that we are asked by families whose ageing parents are fast approaching a move into residential aged care. After adult children commence visiting a few facilities they are often shocked at the amount being quoted for entry in the form of the Refundable Accommodation Deposit (RAD, formerly known as a bond) and the numerous ongoing monthly fees. They are rightly concerned that their parent’s funds will not be sufficient, and this dilemma intensifies when considering that the costs for two parents are doubled.
The True Cost of Two Aged Care Rooms
Take Abe and Esther, for example, who own an apartment worth $1M, have $200k in term deposits, and are both on a full pension.
Their declining health signalled to their family the need for residential aged care. Eyeing a new facility near their children, they were eager to secure two adjacent rooms, each priced at $900,000. Faced with a total of $1.8M in RADs plus monthly ongoing expenses, the family feared these costs exceeded their parents' $1.2M in total assets and began discussing cheaper options in suburbs further away as they assumed the rooms at their preferred facility were unaffordable and unattainable.
Understanding Low-Means Resident Status
It was at this stage that the family reach out to us for advice and assistance. After careful consideration of their circumstances a unique solution became apparent, thanks to two little-known aged care terms – "protected person" and "low means resident."
When one member of a couple enters care and the other stays at home, the home is protected and not considered an asset by Centrelink. For Abe and Esther, this meant their total assessable assets were only the $200k they had saved in term deposits. Split between them, it brought their individual assets to $100k which falls below the current low-means threshold of $197,735. Consequently, the member of the couple that enters care first would be classified as low means, a status retained when the second member joins them in care, even if they join them the very next day.
The low-means resident could then choose between paying a daily accommodation contribution (DAC) or a lump sum refundable accommodation contribution (RAC). The maximum DAC is currently capped at $66.94 per day and equates to a lump sum RAC of ~$291,500. This unique situation allowed Abe and Esther to secure two rooms for a lump sum of $900k + $291,500, coming in below their total asset position of $1.2M.
How Pension Status Changes for Couples in Care
The family then expressed concerns about being able to afford the ongoing monthly expenses of $6,000+. At this point we worked with the facility to have the monthly expenses deducted from the lump sum held. On top of all that, the family were not aware that for pension purposes, when a member of a couple enters care, the couple are considered to be a ‘couple separated by illness’. As a result, instead of being eligible for a couple’s pension, they are eligible for 2 separate individual pensions and will receive an additional ~$15,000 per year. This remains the case when the second member of a couple joins the first member in the aged care facility.
A meeting that began with anxiety and stress ended with optimism and relief for the family as they left with a sense of clarity and a financial solution that allowed them to secure the desired rooms for their parents at their preferred facility.
When RAD Seems Impossible: Real Case Example
The Challenge
When James rang us, he was facing what seemed like an impossible task. His parents urgently needed to move into Aged Care and their top preference was a brand-new facility that was asking for a $1.2M Refundable Accommodation Deposit (RAD) per room. We then went through the ongoing expenses and determined they would amount to over $10,000 per month. However, their only significant asset to work with was the family home, valued at $800,000.
James was distraught as he assumed his parents couldn’t afford the move. But with their health needs escalating, he was determined to secure the best possible care for them. He came to us searching for a solution.
Our Approach
We began by carefully assessing James’ parents’ circumstances and the aged care facility’s requirements. Then, we got to work on:
Negotiating the RAD
Based on past experience, we knew that a new facility would likely be willing to negotiate significantly to fill their empty beds. The reason for this is that most Aged Care facilities generate around 80% of their revenue from government funding which is only received when beds are occupied. As a result, we were able to negotiate heavily reduced RADs for both rooms which was key to making the move financially viable.
Optimising Ongoing Expenses
After paying part of the negotiated RADs, we then communicated with the facility to arrange for the ongoing monthly fees to be deducted from the funds they were holding on the family’s behalf. This in turn resulted in a greater pension being received and the lowest possible Centrelink means tested fee charged.
The Outcome
Despite his initial concerns, James’ parents moved into the facility and thrived in their new environment. His mother stayed in care for five years, and his father remained for seven years before his passing. Throughout this period, the strategic plan we implemented provided James with clarity and allowed him to focus on his parents’ well-being rather than worrying about finances.
This case highlights the value of seeking professional advice before entering Aged Care. When it feels like there’s no way forward, the right expertise can turn the impossible into a reality. At Clarity Aged Care Advisors, we’re here to help families navigate these complex situations with confidence and care.
How Strategic Planning Creates Aged Care Solutions
Emily and her family approached us with a dilemma. Emily’s mother, Margaret, had worked at a local Aged Care facility around the corner from where she lived with her husband for 15 years. She had built a strong connection with the community there, however, when the time came for Margaret to move into Aged Care herself, the family assumed they couldn’t afford for her to stay at the place she considered her second home.
Their only option, they thought, was a cheaper facility much farther away, despite the emotional and logistical challenges it would bring. They initially came to ask seeking guidance on the best way to fund the move into this cheaper facility however when they told us where Mum had worked her whole life, we asked why they didn’t want to move there? When we heard the answer was simply because they didn’t think they could afford it we asked them to give us an opportunity to make it work.
We know how much staying close to family and in a familiar environment matters when moving into care, so we dove into the numbers to find a solution. What the family didn’t realise was that because Dad was living in the home, he was classified as a ‘protected person’ and therefore the family home was exempt from aged care calculations.
In addition, we determined that if Margaret and her husband used part of their savings to fund the RAD, they would be eligible for an Australian government aged pension for the first time in their lives. In fact, rather than being eligible for a couple’s pension, once Margaret entered care they would receive two single pensions.
The reason for this is that when one member of a couple enters care, the couple are considered to be a ‘couple separated by illness’. As a result, they are eligible for an even greater pension that if Margaret were still living at home. This is still the case when the second member of a couple joins the first member in the Aged Care facility.
Once we completed our modelling, we realised that with the pension coming to cover some of the costs the annual shortfall was reasonable enough for the family to cover.
With a clear plan in place, Margaret was able to move into the facility where she had worked for 15 years and stay close to her family and friends. The solution not only honoured Margaret’s long-standing connection to the facility but also provided peace of mind for her loved ones.
The family was thrilled to see Margaret thriving in a place where she was known and cared for, without the stress of financial strain.
This is just one example that demonstrates the value of detailed strategic planning before moving into Aged Care. At Clarity Aged Care Advisors, we don’t just help families find care options - we help them achieve the best possible outcomes, both financially and emotionally.
Accessing Fully Supported Aged Care With No Lump Sum
When Linda's children, Sarah and Mark, first approached us, they were under immense stress. Linda’s had just had a fall, and the hospital was telling them that she couldn’t go home and needed to go into Aged Care.
Sarah and Mark had begun touring facilities for their mother and were shocked at the costs of the Refundable Accommodation Deposits (RADs). They came to us for help as they believed they couldn’t afford the care for their mum who had looked after them their whole lives.
After listening to their concerns, we began discussing Linda’s circumstances. When they told us that her only asset was $50,000 in savings, and her income was limited to her Age Pension, our eyes lit up!
With her assets below the relevant threshold, Linda would qualify as a ‘fully supported resident’, and she was eligible to have her accommodation costs fully covered by the government. Rather than needing to pay a lump sum deposit and ongoing monthly fees, all Linda would need to pay is 85% of her government pension to the facility.
We explained to Sarah and Mark that all Aged Care facilities are required by law to allocate a certain percentage of their beds to low-means residents, ensuring that individuals like Linda could access quality care regardless of their financial situation.
We immediately reached out to the Aged Care facility Linda’s family had chosen. By communicating directly with their admissions team, we confirmed that a fully supported bed was available. We also guided Sarah and Mark through the Centrelink application process, ensuring they completed the correct forms and selected the right options to confirm Linda’s eligibility. This involved assisting with the SA457 form to apply for a financial assessment, correctly declaring Linda’s assets and income, and explaining how to update Centrelink as her financial situation changed over time.
Telling Sarah and Mark that their mum could afford the care she needed without paying a RAD was one of the most rewarding moments of our work. It’s our favourite news to deliver - letting families know that a bed they thought was out of reach is, in fact, fully within their means.
With Linda’s finances in order and her eligibility confirmed, the family could focus on her transition to care, knowing she would be close to home and in a supportive environment. Sarah and Mark expressed their immense gratitude for the clarity and guidance we provided, which turned what seemed like an insurmountable financial burden into a straightforward process.
Many believe quality care is beyond their reach, but with the right support, they can access the care their loved ones deserve, often at little to no cost.
FAQs
1. Can two parents afford aged care rooms in the same facility?
Yes, the system is designed in a way to ensure two parents can afford to live in the same facility.
Under certain circumstances, such as those outlined in this article, it is possible to secure two beds in a facility for roughly the price of one and a half.
2. What is a low-means resident in aged care?
If someone does not own a home, or their home is occupied by a protected person such as a spouse, and they have less than roughly $200k in assets, they may be considered a low means resident.
Low Means Residents face a different set of costs to full fee-paying residents and can often secure a similar bed in an aged care facility for a fraction of the price.
The assessment of low means is done on the day someone enters permanent care. If a resident enters as a low means resident, they remain under this classification unless they move to a different facility.
3. Are couples separated by illness eligible for two pensions?
When a member of a couple enters care, the couple are considered to be a ‘couple separated by illness’. As a result, instead of being eligible for a couple’s pension, they become eligible for 2 separate individual pensions, which is a greater amount. This is still the case if the second member of the couple joins the first in care.
Want expert guidance on aged care costs and payment strategies?
Read our Complete Guide to Aged Care Costs in Australia to explore your financial options.
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