For many Australians, aged care is something that happens "later". It sits in the background as a future problem, often accompanied by a firmly held belief that they will stay in the family home forever. When the need for care finally arrives, the conversation can look very different.
The family home that once represented independence can become socially isolating, unsafe and surprisingly expensive to support. Stairs become hazards. Bathrooms become dangerous. Large blocks become impossible to maintain. Friends and neighbours move away or pass on, and the home that once held a lifetime of memories can suddenly feel very empty.
That does not mean the only option is moving into residential aged care.
In fact, the majority of older Australians receiving aged care services are not living in what used to be called nursing homes.
Fewer than 20 per cent do. Most continue living in the community, supported through their new accommodation, home care services, family and friends.
The challenge is understanding the options before a crisis forces a decision.
Where you live is often the biggest aged care decision you will ever make because it shapes not only the care you receive, but your social connection, financial position and quality of life.
For many people, downsizing can play an important role. Newer apartments and homes are often designed with ageing in place in mind. Single-level living, wider doorways, accessible bathrooms, lifts and low-maintenance layouts can make a dramatic difference to safety and independence.
Retirement communities can also provide something many older Australians quietly lose over time: connection. A study in the UK found that social isolation is as bad for your health as smoking 15 cigarettes a day. In retirement communities there are organised activities, outings, communal spaces and a ready-made social network. That can be as important to wellbeing as formal care services.
Others choose granny flat arrangements which can provide proximity to children and grandchildren while still maintaining a level of independence. Purpose-built granny flats are increasingly designed specifically for ageing, with accessibility and safety front of mind.
Of course, remaining at home still requires support, and this is where many families encounter their first shock. The new Support at Home program is often spoken about as though care will be an on-demand service - the reality is disappointingly different. Wait times for home care support can stretch beyond a year, even for people with significant needs.
The services available under Support at Home fall into three categories: clinical care, independence support and everyday living services.
Clinical services include nursing care, physiotherapy and other allied health supports. These services have no co-contributions regardless of your means.
Independence services are designed to help people continue living safely at home. This may include personal care, showering assistance or transport to appointments. The co-contributions for these services are between 5 per cent and 50 per cent, based on your means. Let's say you are a full pensioner and you receive some personal care costing $200, your contribution will be $10 but if you were a self funded retiree your contribution could be $100.
Everyday living services cover tasks such as cleaning, gardening and meal preparation. These services attract the highest co-contributions of between 17.5 per cent and 80 per cent.
Your co-contributions towards Support at Home count (together with an Non Clinical Care Contribution in residential aged care) towards the lifetime cap of $138,000 (indexed). That doesn't mean your care becomes free once you have paid that amount, just that these particular fees stop.
In addition the ongoing supports you can also access short term supports for short term restorative care, home modifications or end of life care through Support at Home.
Eventually, some people will require residential aged care, particularly when care needs become complex or 24-hour supervision is required. The costs associated with residential care are often poorly understood.
There are two broad categories of costs: accommodation and care.
Your accommodation can be paid either as a Refundable Accommodation Deposit (RAD) or a Daily Accommodation Payment (DAP) or a combination. The RAD works similarly to an interest- free loan paid to the aged care provider and is generally refunded when the resident leaves care, less a 2 per cent per annum deduction, capped at 10 per cent. The DAP is a rental-style daily payment calculated from any unpaid RAD amount at a government rate (currently 7.96 per cent per annum) indexed. For example, if the RAD price is $750,000 you might pay $250,000 by RAD and the rest by DAP of $109/day. If you stay in the home for five years or more then roughly $225,000 will be refunded.
Beyond the accommodation costs residents pay a basic daily fee ($67/day) and depending on their means a hoteling fee (up to $22/day) and a non-clinical care contribution (up to $107/day). There is also a higher everyday living fee for extras like hairdressing, entertainment and wine with dinner.
Don't fall into the trap of thinking that because aged care fees are means tested, they will be affordable from income alone. That is often not the case. The aged care means test uses both income and assets, you can face significant fees despite having relatively modest cash flow. This cash flow squeeze can force people to draw down on savings or consider the family home.
Which leads to the question almost every family asks: do we need to sell the house? The answer is: it's up to you. Your home has special rules applied to it for pension and aged care means tests and capital gains tax (when sold). The rules are complex, it is worth getting advice before you decide to keep or sell the home.
Aged care decisions are rarely just financial. They are emotional often involve questions of independence, identity and family dynamics. Having conversations and exploring options early can help to avoid making major decisions under pressure in a hospital car park. Starting the conversation is often the hardest step of all. But approaching it as a discussion held "with you" rather than "to you" can make a world of difference.
