Do I Need to Sell My House to Enter Aged Care?

Do I Need to Sell My House to Enter Aged Care?

Making the decision to enter aged care is not easy. And you might be wondering whether you’ll need to sell your home in order to fund the accommodation costs associated with living in an aged care facility. 

While many people believe that you must sell your family home in order to enter aged care, the truth is, that’s just a myth. The answer isn’t a straightforward yes or no.

Depending on your personal circumstances, you may choose to sell your home or keep it. Each choice affects aged care admission fees in different ways and may also have an impact on your pension.

Before you make this very important decision, it makes good sense to speak with an aged care adviser who specialises in aged care financial planning.

In this article, we’ll cover the aged care fee structures that will influence whether or not you decide to sell your home before moving into an aged care facility. 

Making sense of aged care fee structures 

Here’s the thing about aged care fee structures – they can be quite complex and confusing. This is because there are multiple fees inside the structure, and each fee is calculated differently depending on your personal circumstances. 

This aged care fee structure may make it difficult for you to discern whether or not selling your house will put you in a better position financially. When you understand how it works, you’ll be able to make an informed decision in your best interest. 

We recommend talking to a professional aged care adviser, who will be able to explain the structure to you in simple terms. But for now, here are the main elements that make up the aged care fee structure: 

  1. Basic daily fee
  2. Accommodation payment 
  3. Means tested care fee
  4. Additional services fee 

What is the basic daily fee?

Every resident of an aged care facility must pay a basic daily fee. This fee covers the costs associated with day-to-day services such as meals, cleaning, laundry and facility management. 

At the moment, the basic daily fee for Australian aged care residents is $54.69 per day, or $19,961.85 per year. This fee will be the same regardless of whether you sell your home or not, because it is not calculated based on your assets or means. 

What is the accommodation payment? 

The Accomodation payment is not compulsory for everyone entering aged care as it’s dependent on the financial situations of each individual.  

Whether you are required to pay this is largely dependent on your financial circumstances before and after you enter aged care and there are many factors that may determine how much you contribute to this, if at all.

If this payment is paid upfront or as a lump sum, it becomes what is known as a RAD (Refundable Accommodation Deposit). This payment is refundable when you leave the aged care home. 

For Australians, the average price of a RAD is around $450,000, but this may vary significantly depending on the location or type of aged care home you may be considering for admission.  But don’t worry – if you cannot afford the entire RAD payment a financial adviser may be able to suggest alternative payment solutions or government support.

Some people entering an aged care facility will choose to sell their home to cover this payment. However, this isn’t the only option. 

You might choose to pay a DAP instead, which is a Daily Accommodation Payment and functions like a rental system. Unlike the RAD, these payments are non-refundable. 

Another option is to pay a combination of RAD and DAP. 

Everyone’s circumstances are different which is why you should highly consider speaking with a specialist aged care  adviser who will be able to guide you to the best decision for your circumstances.  

What is the means-tested care fee? 

This fee is a contribution to your care costs and is determined based on your income and assets so it will vary between person to person. This fee could also potentially be impacted by decisions you make such as choosing to sell your home or keep your home. So always seek professional advice before making any significant financial decisions that may change your financial circumstances.  

It’s important to note that if you decide to sell your home, the proceeds of the sale could be counted as an asset for both pension and means tested assessments. 

What is the additional services fee? 

These fees are only charged if you opt for additional services that your chosen aged care provider offers.  These are services over and above the standard services. These fees aren’t subsidised by the government, so you will need to pay the full amount for any additional services and should factor this into your financial planning. 

Discuss your options with a professional Aged Care adviser 

Deciding whether or not to sell your home before entering aged care is a tough decision that’s dependent on several specific individual factors.  The wrong decision may cost you significantly in unnecessary fees and charges that may have been avoidable with the right guidance. That’s why we highly recommend speaking with the team at Beacon Aged Care before making any big financial decisions. 

This decision can have a huge impact on how much you will pay in fees at an aged care facility and may also affect your pension payments, so we take care to ensure we provide you with the best advice specific to your individual situation. Give us a call today on 1800 232 000 to speak with one of our friendly aged care advisers.