Aged care on a medical care basis will still have low to high care needs stipulated for residents. However, financially there is now no distinction between low or high care level. Accommodation costs and fees remain the same for both low and high care needs as residents age in place.
Supported Accommodation:
• Accommodation Supplement also known as Daily Accommodation Contribution – if assessable assets are over a minimum threshold.
• Basic Daily Care fee
• Means Tested Care fee generally not applicable for fully supported residents
• Refundable accommodation contribution (RAC)
Accommodation Payment:
• RAD (Refundable Accommodation Deposit)
• And/or Daily Accommodation Payment (DAP). Is interest on the RAD.
• Basic Daily Care fee
• Extra Service fee opt in or out, or user pays.
• Means Tested Care fee (dependent on income & assets after thresholds)
Daily fees explained:
Accommodation Contribution or Supplement:
Basic Daily Care fee:
Means Tested Care fee:
This fee is payable after an income and assets free thresholds are reached, which is set by the government. The formula is complex as it is based on 'total assessable income' and assets levels and can either include a portion of the home or not at all. Income sources can include; aged or service pension, rental income, deemed income, trust distributions, super pension payments and overseas pensions.
You can contact PrimeCare Financial Planning for an accurate determination of your means tested care fee (03) 9006 1736.Extra service fees or additional services:
To charge the ‘extra services fees’, facilities need approval from the Australian Aged Care Quality Agency. To mitigate around this requirement, facilities have introduced a fee generally named additional services. These fees are only payable to facilities that provide more services at an additional cost. Some of the services include wine, daily newspaper, greater selection of meals, companions to take residents to their specialist doctors, etc.
The introduction of the changes in the aged care act in 2014, allowed for these fees to be optional. However, in reality facilities have not provided this opt in opt out service. So, most facilities that have additional or extra service fees will require that these payments are compulsory. The payment does not mean a better standard of medical care, just more services. The cost is stipulated by the facilities and varies significantly from facility to facility. It is not a government standard fee.
These fees can have a significant impact on your cash flow. So, you should ensure you know how much the fee is and if you can afford it. PrimeCare can assist you with this financial comparison.Refundable Accommodation Deposit (RAD):
Aged Care RAD's and DAP's vary from facility to facility and you do not have to accept the RAD amount the facility offers you. RAD amounts are negotiable, however if the facility has a waiting list they will be very reluctant to reduce the RAD on offer. Some facilities will offer you a RAD room according to your level of assets. This may be beneficial in some circumstances, as the facility must leave you with a legislated minimum, however generally people who own a home will be above this minimum amount. Therefore, a resident may be charged far more for a room than market rates based on the assets assessment. When this occurs, it may be best to negotiate with the facility to lower the RAD amount. You also do not have to show the facility your assets assessment, particularly if you are a self-funded retiree or if the facility is extra service. You should seek professional help to determine when it is ok to show the facility your assets position.
Generally, facilities have a set RAD (which is determined by local real estate values in the area), and the RAD will then vary according to the size of the room or view within the facility.
If the resident is a member of a married couple, the combined assets of the couple are divided by half and the resident must still be left with the minimum amount.
The RAD payable is also guaranteed by the federal government in the event of insolvency by the facility. So, the RAD money is secure! If the resident decides to leave the facility the RAD is payable within 14 days or if the resident moves to another facility, the RAD must be rolled over within 28 days.
Daily Accommodation Payment (DAP):
This charge is payable on the balance of the RAD. If the lump sum RAD has not been paid in full on entry into a facility, then interest accrues - the official term for this interest payment is 'periodic payment'. The Commonwealth Department of Human Services sets a ceiling rate and facilities cannot charge more than this rate. Most facilities will charge the ceiling rate, even though they have the discretion to charge a lower rate. The periodic rate is generally 4% above the current cash rates, so facilities have a very comfortable margin and hence their willingness to receive periodic interest payments. The resident is also locked into the same rate from the time of entry. This is a massive disadvantage for residents who move into facilities when interest rates are high.
Call PrimeCare Financial Planning today to assist with the financial implications of moving into an aged care facility on 1300 853 875
