Aged Care in Australia
When a relative reaches the stage of needing to enter aged care it can be a very emotional time for them and the family. Quite often the decision to enter care needs to be made quickly and also requires many other decisions to be made.
Facilities must publish their upfront fees, if the fee is paid as a lump sum it’s called a Refundable Accommodation Deposit (RAD), if it’s paid over time on a daily basis, it’s called the Daily Accommodation Payment (DAP).
The RAD is returned when the person leaves the facility. This generally happened upon death in which case it forms part of the person’s estate or if they switch facilities or return home (rare), it is also refunded. These are also guaranteed by the Govt.
A resident has 28 days after entry to tell the facility how they are going to pay the upfront fee and if the fee is to paid via a RAD they have 6 months to pay it.
100% as lumpsum (RAD)
100% as a daily fee (DAP)
A combination of both
The daily accommodation fee can be paid out of the RAD if option 3 is chosen.
A resident has 6 months to make the lumpsum payment if they choose the RAD option. Until the full payment is received, the facility will charge the resident a DAP.
Paying via a DAP is more expensive as an interest charge is applied to the payment. The interest rate is set by the Govt and is currently 6.01%. The interest rate stays the same for the term that you are in the facility.
If a person is on the full age pension and has no assets, the Govt will cover their upfront accommodation costs. However, there are only a certain number of these spots available so people in this position may have to wait for a place to become available.
Basic Daily fees
Everyone pays a daily care fee which equals 85% of the age pension. This is currently $48.25 per day (as at Aug 2016).
Means tested daily fee
The level of this fee is assessed by the Department of Human Services (Centrelink) or DVA if a person is in receipt of a service pension.
It is based on a combination of assets and deemed and assessable income.
This fee has annual and lifetime caps. The current annual cap is $25,939.92 ($71.06 per day) and the lifetime cap is $62,255.85 (as at Aug 2016).
A portion of the value of the family home is counted in this test if a “protected person” isn’t living in it.
A protected person includes a spouse, a dependent child, a carer who has lived in the house for 2 years or more and is eligible to receive income support from the Govt or a close relative who has lived in the house for 5 years or more and is eligible to receive income support from the Govt. The total value of the house is excluded if a protected person lives in the property.
If not, then $159,423.20 (as at Aug 2016) of the home’s value is counted for this test.
Extra Services Fee
This is a daily fee in addition to the above two fees. This fee is charged if the resident wishes to have extra things included in their accommodation for instance, a wider range of menu choices, wine/beer with dinner or pay TV. This fee is negotiated between the resident and facility.
A facility cannot charge an extra services fee in relation to the general care of a resident.
We have seen extra service fees range from $40 to $100 per day in Brisbane.
One of the biggest worries for people entering aged care is what happens to the house.
As mentioned in the means tested fee if a protected person (generally a spouse) is still living there, nothing at all happens with the house.
If the person is single (including widowed) when they enter age care, then a decision needs to be made around what to with the home.
It can be retained and not occupied, retained and rented or sold. It is completely up to the persons own discretion as to what happens to it.
But, generally the decisions on what to do with it comes to down to two factors, does the person have other assets and income to meet the fees or does the house need to be sold to pay for these fees and is the house in a condition in which it can actually be rented.
Consideration also needs to be given to the effect on the person’s age pension.
This is general advice only and as each person’s circumstances are different you should seek your own personalised advice and not rely on what happened to someone else. Phone (07) 3018 0587 for more information.
This advice is general in nature and doesn't take into account your personal circumstances. For advice that is specific to your circumstances please give us a call on (07) 3018 0587.