Aged Care made Easy
There have been significant changes in the Aged Care world in the past year, with the promise of more to come in the year ahead. The Federal Government legislation “Living Longer Living Better” came into force on 1 July 2014, with the aim of increasing transparency; however, despite this admirable goal, in the short term it appears quite complex.
We have created the table below to clarify what homeowners may be required to pay once they move into Aged Care.
|Fee||What this covers||How it works|
|Refundable Accommodation Deposit (RAD)||This is effectively a room accommodation fee.
It does not cover your care costs.
|The RAD is paid as a lump sum, which is
refunded to you or your estate when you
leave care. In metropolitan areas, this would
typically be over $400,000.Only the lump sum is returned, it does not earn interest.
Accommodation Payment (DAP)
|This is effectively a room accommodation fee. It does not cover your care costs.||The DAP is paid daily, and costs about $70 per day (calculated by a government formula based on the RAD fee being $400,000) You
do not get the DAP back.
|RAD and DAP
|This is effectively a room accommodation fee. It does not cover your care costs.||This method has two options:
1) Partial payment of both.
2) Drawing the DAP from the RAD.
|Daily Bed Payment (DBF)||The cost of your bed in care.||Rate is set at 85% of the base aged pension, and is payable by all residents.|
|Means Tested Care Fee (MTCF)||This is a contribution
towards your care costs.
|The amount you are required to pay is based on your income and assets, with an annual cap of $25,200 and lifetime cap of $61,200 (amounts are indexed).|
|Additional Services Fee||This pays for anything extra you might like, such as Foxtel or a glass of wine
Selling your home
Quite often, aged care facilities urge people to sell their property to pay for these fees, especially the RAD. Heartland Seniors Finance provides you with other options.
You can borrow against your home to fund these costs, either in the short or long term, which can bring a number of potential financial and emotional benefits.
Keeping your home means you can return should you desire to do so, making Aged Care decisions less stressful. It also reduces complexity for families in trying to determine how care will be funded.
Financially, it allows homeowners to sell the home when they are ready to do so, which doesn’t necessarily coincide with when they require Aged Care. Some of our customers decide to renovate the property first, wait until the market is doing well or generate income from renters.
The value of the house is capped at $157,000, which can help reduce your Means Tested Care Fees, and there is no capital gains tax on property growth for six years after exiting.
This is intended as a brief introduction to this complex area and does not delve into all the nuances of the sector. However, if you would like more information please do not hesitate to call or email us, and we can either assist or introduce you to an expert in your local area.
*Please note the information (including rates, fees and charges) set out in this document may change from time to time. Information has been sourced from http://www.myagedcare.gov.au/ as at May 2015.
Information provided is accurate as at 10 July 2015 and may change from time to time