Category: Q and A

Q: Will I need to pay a Means Tested Care Fee? A: The answer is often yes.   The government uses a single formula to determine how much you can be asked to pay towards the cost of your accommodation and care, unfortunately it can be a little tricky to calculate.  The Formula is:  50c per dollar of income above   $28,100.80 p.a (single)   $27,580.80 p.a (couple)  plus  17.5% of assets $51,000 – $173,075.20  1% of assets $173,075.20 – $417,225.60  2% of assets over $417,225.60    Where the calculated amount is more than $58.69per day the amount above this threshold is the Means Tested Care Fee.  Your Means Tested Care Fee is used to offset the funding the government provide to the aged care facility, so your Means Tested Care Fee cannot be more than your cost of care.  There is also an annual limit of $28,338.71 and a Lifetime limit (which includes any amount you paid as an Income Tested Care Fee for a Home Care Package) of $68,012.98.  If you are a Low Means resident you will not be liable for a Means Tested Care Fee unless there is a change to your circumstances.     

Q: What if I don’t have any money? A: A common misconcep­tion about Aged Care is “if I don’t have any money, I won’t get in”, in reality most Aged Care Facilities keep a ratio of people with low means and those who pay the mar­ket price. The amount you need to pay towards the cost of Aged Care is based on your (and if applicable, your partner’s) assets and income.  Known as low means residents people with assets and income below the thresholds don’t pay an accommodation contribution.  People with assets and/or income above the threshold/s but with a calculated amount below $58.69 p.d. pay a calculated amount.  Low means residents can choose to pay towards the cost of their accommodation by daily charge, known as a Daily Accommodation Contribution (DAC) or by Lump sum, known as a Refundable Accommodation Contribution (RAC) or a combination of the two.  Your accommodation contribution is calculated at:  50c per dollar of income above   $28,100.80 p.a. (single)  $27,580.80 p.a. (couple)   Plus   17.5% of assets between $51,000 – $173,075.20   

Q: What does a home care package cost? A: The cost of a Home care packages consists of a basic daily fee and an income tested care fee. The basic daily fee can be charged to all home care package recipients. The fee varies across package levels.   Level 1 $9.72 per day  Level 2 $10.28 per day  Level 3 $10.57 per day  Level 4 $10.85 per day    Some providers will waive this fee for people who cannot afford it. Where this happens the amount of funds held within the package is reduced by the same amount.     The Income-tested care fee is assessed by the government based on your (and if applicable your partner’s) assessable income. Assessable income is calculated using Centrelink or DVA rules and also includes your pension income.    The Income Tested Care Fee is calculated at 50c per dollar of income above the Income free area.  The income free areas are:   $28,100.80 p.a for a single    $21,814.00 each for a member of a couple*.   *A higher threshold applies to couples who are separated by illness.     Full Pensioners do not pay an Income Tested Care Fee and there is an annual cap of $5,667.73 for a part-pensioners and $11,335.48 for self-funded retirees.    There is also a lifetime cap which applies across home care and residential aged care. The life

Q: Can my children lend me the money to pay the RAD? A: The simple answer is yes, but it will impact your cost of care and may cause estate planning issues. Children often lend parents money for the Refundable Accommodation Deposit (RAD) this may be because the parents have insufficient funds, there is an aversion to borrowing or because the Daily Accommodation Payment will cause pressure on the parents cash flow. While it is not an uncommon practice you should be aware of the impacts this loan will have on the cost of care. The RAD is included in the assessable assets for calculating the Means Tested Care Fee. There is no consideration given in the assessment to some (or all) of the money being a loan. The total value of the RAD will be included in the aged care assets test and the MTCF will increase as a result of the loan. Loaning money to pay a RAD can create estate planning issues as the RAD is generally refunded to the aged care resident or their estate. You should seek legal advice about documenting any loan agreement. Alternatively, children meeting the cashflow shortfall, paying a Daily Accommodation Payment

Q: How are assets and income assessed for couples? A: The simple answer is the assets and income of a couple are assessed on a 50/50 basis and the home is exempt while one member is living there. If both members of a couple are entering care timing the move can create very different outcomes. If you are a couple entering Residential Aged Care it’s important to understand how the timing of your move can affect your means assessment.    The general rule of thumb when it comes to assessing income and assets is that each person has a 50% share, regardless of legal ownership. The family home is exempt from assessment while one member is living there.  If you both enter care on the same day you will each have half the value of the home up to the capped amount of $173,075.20 included in your assessable assets.    If you enter care on separate days, the house will be exempt from the first to enter care and half of the house up to the capped amount of $173,075.20 will be assessed for the second.   Depending on the value of the home, other assets and the amount of assessable income, entering care on different

Q: Should we keep or sell the family home? A: The simple answer is it depends. There are both advantages and disadvantages of keeping the family home. It is important to be aware of the special rules that apply to your former home when you move to aged care. For two years from the date you or your partner move out, the former home is exempt from the pension assets test. If the home is rented the rent will be assessable in calculating your pension under the income test. Where the home is retained beyond the 2 year exemption, the home will be assessed at the market value with the non-homeowner asset test threshold being applied. For aged care assets the former home is assessed up to a capped amount of $173,075.20 and the rent is included in the income assessment. *If you who entered care before 1 January 2017 an indefinite asset test and income test exemption can apply for pension purposes if you are paying a Daily Accommodation Payment or Contribution and renting your former home. Other important factors to consider include; the impact on your estate planning wishes, the cost of bringing the home up to standard