July 2014 aged care accommodation contributions for pensioners
As from July 2014 the aged care accommodation contributions for pensioners with few assets will be assessed differently. The current system makes a once only determination of each resident’s eligibility for accommodation subsidy at the date of entry. Starting July 2014 the aged care accommodation contributions for pensioners with few assets and the consequent Commonwealth accommodation subsidy is subject to regular review.
From July 2014, all new entrants to Commonwealth regulated aged care will be assessed by Centrelink for a means tested contribution to their total aged are costs. The new means tested contribution has an asset based part plus an income based part.
No change in July 2014 aged care accommodation contributions for full Age Pensioners with few assets
A new resident would not pay any accommodation fees if she has no more than $45,000 of assets and no more income than what a full Age Pensioner can get. The Commonwealth will continue to pay an accommodation subsidy for residents who have few assets and restricted incomes.
As at June 2014, a new resident with assets of $45,000 or less, is entitled to a fully Supported Resident place in a Commonwealth regulated aged care facility. Fully Supported Residents cannot be asked to contribute to their accommodation costs at any time.
The current aged care system reserves places for Supported Residents who do not have the resources to pay any Accommodation costs. The Commonwealth pays an accommodation subsidy for Supported Residents who have few assets on entry.
New residents who have at least $45,000 but less than $117,000 of ‘assessed assets’ may be Partially Supported Residents. Partially Supported Residents are also eligible for Supported Resident aged care places but they pay small Accommodation Bonds or lower rates of Accommodation Charge.
For example, Mary receives the full Age Pension has only $35,000 of cash and her household contents as she has always rented a place to live. Under the current system, Mary could enter residential aged care as a Supported Resident. Mary would not be asked to pay any Accommodation Bond or Accommodation Charge as a Supported Resident.
If Mary waited until July 2014 to enter aged care then she would not be required to pay any Accommodation costs. The aged care facility could claim the maximum Accommodation Supplement from the Commonwealth to cover the cost of Mary’s aged care accommodation.
Mary would pay only the Basic Daily Care Fee of 85% of the Age Pension irrespective of when she enters aged care.
From July 2014 small changes in aged care accommodation contributions for part Age Pensioners with few assets
Then consider, Joan another long term renter who also has only $30,000 of cash plus her household contents. But Joan receives a superannuation pension of $300 per fortnight together with a part Age Pension.
Under the current system, Joan could also enter residential aged care as a Supported Resident. Joan would not be asked to pay any Accommodation Bond or Accommodation Charge as a Supported Resident. But Joan would be asked to pay a small Income Tested Fee (maybe about $2.50 per day) in addition to the Basic Daily Care Fee.
If Joan waited until July 2014 to enter aged care then she would be required to pay part of her Accommodation costs.
Centrelink would calculate Joan’s means tested amount based on her assets and income when she enters aged care. Joan’s means tested amount could be about $3 per day. Joan would pay the three dollars per day towards her Accommodation costs and the aged care facility could claim an Accommodation Supplement from the Commonwealth to cover balance of the cost of Joan’s aged care accommodation.
Joan would then pay the Basic Daily Care Fee but no means tested Care Fee. Her total costs might be about $3 per day Accommodation cost plus of 85% of the Age Pension.
In summary, for Joan the total costs of living in Commonwealth regulated aged care could be similar under the current system and the July 2014 aged care charging system but the terminology and calculation methodology would be different.
From July 2014 significant changes in aged care accommodation contributions for residents who gain assets after entering Commonwealth regulated aged care.
Consider Doris whose dementia necessitated entry to aged care when her husband, Henry, become too frail to care for her at home. If Doris entered as a Supported Resident because the couple had few assets other than their home where Henry lived, then under the current system she could never be levied any Accommodation Bond or Accommodation Charge.
But if Doris deferred her aged care entry until after June 2014, her means tested Accommodation contribution could be reviewed as her circumstances changed.
While Henry is living at home and they each receive the full Age Pension, Doris pays no means tested Accommodation costs and the aged care facility claims the maximum Accommodation Supplement.
Later when Henry has gone and Doris is the sole owner of their former home, she could be asked to contribute a means tested amount (maybe about $20 per day) towards her Accommodation costs.
Would my mother pay more for aged care if she defers entering permanent care until July 2014?
In summary, if you delay moving your mother from the home she owns into permanent residential aged care then her Accommodation costs and daily fees would be calculated differently. You would not know if deferring a move to residential aged care is financially smart without detailed calculations of your loved one’s situation.
Every potential resident’s position is different. An Illustration of your own position could guide your decision to hasten or defer entry to permanent residential aged care.
Before you commit to an aged care placement or decide to defer until July, you can consult Financial Care Services regarding your personal situation. Christine at Financial Care Services understands the new Accommodation cost system and the various means tested fees for residential aged care and Age Pensions.
A consultation at Financial Care Services could Illustrate the various Daily Care Fees and Accommodation Charges that you could be asked to pay for Commonwealth regulated residential aged care under the current system and under the July 2014 Aged Care charging system.
Your Illustration could include the financial impact of retaining the former home vacant or leased, or releasing it for sale.
Call Financial Care Services on 03 9808 0338 to arrange an appointment.
Help with Centrelink forms for July 2014 aged care fees
Christine could help you with the Centrelink forms for the means tested fees for residential aged care.
Christine could assist you with collating your personal data, estimating how much Centrelink Pension you could expect to receive and completing the Centrelink forms for you to sign. Normal hourly rate consultation fees apply for assistance with personal data collation, completing Centrelink forms and attendance at a Centrelink office with you.
A consultation with Financial Care Services helps you understand your potential aged care costs and Centrelink income support pensions. Call Christine on 03 9808 0338 to make an appointment for a consultation.
Financial Care Services is licensed to offer investment strategy advice and to assist you to invest. Financial Care Services charges fees based on the work involved in advising you and arranging your investments. Financial Care Services does not base fees on the value of your assets nor do we accept any commissions or payments from other service providers.
If you would like further confidential, independent and professional advice about Centrelink, lifestyle or financial issues please contact Christine Hopper 03 9808 0338.
Disclaimer: The information contained in this website is of a general nature only and does not constitute “financial advice”. You should obtain your own personal financial advice before investing any money or moving in to any retirement village, lifestyle community or aged care facility. Financial Care Services is licensed to provide financial advice to individual clients based on their personal situations. © 2014 Financial Care Services Pty Ltd. All rights reserved.
To make an appointment for professional advice, call Financial Care Services 03 9808 0338