July 2014 Aged Care charging system

July 2014 Aged Care charging system

 
by Christine Hopper

Would my mother pay more for aged care if she defers entering permanent care until July 2014?

The Commonwealth has legislated for a new package of resident fees and charges for residential aged care for new entrants after June 2014. The July 2014 aged care charging system changes the means testing arrangements for resident contributions to the costs of their aged care accommodation and their care fees.

The impact of the changes on an individual depends on both her financial circumstances and the level of care she requires.

July 2014 aged care charging system has no changes to the aged care fees and charges for full Age Pensioners with few assets

Currently new entrants with assets not exceeding $45,000, are Fully Supported Residents who cannot be asked to pay any Accommodation Bond on entry to ‘Low Care’ or Accommodation Charge for ‘High Care’. (The aged care facility receives a subsidy to help with the accommodation costs for Supported Residents.)

Under the July 2014 aged care charging system, the Commonwealth would pay the Accommodation costs for new entrants who have under $45,000 of assets and receive the full Age Pension.  New residents who have less than $45,000 of assets and receive the full Single rate of Age Pension would continue to pay only the Basic Daily Care Fee.
Thus, a single person with few assets would pay the Basic Daily Care Fee of 85% of the Single Age Pension but no means tested Care Fee and no Accommodation costs.

July 2014 aged care charging system has additional fees for new entrants with few assets but more income than a full Age Pensioner

Under the July 2014 aged care charging system, the amount that you pay for Accommodation depends on your Means Tested Amount.  The Means Tested Amount counts both your assets in excess of $45,000, and your total income less the maximum income of a full Age Pensioner.

Therefore, if you have a large superannuation pension and a part Age Pension but less than $45,000 of assets, you could be asked to pay part of your Accommodation Costs under the July 2014 aged care charging system.  In contrast, the current system would only assess your assets for determining your capacity to pay for your aged care accommodation.

Higher Accommodation Costs for new entrants needing high care under the July 2014 aged care charging system.

Currently a new entrant to standard High Care can be charged a maximum Accommodation Charge of $34.20 per day if her assets exceed $116,136 on entry.
In contrast, the July 2014 aged care charging system requires all new residents with significant assets or income to pay the full costs of their aged care Accommodation.

For example, a single home-owner Age Pensioner in need of high care would be required to pay a daily Accommodation Charge of $34.20 if she became a permanent High Care resident before 1 July 2014.  But if she deferred her entry to residential aged care until July 2014, then she could be asked to pay the full cost of her accommodation; a daily Accommodation Payment of maybe about $75 could be required for a ‘standard’ room.

July 2014 aged care charging system Care Fees might be lower than Income Tested Fees for self funded retirees.

A non-pensioner resident who has substantial financial resources and has chosen not to disclose her income and assets to Centrelink would be paying the maximum rate of Income Tested Fee, currently $73.86 per day.
Under the July 2014 aged care charging system, the non-pensioner resident would be charged the assessed cost of her care less an amount equivalent to the maximum Accommodation Supplement.
If she is not demented and her care needs are ‘low’ or ‘moderate’ she might only need to pay about $20 per day as her Care Fee initially. But if later her health deteriorates such that her care needs increase then her daily Care Fee would also increase. The maximum Care Fee might be around $200 per day until the annual Care Fee cap of $25,000 is reached.

July 2014 aged care charging system Care Fees might be higher than Income Tested Fees for pensioner residents

Aged care residents are currently levied an Income Tested Fee based on the assessed income in excess of the maximum income of a full Age Pensioner.

The new Means Tested Amount takes a higher percentage of the assessed income in excess of the maximum income of a full Age Pensioner and adds on an Asset based amount. For the Asset part, the vacant home of the aged care resident and her new ‘Accommodation Refundable Deposit’  are counted together with her other assets for the Age Pension Assets Test.
But the actual Care Fee for a resident is capped at her assessed care cost less an amount equivalent to the maximum Accommodation Supplement.

The Care Fee to be charged for a resident with high care needs could be more than the Income Tested Fee that would have applied if she had become a permanent resident before July 2014.
But if her care needs are quite low her Care Fee might be lower than the Income Tested Fee that would have applied if she had become a permanent resident before July 2014.

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. 

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.

Call Financial Care Services on 03 9808 0338 to arrange an appointment.

Calculating July 2014 aged care charging system Care Fees

The Commonwealth has not published the transfer amounts and cut-off amounts for the calculation of the various subsidies and Means Tested Amounts to apply from July 2014. Therefore, the July 2014 aged care charging system fees and charges for a potential resident cannot yet be calculated precisely.

However, Financial Care Services has studied the July 2014 aged care charging system legislation and generated estimates of the indexed amounts expected to apply from July 2014.

Thus Financial Care Services could illustrate the types and amounts of fees and charges that would be levied on entry to residential aged care in June 2014 or after the July 2014 system starts.

Your Illustration could include the financial impact of retaining the former home vacant or leased, or releasing it for sale.

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.

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.

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