New July 2014 Means Tested Daily Care Fees for Commonwealth regulated residential aged care
The Commonwealth aged care reform package, Living Longer Living Better, introduces a new style of means tested daily care fee from July 2014. All residents of Commonwealth regulated residential aged care facilities will continue to pay the Basic Daily Care fee.
From July 2014 new residents with significant assets and/or income in excess of what a full Age Pensioner gets, could be required to pay a new style means tested Daily Care Fee.
Why a means tested Daily Care Fee?
The Basic Daily Care Fee and the Accommodation Charges together could be just enough to cover the ‘hoteling’ costs of living in a residential aged care facility. But most aged care residents require some personal support and possibly nursing care also.
The Commonwealth pays a care subsidy to a Commonwealth regulated aged care facility in respect of the agreed level of personal support and nursing care for each individual resident. Part of this care subsidy is recouped via the current system of ‘Income Tested Fees’ for residents in permanent care by 30 June 2014.
For new permanent residents of Commonwealth regulated aged care after June 2014, the Care Subsidy will be reduced by the new means tested Daily Care Fee. The Commonwealth will continue to pay at least part of the costs of providing personal support and nursing care to each resident.
The Living Longer Living Better package indicated that the Commonwealth could cap its Care Subsidy at $50 per day for each resident who has the resources to contribute to the costs of her care. Thus, a new resident who requires only a little personal support and medication management might find that her care costs are covered by the Commonwealth Care Subsidy. In contrast, a resident immobilised by a severe stroke or suffering from advanced Alzheimer’s disease could have a daily care cost in excess of $100.
How much is the new style means tested Daily Care Fee?
The new style means tested Daily Care Fee is set as the cost of the personal support and nursing care less the standard Care Subsidy of maybe $50, subject to a minimum of Nil and a maximum of the Means Tested Daily Care Fee.
The Means Tested Daily Care Fee is calculated as a percentage of the resident’s assessed Income in excess of the maximum income of a full Age Pensioner plus an Asset based component.
Remember that your actual means tested Daily Care Fee would not exceed the cost of your personal support and nursing care. Thus if you have substantial assets and /or a generous income then you might be asked to pay the full cost of your care less the standard Care Subsidy.
The total amount of Daily Care Fees that a resident could be charged will be subject to both an Annual Cap and a Lifetime Cap. The Living Longer Living Better package included an Annual Cap on Daily Care Fees of $25,000 and a Lifetime Cap of $60,000.
Once a new resident’s accrued Daily Care Fees reach the Annual Cap then the Daily Care Fee is reduced to Nil for the remainder of that year of residence. The means tested amount of Daily Care Fee would recommence on the anniversary of resident’s entry to aged care.
The means tested Daily Care Fees will be permanently reduced to Nil once the accrued Daily Care Fees for residential aged care and/or flexible care and/or home care before entering Commonwealth regulated residential aged care, reaches the Lifetime Cap on means tested Daily Care Fees.
Please note that the dollar amounts for the Standard Care Subsidy and the Caps on accrued Daily Care fees are set and reviewed by the Commonwealth; the starting amounts for July 2014 could be different from the illustrative amounts in Living Longer Living Better.
How much means tested Daily Care Fees could I have to pay?
The new style of means tested Daily Care Fees is more complex than the previous system of Income Tested Fees. For new entrants to residential aged care from July 2014, your means tested Daily Care Fees will depend on the amount of your assessed assets, your Centrelink assessable income and the level of personal support and care that you need.
In addition, you will need to pay the Basic Daily Care Fees and a contribution to your aged care Accommodation costs, unless you enter as the equivalent of are a Fully Supported Resident.
Next steps to estimating your means tested Daily Care Fees
Your choice of aged care facility might be constrained by your financial position. Whilst you have a choice regarding how you pay for your Accommodation Charges, the amount of any lump sum Accommodation payment, refundable amount, would continue to be included as an asset for determining your means tested Daily Care Fees.
Your financial position could be sufficient to ensure that you would pay the full cost of your care initially. Later when your care needs increase you might consider disclosing your assets and income details to Centrelink for a means tested Daily Care Fee of less than the full care costs.
Help is available. Before you commit to an aged care placement 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.
Christine could help you with the Centrelink forms for the means tested fees for residential aged care.
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.
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.
To make an appointment for confidential, independent and professional advice consultation 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