Low Means Aged Care Resident Accommodation Contribution

Low Means Aged Care Resident Accommodation Contribution

by Christine Hopper

Low Means Aged Care Resident Accommodation Contribution

The Low Means aged care resident Accommodation Contribution applies to new residents who are assessed as Low Means on entry to Commonwealth regulated permanent residential aged care.

A Low Means aged care resident can only be asked to pay her Accommodation Contribution towards the cost of her accommodation in Commonwealth regulated permanent residential aged care. The Commonwealth then pays the aged care home some Accommodation Supplement to help with the cost of her aged care accommodation.

The aged care home receives the Maximum Accommodation Supplement for each Low Means aged care resident. The Low Means aged care resident pays her Accommodation Contribution and then the Commonwealth pays the remainder.

The Maximum Accommodation Supplement is set by the Commonwealth as a reasonable rent for a basic single aged care place in a home that meets the required Commonwealth standards.

Determination of the Low Means Aged Care Resident Accommodation Contribution

Each new entrant to Commonwealth regulated permanent residential aged care submits asset and income details to Centrelink. Centrelink then determine the new resident’s Means Tested Amount for aged care purposes.

A new entrant to Commonwealth regulated permanent residential aged care is classified as a Low Means aged care resident if her Means Tested Amount on entry is less than the Maximum Accommodation Supplement at that date.

The Maximum Accommodation Supplement increased to $53.84 per day in September 2015. The next indexation increase is expected to apply from 20 March 2016.

Thus on permanent entry in February 2016, a Low Means aged care resident would have an Accommodation Contribution below $53.84 per day.

Reviews of Low Means Aged Care Resident Accommodation Contribution

A Low Means aged care resident must inform Centrelink whenever her asset or income position changes. Centrelink would review her Accommodation Contribution amount to take account of her new situation.

Consider Jean who had never owned a home and had only $10,000 of savings when she entered residential aged care. Jean’s only income is the full Age Pension and some interest on her bank account. As a full rate Age Pensioner with under $46,000 of assets, Jean had an Aged Care Means Tested Amount of nil on entry to permanent residential aged care. Thus Jean has a nil Accommodation Contribution amount. She is not asked to contribute to the cost of her accommodation or her personal support and nursing care.

After her first three years living in aged care, Jean inherits $100,000 from her sister. Jean immediately uses $10,000 to prepay her funeral so that her nieces do not need to worry when the time comes. Jean informs Centrelink that she now has $90,000 left in her bank account.
Jean continues to receive the full rate of Age Pension but her Aged Care Means Tested Amount increases to $21.15 per day on account of her ‘asset component’. Jean is then required to pay an Accommodation Contribution of $21.15 per day towards the cost of her aged care accommodation.
The Commonwealth reduces the amount of Accommodation Supplement payable so that the aged care home still gets the Maximum Accommodation Supplement but partly from Jean and partly from the Commonwealth.

Later when Jean’s bank account reduces, her Low Means aged care resident Accommodation Contribution would be reduced to reflect the lower asset amount recorded at Centrelink.

Low Means Aged Care Resident Accommodation Contribution for couples

The Low Means aged care resident Accommodation Contribution assessment is based on the joint asset and income position of the couple.
Remember that a “Couple at Centrelink” is any two adults who share domestic arrangements and present socially as a couple. When one member of a couple at Centrelink becomes a permanent resident of an aged care facility then they become a “Couple separated by illness at Centrelink”.

If only one member of the couple is entering permanent residential aged care then their home is treated as an exempt asset whilst the other member of the couple lives there. Thus for the purposes of the Aged Care Means Tested Amount determination the value of the home is excluded.
Therefore the first member of a couple to enter permanent aged care could be a Low Means aged care resident when the couple have few assets other than their home and little income in addition to the full rate of Age Pension. For the first member of a couple to enter permanent aged care, the Accommodation Contribution could be nil or a low amount.

But if later, neither member of the couple nor any ‘protected person’ is living in the home then it will be counted as an asset of the couple for the Aged Care Means Tested Amount determination. Then the Accommodation Contribution could increase to the Maximum Accommodation Supplement rate.

If the aged care resident owns her own, now vacant, former home then the Commonwealth will not pay any Accommodation Supplement for her. The aged care facility still gets the full Maximum Accommodation Supplement but now it is all paid by the resident herself.

Consider Bob and Betty, an Age Pensioner couple who were living happily at home until Bob had a major stroke and needed residential aged care. Bob and Betty had only $15,000 of savings in addition to their household stuff recorded at $5,000 for Centrelink. Thus for the purposes of the Aged Care Means Tested Amount determination Bob’s share of their assets is $10,000. Bob is treated as a Low Means aged care resident with a nil Accommodation Contribution amount.

Betty lives quietly at home until she becomes so frail that she needs residential aged care. Their former home is now vacant so it included in their assets for the Aged Care Means Tested Amount determination. Bob’s Aged Care Means Tested Amount determination is reviewed and his Accommodation Contribution is increased to the Maximum Accommodation Supplement amount.

On entry to residential aged care Betty has an Aged Care Means Tested Amount slightly in excess of the Maximum Accommodation Supplement so Betty will not be a Low Means aged care resident. Betty must pay the full cost of her aged care accommodation at the Accommodation Room Price agreed for her placement.

Later when their former home is sold, Centrelink review the Aged Care Means Tested Amount for Bob and Betty. The Aged Care Means Tested Amount is now significantly higher than the Maximum Accommodation Supplement amount resulting in an Aged Care Means Tested Care fee being levied on both Bob and Betty. The amount of the Aged Care Means Tested Care fee is the Means Tested Amount less the Maximum Accommodation Supplement amount.

Thus Bob now pays his full Means Tested Amount partly as Accommodation Contribution and partly as his Means Tested Care Fee. Betty is charged the actual cost of her aged care accommodation after allowing for any Refundable Accommodation Deposit that she has paid, plus the same Means Tested Care Fee that Bob pays.

Help with understanding Commonwealth regulated aged care costs and the Low Means Aged Care Resident Accommodation Contribution

Aged care means testing is complex. Residents with few assets can be surprised at how their means tested charges change if their circumstances change later.

Christine at Financial Care Services understands the DVA Pensions and Centrelink assessment of the means tested amount for aged care both home care and residential aged care.

A consultation with Financial Care Services helps you understand your potential aged care costs together with the DVA and Centrelink implications of rearranging your assets, leasing or selling the former home.

Call Christine on 03 9808 0338 to make an appointment for a consultation. Please email your enquiry to receive a Financial Care Services Financial Services Guide and Aged Care Data Checklist.

Assistance with completing the Commonwealth aged care means testing forms is available to clients of Financial Care Services.

Strategies for couples entering residential aged care

When both members of a couple require residential aged care, the family might seek to minimise costs by having one partner enter as a Low Means aged care resident paying only the Accommodation Contribution.
A family might aim for one parent to enter as a Low Means aged care resident whilst the other parent stays home. The ‘at home’ member of the couple could be absorbing a very high level of support from the extended family.

One challenge of this approach is that the ‘at home’ member of the couple might be so frail as to need to be admitted to hospital or ‘respite care’. Thus the urgency of the second entry to aged care does not allow for a staged approach.

Another challenge to placing the couple is that the initial entrant could be allocated a ‘basic room’, that is, aged care accommodation at a basic standard of equivalent cost to the Maximum Accommodation Supplement. Transfer to another room within the same aged care facility could be on the basis of care needs only. An internal move might only be to the secure dementia section or to the high dependency nursing section.

The second member of a home owner couple to enter aged care would generally be required to pay the full cost of her aged care accommodation. She could have a wider choice of accommodation style, such as a nicer section of the same aged care facility as her partner or a different aged care facility.

Hint Before staging the entry of a couple into residential aged care consult Financial Care Services regarding the financial implications of your choices.

Understanding the potential impact of trying to stage the entry of a couple needing residential aged care critical to finding the right aged care financing and placement option for your family.

Financial Care Services is an independent specialist aged care financial adviser

Christine at Financial Care Services understands the Centrelink assessment of the means tested amount for aged care both home care and aged care. Assistance with completing the Centrelink aged care means testing forms is available to clients of Financial Care Services

A consultation with Financial Care Services helps you understand your potential and aged care costs together with the Centrelink or DVA implications of rearranging your assets or selling the former home. Call Christine on 03 9808 0338 to make an appointment for a consultation.

Financial Care Services welcomes clients from Melbourne and beyond. Please email your enquiry to receive a Financial Care Services Financial Services Guide and Aged Care Data Checklist.

Financial Care Services is licensed to offer investment strategy advice and to assist you to invest. 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.

Arrange an appointment for further confidential, independent and professional advice about DVA, 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. © 2016 Financial Care Services Pty Ltd. All rights reserved.