Means tested aged care fees

Means tested aged care fees

Means tested aged care fees by Christine Hopper

Australians pay means tested aged care fees as a contribution to the costs of their personal care and support. Means tested aged care fees apply to residents of Commonwealth regulated aged care facilities. Seniors and people with disabilities who live in the community can also pay means tested care fees for their help to stay at home community support packages.

Who pays Means tested aged care fees

Means tested aged care fees are payable by recipients of government subsidized aged care or community support.
Permanent residents of Commonwealth regulated residential aged care facilities are provided with personal support and nursing care. These residents only pay means tested aged care fees if they have more income than a full Age Pensioner could have and/or they have more than $162,000 of assets.

Means tested aged care fees are payable in addition to the basic daily fee and accommodation costs for residential aged care.
Seniors living in the community pay means tested aged care fees for help to stay at home if they have more income than a full Age Pensioner could have. Your home could be in a lifestyle community retirement village or a granny flat arrangement with your family. The help to stay at home package could be used for personal support whilst you live in an assisted living residence or an SRS.

How are means tested aged care fees determined

The formula for determining your means tested aged care fees is set out in the Commonwealth Aged Care legislation. The dollar amounts of the changeover points are reviewed at least annually.

The income part of your means tested care fee is half of the excess of your income over what a full Age Pensioner could have. In June 2017, a single person would have an income component equal to half of her income in excess of $26072.80 per year.

For example, Mary has a help to stay at home package. Mary is a retired school teacher who some superannuation pension. Mary’s income is a part Age Pension of $800 per fortnight, $300 per fortnight of superannuation pension. Centrelink also count the deemed interest on Mary’s savings account as $40 per fortnight of assessable income.
Thus, Mary has a total assessable income of $1,140 per fortnight. Mary’s means tested aged care fees are half of her income over $1,002.80 per fortnight.
Mary is charged $137.20 per fortnight, $9.80 per day, of means tested aged care fees.
Mary pays the basic daily fee of $10.10 plus her means tested aged care fees of $9.80 per day for home care.
In total Mary is paying $19.90 per day for her help to stay at home package.

Residents of Commonwealth regulated aged care also have an asset component of their means tested aged care fees. The care fee part is 2% per year of any assets in excess of $391,261.60 and 1% per year of any assets between $162,087.20 and $391,261.60 as at June 2017.

These changeover amounts are usually indexed each March and September. The calculation of your means tested aged care fees for residential aged care is very complex. The value of your former home differs depending on how long you have been out of it.

Christine at Financial Care Services assists client families to understand how much means tested aged care fees their family member could be charged under different scenarios. The means tested aged care fees need to be paid each month so the family need to plan the aged care resident’s finances carefully.

Contact Christine for information to start an aged care advice consultation.

Who calculates the means tested aged care fees

Means tested aged care fees are calculated by Centrelink based on your detailed information.

An Age Pensioner who has help to stay at home does not need to provide additional financial information for her means tested aged care fees calculation. Centrelink have all of the information needed to calculate her means tested aged care fees. Centrelink use the same assessable income amount for both her means tested aged care fees and her Age Pension.

Self-funded retirees need to give Centrelink full details of their income and assets to have a means tested aged care fees calculation done.

Permanent residents of Commonwealth regulated aged care facilities need to provide information to Centrelink about their homes and other assets in addition to their income. Age Pensioners must tell Centrelink about any family members who are continuing to live in the aged care resident’s former home. The former home could be exempt for the aged care resident’s asset test if a spouse or disabled child lives there.

Help is available. 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.

Means tested aged care fees care cost cap

The actual amount of means tested aged care fees that you pay cannot be more than the cost of your personal support and nursing care. If in June 2017 as a permanent aged care resident, you only need a ‘Low’ level of assistance with the ‘activities of daily living’ then you could not be charged more than $36.65 per day for personal support and nursing care.

A very frail aged care resident could be needing personal support and nursing care costing $214 per day. The aged care resident would need a high income and/or very substantial assets to be levied means tested aged care fees of $214 per day.

The Commonwealth pays the part of the care costs that exceed the resident’s means tested aged care fees.

Annual cap on Means tested aged care fees

The amount of means tested aged care fees payable by an individual is capped at $26,380.51 for a year as at June 2017. The dollar amount of this Annual Cap is increased slightly each March and September.

At the June 2017 rates, you would need to be paying at least $72.28 per day of means tested aged care fees to reach the Annual Cap on means tested aged care fees.

The Annual Cap is applied for a ‘care year’. Your first care year starts on the day that you start receiving your help to stay at home care. If you did not have help to stay at home but went directly into Commonwealth regulated aged care then your care year starts on the day that you become a permanent resident.

You start a new care year on each anniversary of starting your first care year.

For example, Sam went directly to residential aged care after suffering a severe stroke. He moved from hospital to aged care on 7 April 2017. Sam will start a new care year on 7 April each year.

Lifetime cap on Means tested aged care fees

The total amount of means tested aged care fees payable by an individual during her lifetime is subject to a Lifetime Cap. As at June 2017 the Lifetime Cap is $63,313.28. The Lifetime Cap amount is increased slightly each March and September.
The Lifetime Cap is 2.4 times the Annual Cap.

The current means tested aged care fees system commenced on 1 July 2014 for new aged care recipients only.
Thus the Lifetime Cap could start to apply early in 2017. The first aged care recipients to have the Lifetime Cap applied would be wealthy people who entered residential aged care in late 2014 and needed at least a medium level of assistance with the activities of daily living.

In future years, aged care residents who do not reach the Annual Caps might reach the Lifetime cap on means tested aged care fees after many years in residential aged care.

Skip Centrelink forms and pay maximum Means tested aged care fees

Self-funded retirees can choose to not to have Centrelink calculate a means tested aged care fee. But to stop the reminder letters from Centrelink someone needs to visit a Centrelink office on behalf of the aged care resident.

Christine at Financial Care Services helps self-funded retirees confirm identity at Centrelink and have the Annual Cap and Lifetime Cap applied to the means tested care fees.

The Annual and Lifetime Caps would only be applied to means tested care fees of aged care residents who are known to Centrelink. The Attorney or court appointed Administrator must visit Centrelink to confirm identity in order to have the Caps applied.

Before you choose to skip the Centrelink forms and pay the maximum means tested aged care fees you could check if the aged care resident could actually be charged the maximum rate.

For example, Tom sold his former home to pay for his aged care. After paying $500,000 of Refundable Accommodation Deposit, Tom has just over one million dollars in the bank and no other assets or income. Tom’s maximum means tested care fee is $75 per day. But Tom requires a Medium level of ‘assistance with the activities of daily living’ which attracts a subsidy of $79.80 per day in June 2017.

Tom has a choice. He could keep Centrelink informed about his assets and income so that he is charged the correct means tested amount of $75 per day until he reaches the Annual Cap. Alternatively he could just confirm his identity to Centrelink and pay the actual cost of his care, $79.80 per day, until he reaches the Annual Cap. Tom decides to pay the actual care costs after confirming his identity to Centrelink to be sure of having the Caps applied.

But consider Sue who only needs a Low level of ‘assistance with the activities of daily living’ which attracts a subsidy of $36.65 per day in June 2017. Sue also has a million dollars in the bank after paying $500,000 of Refundable Accommodation Deposit. Sue’s family confirm her identity to Centrelink to stop the reminder letters. Sue is charged the actual cost of her care which is well below her maximum means tested care fee of $75 per day. The annual care fees for Sue are well below the Annual Cap. But after many years as a Low care resident Sue reaches the Lifetime Cap on means tested care fees.

Independent aged care financial advice from Financial Care Services can help you estimate your means tested care fees and decide about skipping the Centrelink assets and income form.

Contact Christine for the Financial Care Services Aged Care Checklist to start the aged care advice. You will also receive the Financial Care Services Financial Services Guide.

Christine at Financial Care Services can help you visit Centrelink to confirm identity.

Financial Care Services an independent financial advisor

Help is available. 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.

Financial Care Services welcomes clients from Melbourne and beyond.

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.
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:

he 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. © 2017 Financial Care Services Pty Ltd. All rights reserved.