Negotiate aged care accommodation room prices
Aged care facilities must publish the maximum price for each type of accommodation offered. Families then ask “Can we negotiate aged care accommodation room prices?”
Yes, you can negotiate aged care accommodation room prices. But the aged care facility might not choose to negotiate aged care accommodation room prices below their published maximums.
Which aged care facilities would negotiate aged care accommodation room prices?
Commercial aged care providers operate businesses that aim to be profitable. For a commercial aged care provider, the marginal income from having a new resident at a slightly reduced accommodation room price could still be more than the marginal cost of an additional resident. The overall commercial result could be better to negotiate aged care accommodation room prices lower than the published maximum accommodation room price rather than have the room vacant for an extended period.
Thus a commercial aged care facility might be willing to negotiate aged care accommodation room prices to achieve a more profitable overall financial result.
When to negotiate aged care accommodation room prices
Aged care facility managers are more likely to be able to negotiate aged care accommodation room prices when demand for aged care places is low.
If you are seeking urgent admission to residential aged care, you might not be able to negotiate aged care accommodation room prices easily.
In winter when the demand for aged care places might peak, managers might have little business incentive to negotiate aged care accommodation room prices. When many families are seeking aged care places the facility manager could require the full published accommodation room price.
Do not-for-profit aged care homes negotiate aged care accommodation room prices?
Each not-for-profit aged care provider could choose to negotiate aged care accommodation room prices according to its own internal ‘rules’.
Some charitable aged care homes offer standard rooms at very modest aged care accommodation room prices. New residents with significant assets could expect to afford these prices without overstretching their budgets. Therefore these charitable aged care facilities do not normally allow you to negotiate aged care accommodation room prices lower than the published maximum rate.
Other not-for-profit aged care providers have published aged care accommodation room prices at the maximum allowable without special Commonwealth approval. The management committees for these aged care providers might set the published aged care accommodation room prices for every bed within their facility, at the maximum allowable level to provide scope for significant reductions in accommodation room prices for applicants with limited resources. The management might intend that the wealthier residents in these community, or charitable, aged care facilities would subsidize the other residents’ accommodation costs.
Some not-for-profit aged care homes demand proof that the potential aged care resident has limited assets before considering a request to negotiate aged care accommodation room prices. These not-for-profit aged care facilities could ‘require’ the family to show the Centrelink Aged Care Assessment as part of the negotiations.
How far could we negotiate aged care accommodation room prices?
A commercial aged care provider might reduce the aged care accommodation room price by maybe $50,000 from, say, $500,000 to $450,000, when the facility has several vacant rooms and few families are looking for residential aged care. A friendly enquiry from a gracious family member could open the facility manager to negotiate aged care accommodation room prices.
Before you agree a substantial aged care accommodation room price, you could consider the financial implications.
If you do not have the money ready to pay the full aged care accommodation room price agreed then you will be asked to pay interest on the aged care accommodation room price as part of your monthly bill.
A good income from a superannuation pension or reliable investment income could cover the interest payments and daily aged care fees. But many families need to consider selling or leasing the former home to finance residential aged care.
But selling the former home to provide cash to pay the aged care accommodation room price as a refundable accommodation deposit could increase the means tested amount significantly resulting in an increased means tested care fee. Selling the former home usually takes several months to complete, meanwhile the interest is accruing on the agreed aged care accommodation room price.
Before you commit to an aged care placement consult Financial Care Services regarding your personal situation. Christine at Financial Care Services understands the new aged care accommodation cost system and the various means tested fees for residential aged care and Age Pensions. Consultations at Financial Care Services can be arranged at short notice for families needing urgent admission to residential care.
Christine 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.
Financial Care Services is an independent aged care financial advisory service specialising in aged care entrants and Centrelink Pensions
Financial Care Services is an independent financial advisory service specialising in aged care entrants and retirees of modest means. Our core value in financial advice is to assist with your money plan in the responsible management of your assets to generate the cash flow needed for your lifetime planning in your own home or in residential aged care. Christine at Financial Care Services understands both the DVA and Centrelink Pensions systems and the Commonwealth aged care fee arrangements.
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. © 2015 Financial Care Services Pty Ltd. All rights reserved.