Online at http://www.financialcareservices.com.au/newsletters/vol-4-ed-3/

FINANCIAL CARE SERVICES
Independent aged care, lifestyle and financial advice for seniors
Volume 4 Edition 3 –31 March 2014

Hello

Social Security and Veterans Pensions increase from 20 March

The Commonwealth increased the maximum rates of Centrelink and DVA Pension by 1.9% from 20 March 2014. The Age Pension related daily care fees for Commonwealth regulated aged care were increased to reflect the Age Pension increases of 20 March 2014.

The new maximum total payment for a Single Pensioner is $842.80 per fortnight, an additional $15.70 per fortnight. The maximum payment for a Single Pensioner includes Pension Supplements totalling $76.80 per fortnight. The Supplements are paid to Centrelink clients who receive at least one dollar of Pension per fortnight.

The maximum payment to a Single Centrelink Age Pensioner or full-time Carer, is $842.80 per fortnight, that is, $21,900 per year.
Thus the Centrelink Pension benefit supports a frugal lifestyle for a retiree who owns a home without any major debts. Maybe now is the time to seriously consider clearing your personal debt and paying off your home mortgage before you find yourself retired.

Call Christine on 03 9808 0338 to book an appointment to discuss your long term planning for when you no longer earn an income from work.

How much can I have in other income and assets and before I lose the Pension?  You can read more about cut-off limits under the Asset Test and the Income Test and the Pension rates for Couples at Centrelink here.  Remember that at Centrelink a couple is any two adults who share domestic arrangements and present socially as a couple.

Aged Care Regulation is changing on 1 July 2014

Last year the Commonwealth parliament passed the Aged Care (Living Longer Living Better) Bill 2013. The new legislation changes the administration and financing system for both residential aged care and aged care at home.

None of the changes would impact financially on people who are permanent residents of Commonwealth regulated aged care homes as at 30 June 2014. Their Accommodation Bond agreements would not be changed. Any Accommodation Charges for direct entry to permanent High Care would continue to be payable at the flat rate agreed on entry to permanent High Care in a nursing home before 1 July 2014.

For permanent residents as at 30 June 2014, the Income Tested Fees would continue to be calculated under the existing formula. The amount of the Income Tested Fees could change as the care recipient’s financial position changed and the Commonwealth adjusted the Income Tested Fee Allowances.

The Age Pension related daily care fees for Commonwealth regulated aged care were increased to reflect the Age Pension increases of 20 March 2014.
The new Basic Daily Care Fee is $46.50 per day.

The maximum Income Tested Fee has increased to $73.86 per day effective from 20 March 2014. The maximum rate of Income Tested Fee applies to residents with Incomes in excess of $89,000 for a Single person, and residents who choose not to disclose their financial position to Centrelink.

The Aged Care (Living Longer Living Better) Act removes the distinction between Low Care and High Care.
Therefore all Commonwealth regulated aged care homes will be able to accept any potential aged care recipient who has been assessed as needing residential care.
Until June 2014, a person with an ACAS of ‘High Care’ has to find a place in a High Care facility, a ‘nursing home’ in the old language. New entrants to the aged care system coming direct from home or hospital into standard Commonwealth regulated High Care could be levied a modest daily Accommodation Charge on permanent entry by 30 June 2014. Read more about the Living Longer Living Better changes.

Any advantage in entering permanent residential care before the changes on 1 July 2014?
If your family member already has an ACAS for permanent High Care and her assets exceed $120,000 then she might be financially advantaged by becoming a permanent High Care resident in a standard nursing home before 1 July 2014.
The current maximum Accommodation Charge of $34.20 per day is similar to the interest on an Accommodation Bond of $188,000. In Melbourne the Accommodation Bond for a place in standard twin bed nursing home room could be at least $200,000.
But saving money by paying the current maximum daily Accommodation Charge rather than the interest on an Accommodation Bond of over $188,000 might be not a good enough reason for entering residential care early.
Financing residential aged care is complex; if you sell the former home to pay the Accommodation Bond the aged care resident’s Age Pension might be reduced but if you lease the house the ongoing Age Pension plus the rent might not be enough to cover the daily fees.
Before you commit to placing a family member in Commonwealth regulated residential aged care consult Financial Care Services about the options and fee levels. Call Christine on 03 9808 0338 to arrange a Consultation to discuss your family member’s position.

Aged Care Asset Assessment Home Exemption

Multi-generational households often ask if the Aged Care Asset Assessment has a home exemption. Families may be aware that the amount of Accommodation Bond, or Accommodation Charge, required of a permanent resident of Commonwealth regulated aged care home depends on the amount of the new resident’s assessed assets. The former home of the aged care entrant is often her major asset.

But what if  the former home of the aged care entrant is also the home of a family member? Maybe a son with a significant intellectual disability had never become independent enough to move out from the family home. A daughter might have come back to live with her widowed mother as housekeeper and fulltime carer. The family ask, “Do we have to sell the home if the home owner becomes a permanent resident of Commonwealth regulated aged care facility?” Read more about the main Aged Care Asset Assessment Home Exemption.
If you need help regarding your family situation and the Aged Care Asset Assessment Home Exemption call Christine on 03 9808 0338 to arrange a consultation.
Remember that the Aged Care Asset Assessment Home Exemption is about the Asset Value for determining residential aged care costs. The family could choose to rent the former home to a family member or former carer rather than sell it. But the aged care fees do need to be paid each month.

If you would like further confidential, independent and professional advice about Centrelink, lifestyle or financial advice, please contact Christine Hopper (03) 9808 0338.

____________________________________________________

Christine Hopper

Director
Financial Care Services Pty Ltd
Independent aged care, lifestyle and financial advice for seniors in Melbourne, Victoria, Australia
Australian Financial Services Licence Number
299570 (check this at www.search.asic.gov.au/fsr/flb.html)
Authorised Representative Number
252529 (check this at www.search.asic.gov.au/fsr/far.html)

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Disclaimer: The information contained in this newsletter 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.

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