Vol 10 Ed 11 - Financial Care Services

Volume 10 Edition 11 – 30 November 2020

Financial Care Services, the specialist adviser to seniors in transition to new lifestyles

Another small refund of the taxes you paid during your working life

During December another $250 Economic Support payment will be on its way. To be eligible for this payment you need to hold a Pensioner Concession Card or a Commonwealth Seniors Health Card.

Now that the citizens of Melbourne are allowed out you might like to spend this money in a Victorian business. After the long lockdown, our retail services and hospitality businesses would welcome your patronage.

Additional services for aged care residents

At least a ‘basic’ level of services and amenities must be provided to all residents of Commonwealth regulated and subsidised aged care facilities. This ‘basic’ level could be very ‘basic’ like the generic brands in ‘value’ focused supermarkets.

But families expect their seniors to maintain a comparable standard of comfort to what they had at home. The residents are expected to pay for these improvements to their services.

One approach is to charge a fee for each ‘additional service’. For example, five dollars for a bus outing or seven dollars for a visiting music group. Residents already have the costs of their hairdressing and podiatry billed separately so extra charges are not unthinkable.

But the care staff are not thrilled to be recording who participated in each activity and whose family has agreed to pay for a daily beer at lunch. Then the accounts staff are unimpressed at having to collect all these small fees.

To keep everyone happy, an aged care facility could offer residents a package of ‘additional services’. These ‘additional services’ could be a range of small improvements in the quality of the consumables and activities or entertainments.

The residents are expected to pay for their package of additional services via an ‘additional services’ fee. The facility manager’s challenge is to ensure that every resident is capable of utilising ‘additional services’ of equivalent value to their ‘additional services’ fee.

What might be in the package of additional services?

An ‘additional services’ package might include better quality toiletries, nicer meals with some choices, and maybe alcohol with the main daily meal. Not charging extra for every bus outing, or visiting entertainer might be a feature of the ‘additional services’ package.

Many families could expect their seniors to have comparable quality of toiletries to those they had at home. Therefore a suburban aged care facility could offer a ‘national brand’ rather than generic or ‘house brand’ of toiletries for all residents. Thus the facility could claim that it was providing a better level of amenities than the prescribed ‘basic’ level. However, families are unlikely to agree to pay an additional fee just because the toiletries are of a better brand.

A residential aged care facility must provide a program of activities to assist residents maintain physical and cognitive skills. An adequate activities program might be provided by the facility’s own ‘activities leader’ supported by visiting community volunteers. However families do not expect their seniors to be cut-off from the world around.

A range of excursions and visiting entertainers could be considered a normal part of life for aged care residents. Thus families would not be expecting charges for incursions or outings in the facility’s own bus to view the autumn leaves. Charging for an ‘additional services’ package that includes the costs of excursions and visiting performers saves the staff team from administering a recreation fee system.

Slightly enhanced catering with a ‘budget style of alcohol’ could be part of a lower cost ‘additional services’ package applicable to all residents attending the dining room.

Any superior meal options are usually available only to residents of a particular section of an aged care facility.
Staff cannot be expected to grant a choice of main meal and/or alcohol, to residents at this table but not to the folk seated at the next table. But the residents living in the penthouse suites could have their own superior menu and wine offering served in their top floor dining room.

Additional services fees

An ‘additional services’ package might include better quality toiletries and nicer meals with some choices. Not charging extra for every bus outing, or visiting entertainer might be a feature of the ‘additional services’ package.

Families might consider many of these items as just part of the standard service level for a good quality suburban aged care facility not as ‘additional services’. So why are they being asked to pay for ‘additional services’?

The Basic Fee for residential aged care is set at 85% of the single person rate of Age Pension, excluding Supplements, currently $52.25 per day. This fee is intended to cover the full cost of running the aged care facility including personal laundry and entertainment. The costs of ‘personal support and nursing care’ and the notional costs of providing the aged care facility building are expected to be covered separately by the Care Fees and Accommodation payments.

The Basic Fee just covers the costs of a very basic level of hospitality. Remember the aged care facility must be cleaned and meals served to the residents every day. Residents cannot be charged extra for basic services on weekends or public holidays even when the staff get higher pay for working unsocial shifts.

A modest outer suburban aged care facility with a a substantial cohort of Supported Residents could reason that all residents could afford to pay five dollars per day for an additional services package. The $5 per day package would be several small items that make life a little less ‘institutional’.

An upmarket aged care facility could have a significantly higher priced ‘additional service’ package. A daily additional service fee of fifty dollars is not unusual in inner suburban facilities.

Whilst some aged care companies charge all residents, maybe, fifteen dollars per day for their signature package. Other companies vary the ‘additional service’ package and the corresponding fee for different sections within each facility.

A specified level of ‘additional services’ could be compulsory for new residents into specific sections of an aged care facility. For example, the penthouse level of facility might include a sophisticated dining area for the exclusive use of the residents of the eight elegant suites on that level.

New residents selecting accommodation on that penthouse level would be required to contract for the ‘additional services’ package that includes the meals service provided to that dining area. A resident could not select accommodation on the penthouse level without the corresponding ‘additional services’ package.

But what if my granny cannot benefit from the ‘additional service’ package.

An individual resident cannot be charged for any ‘additional services’ that she cannot actually use. For example, a resident who is bed bound could not be charged for bus outings and theatre trips. So the ‘additional services’ fee must not exceed a reasonable amount for those ‘additional services’ that she could actually use.

Therefore aged care facilities often choose to provide a package of superior quality and/or a wider range, of services and amenities for their residents and charge an ‘additional services’ fee that is less than the total reasonable charge for each ‘additional service’ if it were billed separately.

What if my family cannot afford the ‘additional services’ fee

Aged care managers think that after paying the Basic Daily Fee residents might not need the remainder of the full Age Pension payment for their essential health related expenses. Therefore, the managers reason that all residents could afford to pay five dollars per day for an additional services package.
The five dollar per day ‘additional service’ package might appear to be more about saving the staff from checking who needs to pay for a small item or activity, than providing a significantly higher standard overall.

Thus even ‘Supported Residents’ could “afford” the five dollar per day ‘additional service’ package in a modest aged care facility.

Alas the facility managers might skip the thought that their residents need to budget for occasional large purchases not just the regular weekly sweet treats, hairdressing and podiatry. Walking frames, eye glasses, hearing aids, dentists, ejector arm chairs and new shoes are not free.

But we still need to find the money for the ‘additional services’ fee

The facility managers hope that the family of a full Age Pensioner could gift them the ‘additional service’ package. That would spare the family from deciding on appropriate birthday and anniversary gifts.

When your family member’s finances are stretched you could ask for the ‘additional services’ fee to be reduced.
A smile and a polite reminder of granny’s cognitive decline, usually results in a lower ‘additional services’ fee; total cessation of the ‘additional services’ fee is rare.

Beware, if your cash flow is stretched, the facility manager might just suggest that the ‘additional services’ fees be debited to your RAD account rather than paid in cash each month.

Another approach to financing enhanced services

Aged care facilities that offer very superior accommodation might choose to cover the costs of better than ‘basic’ service level by requiring a higher Accommodation Room Price.

The additional Daily Accommodation Payment generated by an additional $100,000 of Accommodation Room Price could cover a modest level of additional services. Thus slightly higher staffing levels and nicer meals could be financed without the hassles of ‘additional services’ fees.

Beware, some aged care facilities require both significantly higher Accommodation Room Prices and substantial additional service fees.

Contact Christine at Financial Care Services your independent adviser for help with understanding the fees and charges for residential aged care

Financial Care Services is an independent advisory service specialising in retirees of modest means and aged care entrants.
Our core values include working with clients in claiming DVA and Centrelink entitlements.

The team at Financial Care Services are here to answer your Age Pension questions and guide your understanding of aged care costs.

Help with Centrelink challenges is available from Christine Hopper at Financial Care Services, the specialist adviser to seniors in transition to new lifestyles.

Christine has neat handwriting just right for inserting your data into small printed spaces. She helps clients complete Centrelink forms.
Christine could help you with collating your supporting documents and then mailing your form to Centrelink.

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

Christine charges fees based on the work involved in advising you about pensions and aged care fee solutions.

To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle costs, granny flat or Age Pension issues please contact Christine Hopper or call +61 3 9808 0338.
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Christine Hopper
Financial Care Services Pty Ltd
Independent aged care, strategic lifestyle and Social Security advice for seniors in Melbourne, Victoria, Australia
Telephone – call +61 3 9808 0338
Email – contact info@financialcareservices.com.au
Address – mail to 172 Warrigal Road, Camberwell Victoria 3124
Website – visit financialcareservices.com.au
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Past newsletters – see http://financialcareservices.com.au/newsletters/
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Disclaimer: The information contained in this newsletter is of a general nature only and does not constitute “financial advice”.
All eligibility for Commonwealth benefits will be determined by Centrelink or DVA, based on your personal position as documented and the legislation and Regulations in force at that time.