Financial Care Services Newsletter

by Christine Hopper
Volume 13 Edition 10 – 30 October 2023

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

Financing the costs of care for residents of Commonwealth regulated aged care facilities

Seniors who need more personal support and nursing care than could reasonably be provided at home are allowed to stay permanently in Commonwealth regulated residential aged care facilities.
The aged care facilities are staffed by qualified nurses and care assistants.
All residents are required to contribute towards the costs of their hoteling in an aged care facility.
Wealthier residents must also pay part of the costs of their ‘personal support and nursing care’.

Who lives permanently in Commonwealth regulated residential aged care facilities

Any Australian resident who needs a significant amount of personal support and/or nursing care could qualify for permanent entry to a Commonwealth regulated residential aged care facility.

Commonwealth regulated residential aged care facilities include many aged care homes operated by charities, religious groups and private businesses.

The Commonwealth contributes to the costs of providing ‘personal support and nursing care’ within Commonwealth regulated residential aged care facilities.
This means that ordinary taxpayers are substantially funding the care our frail seniors are receiving in aged care homes.
Therefore only persons who really need significant levels of ‘personal support and nursing care’ may be admitted into the Commonwealth regulated residential aged care facilities.

Some seniors who are ‘assessed’ as being eligible for permanent entry to a Commonwealth regulated residential aged care facility choose to stay at home with extensive support from their families, friends and visiting nurses.

Costs of ‘personal support and nursing care’ in a Commonwealth regulated residential aged care facility

In 2023, the Commonwealth introduced a new method of determining the maximum subsidy levels for the ‘personal support and nursing care’ costs of permanent aged care residents.
The new method of allocating permanent aged care residents to subsidy levels considers the individual resident’s cognition, mobility and any compounding factors.

The July 2023 ‘personal support and nursing care’ subsidy levels start at $46.19 per day for an ‘independent resident who has no compounding factors’.

The maximum ‘personal support and nursing care’ subsidy of $243.10 per day from July 2023, applies permanent residents who ‘are not mobile, have lower function, higher risk of pressure sores and other compounding factors’.

This maximum subsidy rate also applies to people who were ‘admitted for palliative care’ in a Commonwealth regulated residential aged care facility.

Resident contributions to ‘personal support and nursing care’ costs.

The Age Care Act provides for reductions in the amount of the ‘personal support and nursing care’ subsidy payable in respect of an individual resident.
The amount of the reduction of subsidy is equivalent to the Means Tested Care fee payable by the resident.

This is a roundabout way of stating that the aged care facility is entitled to be paid the full amount of the assessed rate of ‘personal support and nursing care’ subsidy for each resident.
But the facility might need to collect part of its entitlement from the resident rather than from the Commonwealth.

Please note that the Commonwealth will only contribute to the ‘personal support and nursing care’ costs of aged care residents who are Australian citizens or long-term Permanent Residents of Australia.
Hence, if you choose not to ‘prove your identity’ to Centrelink then the Commonwealth would not pay any subsidy towards your personal support and nursing care costs.

Calculating the Means Tested Care fee for an individual resident

The Means Tested Care fee calculation formula is defined in the Commonwealth Aged Care Act.

The dollar amounts for the changeover points for the prescribed Means Tested Care fee formula are varied by Commonwealth Regulations.
The prescribed dollar amounts are usually adjusted on 20 March, 1 July and 20 September each year.

The Means Tested Care fee formula consists of an Asset Component and an Income Component.
Each component has a minimum value of zero.
Thus a negative in one Component cannot be offset against a positive value of the other Component.

The ‘notional value of a vacant former home’ is equivalent to the second changeover point in the Asset Component formula for the Means Tested Care fee.
Thus the ‘notional value of a vacant former home’ is adjusted by the Regulations.

Annual and Lifetime Caps on Means Tested Care fees

Once the total Means Tested Care fees paid by an Australian aged care resident during a ‘care year’ reaches the Annual Cap, then the Commonwealth could pay her ‘personal support and nursing care’ costs until the next anniversary of her entry to permanent residential aged care.

On the anniversary of her entry to permanent residential care her Means Tested Care fees restart for her next care year.

Once the total amount of her Means Tested Care fees for residential aged care and any prior ‘in home care’ reaches the Lifetime Cap, the Commonwealth pays her ‘personal support and nursing care’ costs for the remainder of her lifetime.

The dollar amount of the Annual and Lifetime Caps on Means Tested Care fees are set under Commonwealth Regulations.
The dollar amounts are generally increased each March and September.
The Lifetime Cap is usually maintained as 2.4 times the Annual Cap.

Current Means Tested Care fee formula

As from 20 September 2023, the annual rate of Means Tested Care fee for a non-supported resident, is calculated as

An Asset Component of
1% of the value of assessable assets* in excess of the ‘notional value of a vacant former home’, $197,735.20
plus a further 1% of the value of any assessable assets in excess of $476,205.60

Plus an Income Component of
50% of any income in excess of $32,331.00 for a single resident, or $31,707.00 for a resident who is ‘a member of a couple’.

The annual rate of Means Tested Care fee is the divided by 364 to yield a daily rate.

Note that for the Asset Component calculation your ‘assessable assets’ includes any Refundable Accommodation Deposit paid for residential aged care and the value of your former home together with your assessable assets for the Age Pension Asset Test.

If you are a member of a couple at Centrelink then the Means Tested Care fee calculation assumes that 50% of your total combined assets and income relates to each member of the couple.

As from 20 September 2023, the Annual Cap on Means Tested Care fees is $32,718.57 and the Lifetime Cap is $78,524.69.
The Annual Cap is currently equivalent to a Means Tested Care fee of $89.64 each day for the full year.

Calculation of the Means Tested Care fee for an individual aged care resident

Centrelink undertake the calculation of the Means Tested Care fees for all aged care residents.

Means Tested Care fees for means tested Age Pensioners

Aged care residents who receive means tested Pensions from Centrelink, or DVA, are already providing their asset and income data to Centrelink.
These Pensioners only need to provide information about any ‘protected persons’ staying on in their former homes.

Centrelink would use the database for means testing an Age Pension to calculate the Means Tested Care fees for an Age Pensioner.
Thus, the Centrelink record of assets and income of an aged care resident who is also an Age Pensioner, only need to be updated once for the changes to be applied to both the Pension rate and the Means Tested Care fees.

Centrelink prefer that you update your asset and income details via your MyGov account not by visiting a Centrelink office.

Aged care residents with significant assets who receive the full rate of Age Pension could incur Means Tested Care fees of less than ten dollars per day.
In contrast, an aged care resident who receives only a small part Age Pension could incur Means Tested Care fees of over eighty dollars per day.

Means Tested Care fees for residents without means tested Age Pensions

Blind Pensioners and self-funded retirees may choose to submit full asset and income data to Centrelink.
Centrelink would then calculate their Means Tested Care fees.

The calculated rate of Means Tested Care fees could be substantial for wealthier self-funded retirees.

Similarly, where the partner of an aged care resident is still active in the workforce, the Means Tested Care fee rate could be higher than the Annual Cap.

Therefore, many self-funded retirees choose not to have Centrelink calculate a Means Tested Care fee amount.
These aged care residents pay the full costs of their ‘personal support and nursing care’ initially.

Self-funded retirees might seek to have the Annual and Lifetime Caps applied to their ‘personal support and nursing care’ fees.

To qualify for the Commonwealth to pay a subsidy equivalent to your full ‘personal support and nursing care’ costs after your Means Tested Care fees have reached the Annual and/or Lifetime Caps, you must prove your Australian citizenship or Permanent Residency status.

Proof of identity as an Australian citizen or Permanent Resident

Centrelink handle the proof of Australian citizenship or Permanent Residency status, for Commonwealth regulated aged care matters.

The Centrelink ‘proof of identity’ process requires three forms of identifcation.
At least one of your identity documents must include a photo of you.

Firstly, your proof of Commencement of Australian residency, for example:
Current Australian Passport, Australian Birth Certificate, Australian citizenship certificate or current Australian visa

Secondly, a ‘primary document’ to show the use of your identity in the community, for example,:
Australian driver licence, Australian Marriage Certificate or a current foreign passport

Thirdly, another document that shows the use of your identity in the community.
This ‘secondary document’ must show your name and photo, signature or residential address.
For example, your third identity document could be

an Australian bank issued plastic card that shows your name and signature; or
a statement of account with an Australian bank or credit union that shows your name and address; or
an invoice for Council Rates, Motor Vehicle Registration or a household utility bill that you have paid recently.

You may visit a Centrelink office to show the necessary documents to ‘prove your identity’.

Beware, an aged care facility could charge daily fees in excess of $280 for ‘personal support and nursing care’ until their administrator is satisfied that the new aged care resident has ‘proved identity’ at Centrelink.

Help to understand the costs of aged care for your family

Christine at Financial Care Services helps clients to understand the costs of using Home Care packages and/or placing a family member into residential aged care.

Christine could illustrate the various accommodation costs and means tested care fees that could be levied for your preferred aged care place.
You could ask Christine to illustrate some different Accommodation Room Prices so that you do not sign up for a place that would unduly stretch your family finances.

Contact Christine Hopper or call +61 3 9808 0338 to arrange an aged care consultation.

Christine at Financial Care Services your independent adviser

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

Christine at Financial Care Services is here to answer your Health Card and 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 Age Pension, Low Income Health Card and Commonwealth Seniors Health Card Claims and the Commonwealth aged care means testing forms is available to clients of Christine at Financial Care Services.

Christine charges fees based on the work involved in advising you about health cards, 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
Independent aged care, strategic lifestyle and Social Security advice for seniors in Melbourne, Victoria, Australia
Telephone – call +61 3 9808 0338
Email – contact Christine@financialcareservices.com.au
Address – mail to 2B Thomas Street, Camberwell Victoria 3124
Website – visit financialcareservices.com.au
LinkedIn – connect https://www.linkedin.com/in/christinehopper1
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.