Volume 7 Edition 3 Financial Care Services Newsletter

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Financial Care Services Newsletter by Christine Hopper
Independent aged care, lifestyle and financial advice for seniors

Volume 7 Edition 3 – 31 March 2017

Pension Indexation Increases 20 March 2017

Centrelink and DVA Pension rates increased on 20 March 2017. The amount of the ‘indexation’ increase is small reflecting our low inflation rate.

After the March 2017 indexation is applied, a single pensioner could receive a maximum fortnightly payment of $888.30. This fortnightly payment includes $808.30 of basic Pension and $80.00 of Supplements.

Each member of a pensioner couple could receive a maximum fortnightly payment of $669.60.

Thus a couple who both qualify for the full rate of Age Pension could receive a maximum of $34,800 as their total joint annual income from Centrelink. The maximum Centrelink payment to a full Pensioner is only $23,000 per year for a single person.

The full rate of Age Pensions supports a very modest standard of living in retirement. Just a little more income could allow for some small extras and a buffer for a ‘rainy day’.

If you want to maintain a ‘lifestyle’ then you would need substantial additional financial resources.

So start planning for when your earned income reduces below your preferred expenditure level. To make an appointment for confidential, independent and professional advice about retirement lifestyle financial issues please contact Christine Hopper or call +61 3 9808 0338.

Single Pensioners Means Test Cut-off

The actual amount that an individual pensioner is paid is subject to the pension Means Tests.
Centrelink work out the reduction that could be applied to you under the Assets Test and under the Income Test. Then Centrelink apply whichever Test generates the lowest pension payment to you.

A Single Pensioner could keep her Pensioner Concession Card and receive the Pension Supplements plus one dollar per fortnight of Pension if her Income is not more than $1,778.60 per fortnight.

But she must also satisfy the Assets Test to remain as a Pensioner.
A Single pensioner may have not more than $719,000 of Assets or a ‘home’ plus $519,000 of other Assets, and still be eligible for one dollar per fortnight of Age Pension.

Pensioner Couple Means Test Cut-off

The Means Tests for ‘couples’ count all of the Income and all of the Assets that the couple have. Centrelink use the ‘total’ amounts for the couple; his, hers, ours are all included without distinction. Remember that at Centrelink and DVA, a couple is any two adults who share domestic arrangements and present socially as ‘a couple’. You cannot be treated as a ‘single’ at Centrelink just because you and your domestic partner keep your finances separate.

A couple living together could have an annual income of $70,800 and not be excluded from the Age Pension by the Income Test.

But the Asset Test only allows a homeowner couple to have $780,500 of assessable assets and stay as Pensioners. If the couple are living together as ‘non-homeowners’ then the Asset Test would exclude them from Pension for having more than $980,500 of assets.

DVA War Widow Pension and Income Support Supplement

DVA Pensions and Income Support Supplement rates were increased on 20 March.

The cut-off levels for the Income Support Supplement and the Pensioner Concession Card is similar to the cut-off levels for Centrelink Age Pensions.

Read more about how Pensions increased on 20 March 2017

Aged Care Fee adjustments

The Basic Daily fee for residential aged care is set at 85% of the Single rate of Pension excluding Supplements. The March 2017 Age Pension increase is reflected in a small increase in the Basic Daily fee.

From 20 March 2017, all aged care residents will be charged $49.07 per day for the Basic Daily Fee. This fee is the ‘housekeeping money’ for the food, laundry, cleaning, entertainment and utility bills required for aged care homes.

Aged care residents who have significant resources also pay for their personal support and nursing care. The care component cannot be more than the cost of the resident’s actual assessed level of care.

The maximum Income Tested Fee for people who entered residential aged care before July 2014 was increased to $77.94 per day from 20 March 2017.

Centrelink will recalculate the Means Tested Care Fee for later entrants based on the slightly increased changeover points.
Self-funded retirees might have a tiny reduction in their Means Tested Care fees as a result of the small indexation increase in the changeover points in the Asset and Income component calculation formulae.

Additional Charges for residential aged care

A new category of Additional Charges are appearing for residential aged care. Families arranging permanent entry are advised to check the Resident Agreement for additional charges before signing in to Residential Aged Care

The families of Commonwealth regulated aged care entrants are generally informed about three components of residential aged care costs; accommodation charges, basic daily fees and means tested care fees.

The potential for an Extra Service fee is flagged on the Myagedcare website. In practice, some Extra Service fees are shown on the aged care facility’s own website, but not on the ‘official website’.

New additional fees are appearing in Resident Agreements. The new additional fees are usually disclosed by the aged care facility operator on their own website and in the handouts to aged care enquirers.

The cost of living in aged care could be significantly higher than the family expect if any ‘additional fees’ and ‘compulsory’ extra charges are levied. Comparison of the costs of different aged care places is more complex when additional fees are levied.

A consultation with Christine at Financial Care Services helps you understand the full costs of residential aged care. Contact Christine for the Aged Care Checklist and Financial Services Guide before you commit to an aged care placement. Changing aged care facilities later is not easy.

Once the Attorney or Administrator, has signed the Resident Agreement it might be too late to object to the imposition of any new or unusual additional charges.

New charges have appeared for

Replenishing and expanding the asset base of that aged care chain. This could include buying land and then building and fitting out a new aged care facility, buying another aged care facility or refurbishing the facility where your family member lives.
An ‘additional fee’ per day on every resident because their visitors and perhaps the residents also, will enjoy a good coffee in fancy on-site café. Residents could still be required to pay an Extra Service Fee for the agreed and approved package of Extra Services in addition to the ‘additional fee’.
A ‘departure fee’ for packing up your room and issuing a final invoice.
Reinstatement costs if you have damaged your room or the furniture and equipment of the aged care home beyond reasonable wear and tear.

Be sure to read the Resident Agreement carefully before the Guardian or the Attorney signs.

Ask Christine for help to understand the full cost of your preferred aged care placement. The placement with the ‘additional fees’ could be too expensive for a very long stay in care.

Financial Care Services your independent financial adviser

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

Financial Care Services charges fees based on the work involved in advising you about pensions and aged care financial solutions and arranging your investments.

To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle or financial issues please contact Christine Hopper or call +61 3 9808 0338.

_______________________________________

Christine Hopper
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)

Telephone – call +61 3 9808 0338
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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.

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.