Aged care daily care fee means tested amount

Aged care daily care fee means tested amount

by Christine Hopper

Aged care daily care fee means tested amount applies from July 2014

From July 2014, a new entrant to residential aged care is charged a Daily Care Fee based on her Means Tested Amount. The July 2014 Aged care daily care fee Means Tested Amount includes an Income Tested component and an Asset Tested component.

Income Tested Component of aged care daily care fee Means Tested Amount

The Income Tested component of the Aged care daily care fee Means Tested Amount is calculated as half of the resident’s Income in excess of the Income Free Area.

The Income Free Area represents an amount that could result in a full rate Age Pensioner who is not impacted by the Age Pension Income Test, having a Nil Income Tested component.

The Income Free Area is expected to increase as the Age Pension and its Income Test Allowance increase.

Income for the Income Tested component is the sum of the Income at Centrelink for assessing an Age Pension entitlement plus the actual amount of DSP, Age or Service Pension that the aged care resident actually receives.

For a Single person, the Income Tested component is calculated as 50% of the Resident’s Income in excess of the Income Free Area of $24,835.20 per year in July 2014.

For a member of a Couple Separated by illness, the Income Tested component is calculated as 50% of the Resident’s Income in excess of the Income Free Area of $24,367.20 per year in July 2014.  The Resident’s Income could be half of the total combined Income of the couple.

There is no maximum Income Tested component for the Aged care daily care fee Means Tested Amount.

The minimum Income Tested component for the Aged care daily care fee Means Tested Amount is zero. A resident cannot offset a negative Income Tested component amount against a positive Asset Tested component of the Aged care daily care fee Means Tested Amount.

Asset Tested Component of Aged care daily care fee Means Tested Amount

The Asset Tested Component of Aged care daily care fee Means Tested Amount is calculated as a percentage of the aged care resident’s assets.

The annual rate of the Asset Component is calculated as shown below for July 2014.
The Asset ranges are expected to be increased at least annually by the Commonwealth.

Aged Care Assessed Assets band Asset range for this rate Annual Rate Full Amount for this Asset band
 First $45,000 of Aged Care Assessed Assets  Nil -$45,000  0%  Nil
 Next $109,179.20 of Aged Care Assessed Assets  $45,000 – $154,179.20  17.5%  $19,106.36 per year
 Next $218,358.40 of Aged Care Assessed Assets   $154,179.20 to $372,537.60 1.0%  $2,183.58 per year
 Any Aged Care Assessed Assets over $372,537.60   Over $372,537.60 2.0%  Unlimited

The Asset Tested Component of the aged care daily care fee Means Tested Amount is zero if the resident’s asset value does not exceed $45,000.

The minimum value of “Nil” ensures that you cannot offset a negative Asset Tested Component against a large Income Tested Component to reduce your overall of Aged care daily care fee Means Tested Amount.

Home ownership and the aged care daily care fee Means Tested Amount

The value of the aged care entrant’s former home is included in her Assets unless a partner or another ‘protected person’ lives there. For the purposes of the Asset Tested Component calculation, the value of the aged care entrant’s former home is capped at $154,179.20 in July 2014.

Thus an aged care resident who owns a vacant suburban home, would have Assets of at least $154,179.20 resulting in an Asset Test Component of at least $19,106 per year, $52.49 per day in July 2014.

The Maximum Accommodation Supplement is $52.49 per day in July 2014. Thus an aged care resident who owns a home that is not occupied by a partner or another ‘protected person’, could not be eligible for any Accommodation Supplement for her residential aged care.

Refundable Accommodation Deposits count for the Asset Tested Component of Aged care daily care fee Means Tested Amount

The current value of any Refundable Accommodation Deposit held for an aged care resident is included in her Assets for the for the Asset Tested Component of Aged care daily care fee Means Tested Amount.

For example, Mary has agreed an Accommodation Price of $350,000. On entry to residential care, Mary paid $200,000 as a Refundable Accommodation Deposit and elected to have the Accommodation Daily Payments, that is, the interest on the other $150,000 of her Accommodation Price, debited to her Refundable Accommodation Deposit account.
The latest balance of Mary’s Refundable Accommodation Deposit account would be included as an asset for the calculation of Mary’s Asset Test Component of her Means Tested Amount of aged care daily fees.

Examples of Aged care daily care fee Means tested amount

Kim has always rented a home and has only $20,000 of assets in total. Kim’s only income is the Age Pension. Kim has become frail and cannot move about safely at home so she agrees to enter residential aged care.
With $20,000 of assets, Kim’s Asset Tested Component is Nil.
Kim’s has $400 per year of deemed interest on her bank account in addition to the full Age Pension and hence a total Income within the Income Free Area. Kim’s Income Tested Component is Nil.
Thus Kim’s total Aged care daily care fee Means Tested Amount is Nil and Kim cannot be charged for her aged care accommodation or her daily care. Kim will pay only the Basic Daily Fee of 85% of the Age Pension.

Bob had a severe stroke and cannot walk unaided. His wife Betty is unable to care for him at home now that Bob needs lifting. Betty will be staying home alone so their home does not count for the Asset Tested Component initially.
After Betty dies, Bob becomes the sole owner of the now vacant family home. The home then counts for the Asset Tested Component of Aged care daily care fee Means Tested Amount.

Calculating the Aged care daily care fee Means Tested Amount

Calculation of your Aged care daily care fee Means Tested Amount is complex. The Asset Tested component uses a new definition of assets. Thus your Asset Tested component includes more items than the Age Pension Asset Test and treats your former home differently.

You need to know the level of your Means Tested Amount so that you can estimate your aged care accommodation costs. Please be aware that if you do not understand your Aged care daily care fee Means Tested Amount then you might sign up for a more expensive aged care placement than you reasonably could afford.

Hint: Seek both an estimate of your Aged care daily care fee Means Tested Amount and an explanation of the new fee system before entering residential aged care.

Once your family member is in care, you might not be able to renegotiate the Accommodation Price agreed on entry.

Your Aged care daily care fee Means Tested Amount is reviewed every time your circumstances change. For example, when your partner moves on your aged care daily care fee Means Tested Amount will be changed to take account of the value of the now vacant home. Therefore look ahead to be sure that you can afford your chosen aged care placement for the long term.

Before you commit to an aged care placement consult Financial Care Services regarding your personal situation. Christine at Financial Care Services understands the new Accommodation cost system and the various means tested fees for residential aged care and the Centrelink DSP and Age Pensions.

A consultation 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.

Help with Centrelink forms for July 2014 aged care fees Means Tested Amount

Centrelink have released a new 32 page booklet form to collect the information needed to assess your Means Tested Amount: Permanent Residential Aged Care Request for a Combined Assets and Income Assessment

Christine could help you with the Centrelink forms for the Means Tested Amount for residential aged care.

Christine could assist you with collating your personal data and completing the Centrelink forms for you to sign. Christine could help you by estimating both your Means Tested Amount and how much  DSP or Age Pension or Service Pension you could expect to receive  from Centrelink or DVA.  
Normal hourly rate consultation fees apply for assistance with personal data collation, completing Centrelink forms and attendance at a Centrelink office with you.

A consultation with Financial Care Services helps you understand your potential aged care costs and Centrelink income support pensions. Call Christine on 03 9808 0338 to make an appointment for a consultation.

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. © 2014 Financial Care Services Pty Ltd. All rights reserved.
To make an appointment for professional advice, call Financial Care Services 03 9808 0338