Aged care fee indexation increase
The Commonwealth sets the levels of residential and home aged care fees for aged care services eligible for Commonwealth subsidy. The Commonwealth allows for regular reviews and aged care fee indexation increases. An aged care fee indexation increase also applies to the annual and lifetime caps on means tested care fees.
Basic daily aged care fee indexation increase
All residents of Commonwealth regulated aged care facilities pay the Basic daily fee. This fee represents the resident’s contribution towards the costs of running the home, such as, food, electricity, cleaning, laundry and resident social activities.
The Basic daily aged care fee is set at 85% of the Single rate of Age Pension excluding Pension Supplements. The Age Pension is subject to an indexation increase each March and September. Therefore the aged care fee indexation increase is applied to the Basic daily aged care fee.
Effective 20 September 2014, the Basic daily aged care fee is $47.15 per person per day.
Means tested aged care fee indexation increase
The means tested aged care fee consists of an income component and an asset component. The income component is similar to half of the assessed income over the income amount for a full Age Pensioner, the “Income Free Area”. Thus as the rate of Age Pension increases the maximum income of a full Age Pensioner increases and the “Income Free Area” also increases.
Aged care residents benefit from the aged care means tested fee indexation increase to the Income Free Area.
The formula for the asset component of the means tested aged care fee was also adjusted to allow for an aged care fee indexation increase to the changeover points in the formula. Each of the Asset thresholds in the residential care means test calculation formula has been adjusted for the aged care fee indexation increase. The aged care fee indexation increase applied to the asset component of the means tested fee is slightly different from that applied to the Age Pension and Income Free Area for the Income component of the means tested fee.
The impact of the aged care fee indexation increase is to slightly reduce the means tested amount for aged care residents who are not Pensioners. But the combined impact of Basic daily aged care fee indexation increase and the indexation of the means tested amount thresholds could be to increase the overall fees payable by self funded retirees for residential aged care.
Aged care fee indexation increase on Annual and Lifetime caps
The caps on the amount of means tested care fees that an aged care recipient could be asked to pay were also increased effective 20 September 2014. An aged care fee indexation increase applied to the caps on the annual and lifetime amounts of means tested care fees.
The ‘means tested care fee’ excluding the Basic daily fee, is now capped at $25,349.21 for the care year. Your care year starts on the first day that you received ‘home care’ or entered permanent residential care after June 2014.
The lifetime cap on ‘means tested care fees’ increased to $60,838.12 on 20 September 2014.
Aged care fee indexation increase reviews of individual means tested fee amounts
Following the aged care fee indexation increase to the Income Free Area and the Asset Thresholds for the residential aged care means tested fee, the means tested amount will be recalculated for each individual aged care recipient.
Non- Pensioner, that is, self funded retiree aged care recipients could have their means tested amounts reduced slightly following indexation adjustment. But if your aged care cost was less than your maximum means tested aged care fee amount then your actual means tested fee would not change on account of the indexation of the means test calculation changeover points.
Review of individual means tested aged care fee amounts
The amount of the means tested fee payable by an home aged care recipient or a permanent resident in an aged care facility can be reviewed by the Commonwealth at any time.
The Attorney or Administrator, for an aged care recipient is responsible for updating Centrelink about the aged care recipient’s asset and income position.
If you are the Attorney or appointed Administrator for an aged care resident then you must tell Centrelink within fourteen days of any significant changes in her financial position. If you sell or lease the former home of an aged care resident then you must show Centrelink the paperwork.
The amount of the means tested care fee could also increase because the aged care resident needs a higher level of care. As a care recipient becomes frailer or has more complex health conditions, then her care cost could increase. Remember her actual means tested care fee is the lower of her actual care cost and her means tested fee amount but subject to the annual and lifetime caps on means tested fees payable.
Help with estimating your aged care costs
Christine at Financial Care Services understands the new aged care system of daily fees and Accommodation costs. Financial Care Services is ready to calculate the various means tested fees for residential aged care that could apply to your family member. The current annual and lifetime caps can be applied to your care fees.
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. The means tested amount of any Age Pensions would be included in your Illustration.
Your Illustration could include the financial impact of retaining the former home vacant or leased, or releasing it for sale. This lifetime planning for your future aged care expenses could reduce your later surprises.
Before you commit to an aged care placement consult Financial Care Services regarding your family member’s situation. Financial Care Services is an independent financial advice practice that is not linked to any other business.
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 at Financial Care Services could help you with the Centrelink forms for the Means Tested Amount for residential aged care.
Christine could assist you with collating your family member’s personal data, estimating both her Means Tested Amount and how much Centrelink Pension you could expect her to receive and completing the Centrelink forms for you to sign.
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