Aged Care fees increases 20 September 2015
Basic Daily Aged Care fees increases 20 September 2015
All residents of Commonwealth regulated residential aged care are asked to pay a Basic Daily fee. You could think of the Basic Daily fee as covering the costs of running any home such as meals, laundry, cleaning and electricity.
Therefore Respite residents also pay the Basic Daily fee to cover their meals and domestic services costs. The costs of operating an aged care facility increase when the prices of food and other household supplies, and wages increase.
The Commonwealth has set the Basic Daily fee for Commonwealth regulated residential aged care as 85% of the Single person rate of Age Pension excluding the Supplements. Thus the Basic Daily fee increases whenever the Age Pension is increased.
In practice, the Commonwealth adjusts the Age Pension rates each March and September to reflect changes in the Consumer Price Index. Consequently the Basic Daily fee has increased to reflect the Age Pension increases of 20 September 2015.
The new Basic Daily fee is $47.86 for seniors who entered residential aged care from 1 July 2014.
The Basic Daily fee for Standard Residents who entered residential care before July 2014 has increased to $47.86 per day. Some earlier residents pay different rates of Basic Daily fees to reflect their circumstances on permanent entry to residential aged care.
Pre-July 2014 entrants Income Tested Aged Care fees increases 20 September 2015
The maximum Income Tested Fee increased to $76.02 per day to reflect the higher Age Pension rates effective from 20 September 2015. The maximum rate of Income Tested Fee applies to residents with annual Incomes in excess of $92,000 for a Single person, and residents who choose not to disclose their financial position to Centrelink.
Pre-July 2014 residents who have informed Centrelink of their Asset and Income position pay an Income Tested Fee calculated as five twelfths of the income in excess of $980.30 per fortnight for a Single person, or $962.30 for a member of a Couple at Centrelink.
Means Tested Amount for July 2014 aged care entrants
Following the increase in the Age Pension on 20 September 2015, Centrelink will recalculate the Means Tested Amount for each permanent aged care resident.
The new calculation of the Income Component allows for the new Age Pension rate of $788.40 per fortnight by disregarding the first $25,487.80 of a Single person’s assessable income, or $25,019.80 of assessable income for each member of a Couple at Centrelink.
The Asset Component calculation has been revised to link the first Asset Threshold to the new higher value of a non-exempt former home of $157,987.20. The Second Asset Threshold has been increased to maintain the ratio of asset amounts subject to each assessment rate.
Maximum Accommodation Supplement Amount increased on 20 September 2015
The amount of Accommodation Supplement that the Commonwealth would pay for an aged care resident with few resources, increased to $53.84 per day effective 20 September 2015.
Consequently, the Means Tested Care Fee calculation now allows for the increased Maximum Accommodation Supplement Amount to be offset against the Means Tested Amount.
Maximum Amount of Aged Care fee increases 20 September 2015
The maximum amount that an aged care resident could be charged as Means Tested Care fee increased to $25,731.05 for any ‘care year’, the Annual Cap.
Over a lifetime of care, the Lifetime Cap on residential aged care Means Tested Care fees plus any in home care Income Tested care fees increased to $61,754.55.
Help with understanding residential aged care fees
All new residents pay the standard rate of Basic Daily fee. Centrelink calculate the amount of Means Tested Fee each resident is required to pay based on the resident’s current financial position. Your Means Tested Care fee, or Income Tested Fee, can be changed as your circumstances change.
Centrelink use the same financial data to determine both the Pension entitlement and the means tested daily fees for residential aged care. Therefore, aged care residents provide their financial data to Centrelink for use in both the Age Pension and the new Means Tested Care fee, or the Income Tested Fee, calculations.
Entrants to Commonwealth regulated residential aged care can also be asked to contribute to the costs of their accommodation. Some families decide to lease or sell the former home of an aged care resident to generate the cash needed to pay the aged care fees.
Financing residential aged care is complex; if you sell the former home to pay a Refundable Accommodation Deposit, or the Accommodation Bond, the aged care resident’s Age Pension or ISS from DVA, might be reduced but if you lease the house the ongoing Pension plus the rent might not be enough to cover the daily fees.
Help is available. Christine at Financial Care Services is experienced with the complex web of Accommodation cost and daily fees for aged care and the interaction with Age Pension rules.
Before you commit to placing a family member in Commonwealth regulated residential aged care consult Financial Care Services about the options and fee levels. Call Christine on 03 9808 0338 to arrange a Consultation to discuss your family member’s position.
Independent aged care financial planning advice services
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.
Christine at Financial Care Services understands both the DVA and Centrelink Pensions systems and the Commonwealth aged care fee arrangements.
A consultation with Financial Care Services helps you understand your potential retirement living and aged care costs together with the DVA and Centrelink implications of rearranging your assets or selling the former home.
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 does not base fees on the value of your assets nor do we accept any commissions or payments from other service providers.
Contact us to arrange a consultation further confidential, independent and professional advice about DVA, Centrelink, lifestyle or financial issues.
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. © 2015 Financial Care Services Pty Ltd. All rights reserved.