Volume 8 Edition 3 Financial Care Services Newsletter
Online at :Permalink: https://financialcareservices.com.au/newsletters/vol-8-ed-3/
Financial Care Services Newsletter by Christine Hopper
Independent aged care and retirement lifestyle advice for seniors
Volume 8 Edition 3 – 31 March 2018
Pension Indexation Increases 20 March 2018
Centrelink and DVA Pension rates increased on 20 March 2018. The amount of the ‘indexation’ increase is small reflecting our low inflation rate.
After the March 2018 indexation is applied, a single pensioner could receive a maximum fortnightly payment of $907.60. This fortnightly payment includes $826.20 of basic Pension and $81.40 of Supplements.
Each member of a pensioner couple living together could receive a maximum fortnightly payment of $684.10.
Thus a couple who both qualify for the full rate of Age Pension could receive a maximum of $35,500 as their total joint annual income from Centrelink. The maximum Centrelink payment to a full Pensioner is only $23,600 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 and Pension 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 $1,818.40 per fortnight.
But she must also satisfy the Assets Test to remain as a Pensioner. A Single pensioner may have not more than $731,800 of Assets or a ‘home’ plus $528,800 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; yours, mine and 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 $72,400 and not be excluded from the Age Pension by the Income Test.
But the Asset Test only allows a homeowner couple to have $795,000 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 $998,000 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 2018.
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 2018 Age Pension increase is reflected in a small increase in the Basic Daily fee.
From 20 March 2018, all aged care residents will be charged $50.16 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 $79.66 per day from 20 March 2018.
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
The Commonwealth Aged Care legislation sets out the fees and charges that can be levied on residents of Commonwealth regulated, and subsidized, aged care facilities. A Commonwealth regulated aged care facility must not charge more fees than the Commonwealth Aged Care legislation prescribes for the basic level of aged care.
Over the last three years new types of Additional Charges have been appearing in residential aged care agreements for post June 2014 entrants.
Allowable Additional Service fees for additional services that this resident can enjoy
Allowable additional fees must relate to ‘additional services’ that your family member could benefit from and access. For example, special hot breakfast every Saturday, or lunch with a family member every Friday could possibly be offered as an ‘additional service’ for all residents.
However the cost of ‘additional services’ such as bus outings to art galleries or visiting teachers for fancy craftwork activities could only be charged to residents who are physically capable of participating in these events.
Additional fees not allowed if no additional benefit is provided to this resident
We have seen compulsory ‘asset replacement charges’ and ‘capital refurbishment fees’ described as contributions to the building and/or refurbishing of aged care facilities located anywhere in Australia for that aged care provider group. These fees would be unlikely to benefit the resident who is already in a new or refurbished aged care home.
On 2 March 2018, the Federal Court ruled that ‘asset replacement charges’ are not allowed under the Commonwealth Aged Care legislation. Similarly, ‘capital refurbishment fees’ and ‘security deposits’ are not allowed.
Read more from the Commonwealth Department of Health website
What if my family member has been charged any of these ‘disallowed’ additional fees?
Your first step could be to contact the Accounts office for your aged care facility to arrange for a refund payment or credit, for any ‘asset replacement charges’, ‘capital refurbishment fees’, ‘security deposits’ or similar fees that have already been paid.
Then check that these types of fees are not charged again on your next monthly billing.
If you are not satisfied with the aged care provider’s response then your second step is to contact the Aged Care Complaints Commissioner on 1800 550 552
Extra Service fees are charged to all residents in ‘extra service places’
An aged care facility may designate all, or a section, of its facility as ‘extra service’ places. All residents occupying ‘extra service’ places are levied the ‘extra service’ fee to cover the cost of providing a package of ‘extra services’. These ‘extra services’ could include nicer furnishings in the communal areas, more menu choices, better quality toiletries and professional presenters for cultural activities.
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’.
Get help with understanding your aged care costs before signing the Resident Agreement
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.
But ‘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.
Remember that 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.
Financial Care Services your independent aged care adviser
Financial Care Services is an independent advisory service specialising in retirees of modest means and aged care entrants. Our core values of working with clients in their lifetime 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 fee solutions.
To make an appointment for confidential, independent and professional advice about aged care, retirement lifestyle or Age Pension issues please contact Christine Hopper or call +61 3 9808 0338.
To arrange an appointment for further confidential, independent and professional advice about DVA, Centrelink, lifestyle or Pension issues please contact Christine Hopper 03 9808 0338.
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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)
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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.
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