FAQs
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FAQs
Frequently Asked Questions
Common questions about aged care fees and funding. If your question isn’t answered here, send it to us using the form below.
Costs can vary dramatically, and advice from a qualified financial planner and aged care professional can assist enormously in helping families understand the costs and how various funding scenarios may play out in future years.
Some fees are means-tested, using assets and income to calculate these fees. The government will subsidise aged care residents who are assessed as “low means” and, again, this is why seeking advice can be invaluable.
Getting the correct advice can result in maximising Centrelink/DVA payments and minimising aged care costs. A summary of costs that may arise includes:
- Accommodation payments – pay for your room and the use of amenities.
- Essential living fees – pay for your daily living expenses.
- Care costs – cover the cost of staff and equipment.
- Higher everyday living fees – pay for lifestyle choices and/or additional services.
Similar to the cost of entering aged care, the ongoing cost of staying in an aged care facility will depend on your accommodation payments, daily living fees and any care contributions that apply. You may also pay higher everyday living fees if you choose additional services. Some fees are means-tested, so advice from a qualified financial planner and aged care professional can help you understand what you may need to pay over time.
Everyone who has been assessed as requiring residential aged care can afford their care. The government will subsidise residents who are assessed as “low means”.
This is a common misconception, and in some cases, it may be the most appropriate option. However, there are considerations around selling the family home, and advice may vary depending on individual circumstances.
The Age Pension will continue to be paid.
For the calculation of aged care fees, the home will be assessed at a capped value, assuming that a “protected person” does not continue to reside in the home.
For Centrelink/DVA purposes, the home will be exempt from asset assessment for up to two years after you leave to enter care, or until sold, whichever occurs first. After this period, your status will be reclassified as a non-homeowner, and the full market value will be assessed when determining your Age Pension benefits. This assumes that a “protected person” does not continue to reside in the home.
This is possibly best answered by a financial planner. However, it is important to note the following in relation to RADs:
The RAD is repaid to the resident or their estate, usually after the provision of Probate documents, regardless of who paid it. This may create complications and unintended consequences if the money was provided by someone else.
All aged care residents can make their own choice regarding how their fees are paid. For example, they can pay the full RAD, a partial RAD or no RAD.
Interest is paid at the MPIR (Maximum Permissible Interest Rate) for any unpaid RAD. The MPIR is set at the date of entry into permanent residential aged care.
In this case, each member of the couple, if pensioners, would receive the single rate of pension rather than the couple rate.
While one partner lives at home, the home is exempt for aged care fee purposes. However, if that partner enters care or leaves the home for any other reason, the home will be assessed up to the capped value for each person.
For Centrelink/DVA purposes, the home will be exempt while one partner lives there. However, if that partner leaves the home to enter care, the home will be exempt from asset assessment for up to two years, or until it is sold, whichever occurs first. After this period, Centrelink will reclassify your status as a non-homeowner and assess the full market value when determining the Age Pension.
This is very dependent on individual circumstances and family preferences. Advice is definitely recommended.
An important fact to consider is that RAD payments can be made at any time, and additional RAD payments can be made at any future time. It is not necessary for families to make all these decisions when a loved one enters care. Matters can be reviewed, and additional payments made, as and when required.
Two quick examples of this are: Centrelink may have an asset recorded for a person that no longer exists.
For example, some shares that were previously held may have been sold. The sale may not have been advised to or recorded by Centrelink. This situation may result in means-tested aged care fees being higher than they should. In a second example, an aged care resident may be paying a Higher Everyday Living Fee (HELF) to the aged care facility. They may not be able to or may not wish to take advantage of the extras the HELF covers (e.g. wine with their dinner, use of wifi etc.). Some negotiation with the aged care facility may result in the HELF being reduced. To comply with legislation, providers must undertake regular reviews, there must be written agreement and price increases cannot exceed CPI.
Just as an example, any amount of money paid towards a RAD (Refundable Accommodation Deposit) at an aged care facility, doesn’t count as an asset for the aged care pension or DVA pension. Situations can occur where Centrelink has not been informed of a RAD payment and this can result in a reduced pension payment.
It is very important to make regular updates to Centrelink regarding assets and income. Errors can occur which inadvertently result in reduced pension payments.
Aged care residents also need to be aware of how the home is treated and when it becomes an assessable asset in regard to their pension.
What many people don’t understand is that when a person in aged care passes away any RAD (Refundable Accommodation Deposit) amount held by an aged care facility is returned to the Estate.
Therefore, if a family member had paid an amount towards the RAD, the aged care facility is by law obligated to return that amount to the Estate, not to the person who may have paid it. This may have implications for families.
The rules around a resident paying all or part or none of their RAD (Refundable Accommodation Deposit) provide a lot of flexibility. For instance, someone might enter aged care and pay $50,000 towards their RAD. 6 or 8 months later, they might sell a home and be in a position to pay another $500,000 towards the RAD.
Aged care residents have the option to make these payments as and when they see fit.
Some people think there is a rule that these decisions about RAD payments must be made when a person enters care. In reality the legislation allows for people to make their own decisions in their own time.
Interest is paid at the MPIR (maximum permissible interest rate) for any unpaid RAD. The MPIR is set at the date of entry to permanent residential aged care.