Author: Elder Advice

Since the Living Longer Living Better changes to aged care fees and charges came into effect on 1 July 2014, the costs of aged care have become very complicated and confusing. It is easy to find information about the costs of residential aged care by just doing a google search or going on to the myagedcare.gov.au website. But understanding those costs is a different matter altogether.  To save you that trouble, in summary, here are the 4 components to the costs of aged care:

1. Daily care fees which every resident pays. These are pegged at 85% of the full aged pension, currently $52.25 per day and revised every March and September;
2. Means tested care fee which, as the name suggests, are calculated using a complicated formula on the resident’s income and assets. The formula complicated due to the convoluted definitions of the various elements and the rules around what is included and excluded from each of the elements. They vary from $0 per day to around $260 per day;
3. Extra services or additional services fees which some facilities (but not all facilities) charge. These fees have no bearing on the care provided; they are just extra or additional services such as wine with meals or newspapers. These items can usually be purchased independently of the facility. If you are considering a facility with these charges, ask what the resident gets for those charges and work out whether it is worth the cost.
4. Accommodation Payment (what used to be called the bond). This can be paid to the facility in whole or in part as either cash which is called a Refundable Accommodation Deposit (RAD) or as a Daily Accommodation Payment (DAP). The DAP is calculated as an interest payment on the amount of Accommodation Payment that is not paid as a RAD. The interest rate is fixed by the Government, currently 4.1% per annum, and paid on any part of the Accommodation Payment that is not paid as a RAD for each day in care. The RAD is guaranteed by the federal government and refunded when the resident leaves the facility.

You pay some or all of these charges, depending on the resident’s means and whether the facility charges extra services or additional services fees. The aged care residential facility, in conjunction with Centrelink, will work out the payments for you if you want them to or if you do not take control. Residents will most likely but not always need to complete the Centrelink assessment form and aged care residential facilities now often hand them out during a tour of the facility and want them filled out before the resident is admitted. However, it is not their job to optimise these costs. There are numerous ways to ensure that you are not paying more than you should for aged care and every situation is different. It is nigh impossible to work out how to do it unless you are an aged care specialist financial adviser.Pensions are affected by how aged care is funded and paid for. How the resident organises the funding of aged care can be to their financial detriment. Seek advice from a specialist in aged care. We are experts and we can assist.

Until next time
Margaret Harrison

Negotiating aged care costs

Did you know that some aged care costs, particularly the Accommodation Payment (or bond or RAD as it is commonly known) are negotiable?  The price quoted by the aged care facility is often the maximum amount that the facility can charge.  If you want find out what that maximum amount is, the price is listed on the myagedcare.gov.au website.  Once you know that price, you can negotiate with the facility to see if they will accept less than the listed price.

A facility’s willingness to negotiate is often a function of supply and demand.   If the facility has a long waiting list of people who are willing to pay the asking price, they may not negotiate on the price.  But if the facility has a number of beds available, they are usually more willing to accept a lower price.  Negotiating is just a matter of asking the simple question ‘Are you willing to negotiate the Accommodation Payment?’ (or RAD as it is often called).

Sometimes, facilities also charge an additional service fee which can range from $5 a day to more than $100 per day.  These additional services often include things like daily newspapers, wine with meals, a choice of meals or podiatry or hairdressing services.  Facilities may also be willing to negotiate those additional services.  Again, it is just a question of asking. Then again there are all the different housing options to consider.

Supported beds for those who cannot afford aged care

If you think you cannot afford aged care, you may be entitled to a ‘supported’ bed. In this case, the government pays a contribution towards the Accommodation cost. This often occurs when a spouse will be remaining in the marital home and the couple’s assets combined are less than about $340,000.   It is worth checking whether you are eligible for a supported bed before you start looking at aged care.  Whilst it does not mean you won’t be able to move into a fabulous facility, it is it a little harder to find a supported bed.

Negotiating home care packages

Home care provided under a federally funded aged care package (known as a Home Care Package) is also negotiable – both on price and the services that you receive. Whilst many people just engage the provider who first makes contact with the person receiving the package (or their loved one), it is worth shopping around for the best deal. The list of providers in your area is published on myagedcare.gov.au under the ‘Find a Service’ tab.

It is always worth obtaining financial advice from an aged care specialist financial adviser about the costs of aged care. If you need any help understanding or negotiating the costs of aged care, call 1800 500 780 and speak to one of our consultants.

Until next time
Margaret Harrison

Aged care housing options

Retirement village, nursing home or somewhere else that provides care and does not charge an ingoing fee?  What is the difference and how do you tell them apart?  Which one is more suitable for you or your parent?  This article helps you to understand the options.

Aged Care Residential Facility (nursing home)

This is a facility regulated under the Commonwealth Aged Care Act to provide both accommodation and care for the elderly and frail.  An older person needs an ACAS (Aged Care Assessment) to become a resident of an ACRF (Aged Care Residential Facility).  The care in an ACRF is subsidised by the Federal Government. Accommodation Payments must be paid for residing in an ACRF unless the resident does not have sufficient assets to pay an accommodation payment. This option can be good for people who are unable to care for themselves at home.

A Retirement Village

These are units or apartments regulated under State legislation.  Whilst they can be an excellent option for older people, they are not accredited aged care providers.  They may have on-site serviced apartments or bring in services to assist elderly residents.  Some retirement villages are part of a complex which includes an ACRF and some have affiliations with ACRF’s that will accept residents preferentially.  This option can be good for people who are able to care for themselves (even if they might need a little help) or those who are lonely or socially isolated.

Supported Residential Service (SRS)

This is a residential service that provides support and care for residents.  They are not accredited aged care providers although many have nursing staff and other qualified care staff on site.  They are regulated by State Governments.  Not all states have them.  The cost of care is not subsidised by the government although pensioners may receive rental assistance when staying at an SRS.  This option can be good for people who need some assistance with daily living or short term care.

Is your parent seeking home help to stay independent?

Each of these options could be appropriate and there are good and not so good providers of each type of accommodation.  It is important to understand what a place is so that you know what a resident can expect both financially and in terms of the care that is provided. The distinction is confusing and it is often very hard to tell which is which.  So how do you tell?  Here are some tips.

1. If there is a fully functional kitchen in the unit, it is not an ACRF.  It is probably a retirement village;
2. If the facility is advertised as not requiring an accommodation payment (bond) it is probably an SRS; or
3. Ask the facility what it is.  They will tell you if you ask.  You just have to know what they mean when they give you the answer!

Contact us on 1800 500 780 if you need more help or advice.

Until next time
Margaret Harrison