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Paying for Residential Aged Care
We’ll be the first to admit it upfront – the pricing of aged care can get complex.
When you think about it, the fees and charges cover somewhere to live, your meals,
electricity and a number of highly trained people to look after you around the clock.
At AnglicareSA, we put the resident at the centre of what we do. We pride
ourselves on providing excellence in care and accommodation services.
The good news is that depending on your financial circumstances, a lot of the cost
of your care and/or your accommodation may be paid by the government. However,
under new pricing legislation introduced in July 2014, the more you have in assets
and/or income, the more you may be asked to contribute.
When comparing different aged care facilities, it’s important to note that all aged
care fees, with the exception of the price of your room , are set by the Australian
Government. The maximum room price applying to each room within a facility is set
by each aged care provider.
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At the back of this document we’ve included a glossary of terms and acronyms for
you to refer to.
Fees & Charges
The fees you could pay are divided into four categories as shown in the diagram
below.
Means Testing
Means testing applies to all new residents from 1 July 2014 and combines an income
test and an assets test. The means test determines the Means Tested Amount
(MTA) which is used to establish the amount a resident and/or the government
pays towards the cost of accommodation. Means testing will determine whether you
are classified as:
A low means resident (also known as either a fully supported or partially
supported resident)
An unsupported resident
Accommodation
costs
Basic Daily
Care Fee
Means Tested
Care Fee Additional
Services Fee
Depends on your
income and
assets from the
Means Test.
Can be either a
lump sum or
daily fee or
combination of
the two
Paid by all
residents at a
fixed amount.
Indexed each
March and
September by
government
Calculated on
combined
income and
assets on an
ongoing basis.
Is subject to
both an
annual and
lifetime cap
Set by each
facility if extra
services are
provided
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The fees that may apply to these resident classifications are summarised in the
following table.
Type of
Resident
Basic Daily
Care Fee
Means Tested
Care Fee
Accommodation
Contribution
Accommodation
Payment
Fully
Supported
Partially
Supported
Unsupported
The Department of Human Services will determine which category you will be
classified as, after assessing your income and assets.
These fees are explained further in this document. If your assets and income
circumstances change over time, the payment you are assessed by the government
as being eligible to make towards your accommodation and/or care, could also
change.
For the purpose of calculating the Means Tested Amount, here are some
important points:
Income from investments is calculated at a deemed rate of return, not what
you might actually be earning.
If your family home is occupied by a “Protected Person”, it is not included
in the means test. A protected person is generally a close member of your
family such as your partner or dependent child. Even where the house is
counted as an assessable asset (meaning that it is not occupied by a
protected person) only the first $155,823 (as at November 2014) is taken into
account. This capped amount is set by the government and is indexed
regularly.
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Rental income from the former principal home (in some circumstances) is
excluded from assessable income for calculating the MTA.
Lump sum payments or refundable deposits to residential aged care providers
are included as an assessable asset.
Low Means Resident
The term Low Means Resident is a government term and basically refers to either
fully supported or partially supported clients. This is anyone who is eligible to
receive any government contribution towards their accommodation. As a low means
resident, you do not pay the Means Tested Care Fee. You will (as everybody
does) have to pay the Basic Daily Care Fee and you may (depending on whether
you are fully or partially supported) have to pay a contribution towards your
accommodation. These fees are explained on the next page.
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1. Basic Daily Care Fee
This fee covers living costs such as meals, power and laundry etc. For fully
supported residents, this is the only fee you are required to pay. The Basic
Daily Care Fee is set by the government at 85% of the single basic Age
Pension (not including supplements). This is currently $47.15 per day as at
November 2014. It will increase on the 20 September and 20 March each
year in line with Age Pension changes. As shown back on page 3, everyone
pays the same Basic Daily Care Fee irrespective of an individual’s assets and
income.
2. Means Tested Care Fee
The Means Tested Care Fee (MTCF) applies to those residents with higher
levels of combined income and assets. This effectively means that you pay a
share of the cost of your care and the government pays less. This fee is
calculated by the Department of Human Services after you move into care. It
is applicable for Unsupported Residents (i.e. Fully Supported and Partially
Supported residents do not pay the MTCF, unless your financial circumstances
change in the future).
Once assessed, the amount of the MTCF payable is advised by the
government to you and AnglicareSA.
Annual & Life Time Caps for Means Tested Care Fee
The MTCF is limited by two caps; an annual cap and a lifetime cap. These
are explained below.
The annual cap means that you can only pay a maximum of $25,349 in any
given 12 month period. This amount is current as at November 2014 and
gets indexed periodically. If you reach this capped amount within a 12 month
period, the MTCF ceases for the remainder of that 12 month period and then
recommences on the first day of the next 12 month period. The 12 month
period starts from the date aged care services, including any home care
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services, were first accessed.
The lifetime cap applies once you have paid a grand total (over multiple
years) of $60,838 in MTCF. This amount is current as at November 2014 and
gets indexed periodically. Once you have reached this lifetime cap, you do
not pay any more MTCF for the rest of your time in our aged care facility.
Amounts that you may have contributed towards a government funded home
care package also count towards the lifetime cap.
The Basic Daily Care Fee however is separate from the annual and lifetime
caps applied to the MTCF and will always remain payable.
3. Accommodation Payment or Accommodation Contribution
Both of these charges cover your accommodation in the aged care home.
Fully supported clients do not pay either. Their accommodation charges
are fully covered by the Australian Government.
Partially Supported residents pay an accommodation contribution based
on the government’s Means Tested Amount (MTA). AnglicareSA does not set
this fee. This amount may change from time to time in line with changes in
your assessed MTA (ie. if your assets or income change) and/or if AnglicareSA
significantly refurbishes the facility. In any case, the government advises
both you and AnglicareSA of the amount assessed as payable by you.
Unsupported residents will pay an accommodation payment based on the
maximum room price as advertised by the provider.
To reiterate our earlier point, the only fee that AnglicareSA sets is the
accommodation payment (room price). All other fees are set by the
government based on their assessment of your income and assets.
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Other terminology associated with the Accommodation Payment or
Contribution that you may encounter are:
Accommodation Payment paid as a lump sum is also known as a
Refundable Accommodation Deposit or RAD for short.
An Accommodation Payment paid on a daily basis is known as a Daily
Accommodation Payment, or DAP for short.
Accommodation Contribution paid as a lump sum is also known as a
Refundable Accommodation Contribution or RAC for short.
An Accommodation Contribution paid on a daily basis is known as a
Daily Accommodation Contribution or DAC for short.
Both Accommodation Payments and Accommodation Contributions may be
paid as a lump sum, a daily payment or a combination of the two.
4. Additional Services Fee
Additional fees may apply if you choose a higher standard of accommodation
or additional services. Please note that AnglicareSA does not charge an
Additional Services Fee.
The graph on the next page shows the relationship between assessable
income and assets and the levels at which the different fees described above
become relevant and payable.
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Government Fee Estimator
The government’s website called ‘myagedcare’ contains a Residential Care Fee
Estimator that will estimate your care fees based on your inputs.
You will need to provide details of your annual income, your financial and other
assets, any debts that you have, and details about your family home. If you have a
partner, you will need to provide details of your combined income, assets and debts
The Residential Care Fee Estimator (pictured above) and much more
information can be found online at the following website address:
http://www.myagedcare.gov.au/fee-estimator/residential-care/form
The Residential Care Fee Estimator will give you an estimate of all your fees
except for the room price (for unsupported clients) that is set by the individual
facility, not the government. Hence, they can’t include this because it will vary from
facility to facility, and often different rooms within a facility.
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When do I have to pay the accommodation payment (room
price)?
You cannot make a payment before you move in. You just need to agree on how
much you will pay and sign the Pricing Agreement.
The Pricing Agreement will specify the maximum accommodation payment as both a
lump sum (RAD) and a daily equivalent. What this means is that whether you are
classified as partially supported or unsupported you can choose to pay any lump
sum RAC (for partially supported residents) or RAD (for unsupported residents) as a
daily equivalent amount.
The conversion of the RAD into a DAP or a RAC into a DAC is based on an interest
rate set by the government. This interest rate is reviewed by the government and
may change each quarter so the comparisons will adjust each time the rate changes
but once you sign the Pricing Agreement, the rate applied to you is fixed at the
current rate. You will have 28 days after moving into care to decide whether you
want to pay a lump sum RAD/RAC or the daily DAP/DAC equivalents or a
combination both. The choice is yours. If you choose to pay a lump sum,
regulations stipulate that you must be left with a minimum asset level, which as at
November 2014 is $45,500.
What if I can only afford some of the RAD?
That’s ok. You don’t need to pay the full room price as a RAD. As noted above, you
can pay for the room price as a combination of RAD and DAP. The DAP effectively
accounts for the lower RAD paid at the interest rate the government prescribes. You
can then choose whether you pay the DAP separately or have the DAP taken out of
your RAD. The implications of this are expanded on below.
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Will I get my deposit back?
Generally, yes.
If you pay for your accommodation as a RAD or RAC, this money will be paid back to
you (or your estate) when you leave our facility. AnglicareSA holds your deposit in
trust for you.
The only exception to this is that if you choose to pay for any of your fees (such as
the DAP) from your RAD, this will reduce the balance of your RAD, and
therefore the amount of the deposit refunded to you, over the time in
which you are in care. Importantly, it is solely your choice to structure your
payments in this way.
Independent Financial Advice
Confused? We don’t blame you. It’s complex! This is why it’s a good idea to consult
with an independent financial planner who is a specialist in aged care. A financial
planner will help you make decisions regarding the best way to structure your
assets, whether to sell or retain the family home and how much income you need.
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Whilst AnglicareSA will do everything we can to help you, as an aged care provider,
we are not permitted, nor are we qualified, to provide you with financial advice on
your personal situation. This document therefore does not constitute financial
advice. It is intended as an overview of the pricing structure of residential aged
care. No part of it should be relied upon as advice for your particular situation.
Questions?
Noting the above comment that we cannot provide financial advice regarding your
personal situation, AnglicareSA can help you come to grips with these changes as
you make a very big and important decision. We are here to help. Should you have
any questions please contact the AnglicareSA Admissions Team on 08 8305 9279.
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Glossary of Terms (Alphabetical order)
Annual Cap Applies to the Means Tested Care Fee – is the
maximum that can be charged in a 12 month period.
In 2014, this amount is $25,349. The amount is
established and indexed periodically by government.
Basic Daily Care Fee The base daily care fee. All residents pay this fee and
for the standard amount.
Daily Accommodation
Contribution (DAC)
This is the Refundable Accommodation Contribution
(RAC) converted into a daily amount.
Daily Accommodation
Payment (DAP)
This is the Refundable Accommodation Deposit (RAD)
converted into a daily amount.
Lifetime Cap Applies to the Means Tested Care Fee – is the
maximum that can be charged in total for the whole
time the resident is in care (time in care also includes
time you may have spent in a government funded
home care package). In 2014, this amount is
$60,838. The amount is established and indexed
periodically by government.
Low Means Resident A term for fully supported or partially supported
residents
Means Testing The process of working out which category of fully
supported, partially supported or unsupported the
Department of Human Services will place you in based
on your income and assets.
Means Tested Amount
(MTA)
The result of the Means Test.
Means Tested Care Fee
(MTCF)
A care fee paid by unsupported residents.
Protected Person Relates to whether the value of your family home is
included in the Means Test. A protected person is a
close family member such as your partner or
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dependent child.
Refundable
Accommodation
Contribution (RAC)
Refundable lump sum payment for partially supported
residents. It converts from the DAC amount as
determined by Department of Human Services (not
the provider) based on your assets and income.
Refundable
Accommodation
Payment (RAD)
Refundable lump sum payment for unsupported
residents. Amount is determined by each provider for
each room within their facilities. This is the only fee
AnglicareSA sets.