It may interest you to know that to pay for aged care in Australia, there are certain factors which are assessed to determine what you as a new entrant, or as an existing care receiver pay for care.
As a new entrant into the aged care home scheme, a lot of worries might confront you with regards to payment methods, and the fact it might be quite expensive to start and maintain your age care accommodation.
Well let’s look at some factors what you will need to be aware of that may put your mind at ease and help you with the payment process.
INCOME AND ASSET ASSESSMENT
This is the very first step taken to know what payment method is the best for a current or prospective resident. It would interest you to know that your income and assets determine the amount you will be requested to pay for your accommodation with home care providers. So before you are assigned a payment method or even before you embark on seeking aged care services, your financial means is assessed, that is to say your income and assets are tested to know if you can pay your way through or would be needing government assistance. This assessment determines which of following categories you fall under:
Zero Accommodation costs: Under this scenario the Australian Government pays your accommodation costs because your income and assets are below a certain amount.
Accommodation contribution: If your income and assets determine you need to pay for only part of your accommodation costs, then you fall under this bracket, and the Australian government assists you with the remaining part of it.
Accommodation payment: You are asked to make a full accommodation payment if your income and assets are determined to allow you to easily handle the payment.
It is now the domain of the DHS to let you know if you are eligible for government assistance or not. After this assessment is you will be presented with payment plans or methods which you can choose from.
You should know that you are allowed 28 days to decide which payment plan suits you and make payments. Also, during this time of decision while in the care of these homes you are requested to pay a daily accommodation payment.
If it turns out that you fall in the accommodation contribution category, DHS will advise you on what amount to pay and what method is suitable to make this contribution.
So what are the payment types:
Under the Accommodation Contribution
So if you have been asked to make an accommodation contribution you can chose to pay either the Refundable Accommodation Contribution (RAC), or the Daily Accommodation Contribution (DAC), or a combination of both the RAC and DAC.
This is also known as a lump-sum which is payable on entry and covers the total amount you have to pay while in an aged care home. It is refunded when the resident is leaving the care home after agreed deductions have been made.
You can also decide to pay using the DAC method if you do not have a lump-sum to pay but can afford to make daily contributions of your accommodation costs. You should know that DAC is in no way refundable.
You can choose to pay a lump-sum that covers a certain period of time of your stay and when your RAC is used up, you continue with the DAC payment method which requires you to make daily contributions for your accommodation.
Under the Accommodation Payment
On the other hand, if you have been assessed as having to make an Accommodation Payment then you have the option to pay either the Refundable Accommodation Deposit (RAD), or the Daily Accommodation Payment (DAP), or a combination of both the RAD and DAP.
This payment method requires that you make a lump-sum deposit for your accommodation. If you decide to choose this method of payment you are required to make the lump-sum payment within six months. The balance of this payment is refunded when you leave care home and after the agreed deductions listed on the resident or accommodation agreement has been made. The maximum that can be charged for this is $550,000.
This is a rental-style payment method that is applicable if you decide to make daily payments for your accommodation just like in the DAC method.
You can agree with the Age Care Provider to pay a combination of the RAD and DAP.
Importantly it must be noted that there are certain limits that cap the annual and lifetime amounts of the means tested fee. So you never have to pay more than $26,964.71 annually, and $64,715.36 over your lifetime in means tested fees.
Remember, the only difference between the contribution and deposit/payment of accommodation costs is the fact that you make contributions while the government assists you with the rest of the payment and in deposits/payment; you pay everything without the government’s assistance.
Also bear in mind that your accommodation contribution will never exceed what you are eligible to pay based on your income and asset assessment even though the amount requested by the home to be paid may vary either because of your income and asset assessment or the conditions to be met by these homes.
For financial advice tailored towards your personal situation, please call TGFS Financial Planning today on 1300 755 521 or email firstname.lastname@example.org
TGFS Financial Planning is an Authorised Representative of Consultum Financial Advisers Pty Ltd. ABN 65 006 373 995 AFSL No 230323 (Consultum). This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.