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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.