“The aged care facility gave us a brochure with their costs… but we don’t understand all the terminology”
Basic Daily Care Fee
This fee is set by the Australian Government and is paid by every resident. The fee is calculated as 85% of the full single age pension and is currently $58.98 per day. If you receive a part age pension or no age pension you still pay this fee. This fee is not means tested.
Refundable Accommodation Deposit (RAD)
This is the lump sum cost of a room at an aged care facility. The RAD is set by an individual facility and is often based on the outlook, position and size of the room.
Daily Accommodation Payment (DAP)
This daily payment is in lieu of not paying a lump sum for accommodation. This is the equivalent daily accommodation payment of the Refundable Accommodation Deposit.
Extra Service Fee
Some aged care facilities charge an extra daily fee. This fee is set by the aged care facility and is an extra daily fee for additional services such as choice of meals, wine with dinner, haircuts, bus trips and entertainment. Each facility is different and you will need to ask what services are provided.
Means Tested Care Fee
This fee is set by the Australian Government and is based on the individual assets and income of a resident. This fee can change over time if there is a change to the resident’s financial circumstances. This fee is subject to annual and lifetime caps.
Harrison Lew will determine the cost of aged care and develop a plan for the payment of fees and costs over time.
We don’t have access to a lump sum. How are we going to pay the accommodation cost?
A Refundable Accommodation Deposit (RAD) can be paid as a lump sum, an equivalent Daily Accommodation Payment (DAP) or a combination of both. Some residents with low means may be asked to pay only a contribution towards the accommodation costs, known as Daily Accommodation Contribution (DAC), or in some circumstances, the Australian Government will pay the accommodation costs in full. The cost of accommodation will depend on the individual financial circumstances of a resident. Harrison Lew can assist with a financial analysis to determine the applicable accommodation costs.
What will happen to Mum’s pension if she sells the family home?
The Centrelink age pension and DVA Service Pension are subject to an assets test and an income test. The test that results in the lowest pension is the one that is used. The Refundable Accommodation Deposit (RAD) is an exempt asset under the assets test for pension purposes. If a lump sum is paid towards the RAD, your Mum may still be eligible for some age pension. Financial planning will assist greatly in this circumstance.
What will happen if Dad runs out of money?
Provided various eligibility criteria are met and the financial difficulties are genuine, the Australian Government will assist in the payment of your Dad’s aged care fees under ‘hardship provisions’.