The ‘Living Longer, Living Better’ aged care reforms began on 1 July 2014.
It is important to note that the new rules only apply to individuals who enter residential aged care on or after 1 July 2014, as existing residents will be grandfathered under the previous rules.
The major changes are summarised in the table below.
|Before 1 July 2014||From 1 July 2014|
|Aged Care Assessment Team (ACAT)||ACAT assessments distinguish between high or low-level care.||No distinction between high and low-level care.
ACAT will assess all forms of care.
|Upfront accommodation costs||Two options:
Costs determined by assessable assets.
|Costs known as:RADs (refundable accommodation deposits), andDAPs (daily accommodation payments).On entering a facility, residents have 28 days to decide payment method. (Costs are determined by a resident’s assessable income and assets.)Accommodation costs are more transparent (published
|Retention amounts||For accommodation bonds, a facility may deduct a ‘retention amount’
each month for up to five years.
|Amounts no longer to be deducted from RADs
(previously known as accommodation bond).
|Ongoing care fees||Fees include:Basic daily fee – All residents.Income-tested fee – not payable by full pensioners and determined by assessable income (maximum applies).Extra service fee – set by extra service facility.||Fees include:Basic daily fee – all residents.Means-tested care fee – determined by assessable income and assets.(no daily maximum but yearly and lifetime caps apply).Extra service fee – facilities can offer extra services
|Home assessment||Home not assessed for
|For the purposes of paying a RAD or DAP, the full value of the home is included as an asset, unless an eligible person (such as a spouse) remains in the home. However, for means-tested care fee purposes, the assessable value of the home is capped – up to a maximum of $154,179.20 (July 2014) .|
To help you navigate the changes, there are three guiding principles.
Rarely do families agree on everything — from the standard of the facility through to geographic location or the type of care.
To get the best result for both the family members and the prospective resident, it can often take time as well as the intervention of a professional.
Analysing the application of the means-tested care fee pre and post 30 June 2014 shows that, while the cost of care will generally be more expensive under the new regime, the annual and lifetime capping of the means-tested fee will make it more affordable for some people, particularly those who have greater personal wealth.
The new rules may also present some opportunities. For example, if the principal residence is not occupied by a protected person (such as a spouse), only a portion of the principal residence will be assessed under the assets test. Therefore, there may be more reason to retain the principal residence.
A financial planner who understands the aged care and Centrelink rules can help you analyse the numbers and develop and implement the right plan for your circumstances.
For more information about the above or an aspect of your financial position, book a free consultation with Lisa by clicking here or the button below.
Lisa Fomin is an Authorised Representative (No 340112) of Bridges Financial Services Pty Limited (Bridges). ABN 60 003 474 977. ASX Participant. AFSL No 240837. Part of the IOOF group.
This is general advice only and has been prepared without taking into account your particular objectives, financial situation and needs. Before making an investment decision based on this article, you should assess your own circumstances or consult a financial planner.