Aged Care Costs
Aged Care Costs
On numerous occasions, I have written about the requirements for a person entering residential aged care to complete a Permanent Residential Aged Care – Request for a Combined Assets and Income Assessment (SA457) form. Sounds a little frightening, and it can be. It is 28 pages long with over 140 questions – of course not all questions need to be answered, but on first look, it is indeed daunting.
So, why is the form required? The answers you provide in relation to your income and assets will determine your entitlement to receive assistance from the government with your accommodation costs. The information also establishes whether you are required to a means-tested care fee.
Now, I have been asked on numerous occasions; what happens if I do not want to fill in the SA 457 questionnaire?
This question will usually come from a person who has typically supported themselves independently throughout their retirement and never applied for any benefits from the government. They are not keen on supplying their personal data on one form and then forwarding to an anonymous person sitting in a large bureaucracy, in a building several thousand kilometres away.
What happens if the form is not completed?
Short answer – As an individual, you are now responsible for your nursing home costs.
Next question, how bad can that be?
Let’s look at each aged care cost separately.
- The basic daily fee is $49.07, this fee everyone pays regardless of their income and assets
- The accommodation costs are your responsibility. These costs referred to as a Refundable Accommodation Deposit, payable to the home of your choosing can range anywhere from $200,000 to in excess of $1,000,000. It just depends on your taste and requirements.
- The means-tested care fee represents your contribution to your daily care costs and is based on your income and assets. The means-tested care fee is paid to the home who would also, in most circumstances, receive a subsidy from the government to assist in covering the cost of your care. If you do not fill in the SA 457 form you are responsible for your total daily care costs without any government subsidy paid to the home, this can exceed $200 per day.
Now before you do the mathematics and work out that you could be paying $73,000 per annum for your care, in addition to the basic daily fee of $17,910 per annum and the Refundable Accommodation Deposit, you need to be aware that the fees you pay in addition to the basic daily fee have an annual cap of $26,380.
What does this mean in the situation outlined?
You will pay $200 per day for your care until you reach the annual total of $26,380 after 131.9 days. Then for the balance of the year, for 233.1 days you will only pay a basic daily fee of $49.07 per day. You would then pay the additional $200 per day again on the anniversary of your entry to the aged care facility.
I should also mention the lifetime cap on the full care fee, which is currently $63,313. In other words, after paying for your full aged care costs for 316 days over a period of just under two and half years, you would never have to pay your full care costs other than the basic daily fee.
At what level of assets does it become advantageous for me to complete the SA 457 form and divulge my personal details to the anonymous person? As my good friend, PK often states ‘it depends’.
As an example; a single person who has sold their home paid $500,000 as a Refundable Accommodation Deposit and has $975,000 in other assets, their daily means-tested care fee would be $72.38 per day or $26,418 per annum, exceeding the yearly maximum by only $38.
Put simply as a guide, for those non-homeowner retirees whose assets are less than $1,500,000, including the Refundable Accommodation Deposit paid to enter the aged care facility, it may be worthwhile to swallow your pride, complete the SA 457 form and provide the data to the anonymous person. Ensuring you are not paying in excess of what you are required to pay.
As we have often stated aged care is not easy. So please, with all aged care concerns, do talk to some who understands the issues and the legislation before you make any decisions.
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