The means tested care fee is a tricky fee to explain and yet it can have a powerful kick to it when it applies to you or a loved one.
When entering aged care accommodation there are a number of fees payable such as the means tested care fee, a basic daily fee, accommodation costs and more. The means tested care fee iswhen entering aged care accommodation, and it contributes towards your day to day care costs in an aged care home.
The government subsidises a resident’s cost of care but those who meet income and asset thresholds will co-share this payment with the government.
So whether you are caring for a parent or a loved one, understanding these costs is important when planning for aged care accommodation options.
Assets and income thresholds (until 31 December 2018)
A person who has assets over $167,707 and income over $26,985 will pay a means tested care fee. This is a sliding scale from $1 per day all the way up to the maximum $249 per day.
There is a ceiling on how much is payable over a 12-month period (currently $26,985 per year). Once you reach this maximum, your means tested fee drops to zero until your 12-month anniversary date is up.
For example, if you are assessed as being able to pay $100 per day, then you pay $100 per day for 269 days. At this point you have reached the $26,985 cap and the fee drops to zero. On day 1 of year 2, the daily fee of $100 is reinstated.
Is this fee payable forever?
There is a lifetime cap on this fee, set at $65,357 (until 31 Dec 2018), at which point no further means tested care fee is payable. This might take five to seven years or be done and dusted in two and a quarter years – it just depends on your assets and income levels.
Calculating your means tested care fee
The Department of Health calculates it based on your submission of the Assets and Income Assessment form. Without this assessment you are required to pay the maximum possible rate per day. This is incentive enough for most people to complete the form, regardless of whether they are self funded or not.
This form creates so much worry, it is so easy to make a mistake on it, and it can be time consuming to resolve these mistakes. We can assist you in completing this form if you need.
In the meantine you can calculate your fee using the My Aged Care Residential Care Fee estimator – it can be tricky to navigate.
So you might like to also consider the following:
- The principal residence counts for only $167,707 if you are not selling it
- If you do plan on selling the home, factor in the full net value of this as an asset
- If you plan to pay a RAD, the amount you pay counts as an asset
- The assessable income needs to include age pension, DVA pensions etc and if you rent the house out, include net rent here too.
How do I afford this?
Managing this fee as well as all the other aged care costs can be tricky. Balancing out pension benefits, renting versus selling the home are all reasons to seek advice on the best way to afford it.
How we can help
If you are thinking about a move into aged care, one of our planners can provide you with financial clarity so that you understand how the cost of aged care relates to your circumstances.
An aged care planner can help you:
- Identify the costs that will apply
- Structure the costs so that aged care is affordable in the short and long term
- Help you decide what assets should be kept or sold, including the family home
- Develop strategies to maximise any government benefits available, including the Age Pension, and
- Talk through estate planning complexities.
Make an appointment for a consultation with an aged care specialist about the key decisions that lie ahead, the options available to you or your loved ones, and the cost of our advice.