Navigating the world of aged care can be overwhelming, especially when it comes to means tested aged care fees. In this article, we’ll go through daily fees and means-tested care fees to provide clarity for those approaching or considering aged care.
What are Daily Fees and Means-Tested Care Fees?
The Basic Daily Fee
Every resident of an aged care facility is required to pay the Basic Daily Fee, which is set at 85% of the Age Pension. This rule is applicable to all, even those on respite. As of Sept 23, this is $60.86.
Means-Tested Care Fee
On top of the Basic Daily Fee, some might need to pay an additional fee, known as the means-tested care fee. To determine this, the government evaluates your income and assets. In essence, this fee reflects your financial capacity to contribute more to your care.
The formula used for calculation is as follows:
- Charge 50¢ for every dollar of income above the set threshold (Sept 23 is $58,500).
- Add 17.5% of the value of assets that exceed the minimum assets but are below the first threshold.
- Add 1% of the asset value between the first and second asset threshold. (Sept 23 first asset threshold is $197,735.20)
- Add 2% of assets valued above the second asset threshold. (Sept 23 second threshold is $476,205.60)
- Subtract the maximum accommodation supplement from the total.
Assets – What’s included when determining means tested aged care fees?
Assets are essentially any items of value that the care recipient or their partner possesses or has an interest in. These assets can be:
- Financial investments.
- Real estate properties.
- Shares in companies.
- Household items and contents.
- Personal belongings.
Even if the assets are held outside Australia, they are counted. If the care recipient is part of a couple, it is assumed that they own half of the combined assets, regardless of whose name is associated with the asset.
One crucial asset is the home. If a care recipient entered residential aged care after 1 July 2014 and no “protected person” occupies their home, then their home is counted as an asset. Protected persons can be:
- A spouse or dependent child.
- A carer eligible for an Australian Income Support Payment who has resided in the home for at least two years.
- A close relative, also eligible for an Australian Income Support Payment, who has been living there for a minimum of five years.
It’s essential to note that your means-tested care fee will never exceed your cost of care, and there’s a lifetime cap on these fees.
Non-Disclosure of Financial Details
If a care recipient chooses not to disclose their financial specifics, it’s their right. However, without an assessment, they will have to cover:
- The maximum basic daily fee.
- The maximum means-tested care fee (keeping in mind annual and lifetime caps).
- Accommodation expenses.
Understanding aged care fees is vital for both the care recipient and their families. By being informed, you can make choices that best align with your needs and financial situation. We are here to guide and inform. To find out more, please contact us here.