As always the answer is that depends.
It depends whether your parents have the means.
That means knowing what their income & assets are as your parents just as you & I are, are expected to fund their care if they can.
Your parents will have 4 possible fees that they may have to pay
1. Basic daily fee
The basic daily fee (BDF) is paid by all parents, and helps to cover the cost of their ongoing care, e.g. for meals, power and laundry.
The BDF is pegged to 85% of the basic single Age Pension rate and therefore indexes on 20 March and 20 September each year.
So for example, as at 20 March 2019 the single basic Age Pension is $843.60 per fortnight.
85 percent of this is $717.06 per fortnight or $51.21 per day as the maximum daily fee.
2. Means-tested care fee
The means-tested care fee (MTCF) helps to pay for your parent’s ongoing care.
Means-tested amount MTA
The MTA is determined when a client completes a Permanent Resident Aged Care Request for a Combined Assets and Income Assessment (SA457) and forms the basis for calculating their fees.
It can change over time if your parent’s income and assets change (for example Centrelink/DVA perform quarterly aged care reviews.
It’s based on a parent’s assessable income and assets, therefore strategies to reduce a parent’s assessable income and assets can help to reduce the MTCF.
There is a limit (price cap) on this fee, which at the moment is $27,532.59 (20 March 2019).
There is a formula using 364 days & combining income & assets so there are calculators to do the maths for you.
3. Accommodation amounts
A person may have to pay an accommodation amount for the cost of their accommodation when they enter residential aged care.
This would be an accommodation payment if the parent has an MTA greater than the maximum accommodation supplement (MAS), currently $57.14 per day.
Otherwise the parent will be a low means parent and may pay an accommodation contribution, which means their accommodation cost can be partly or wholly subsidised by the Government.
How much you pay for this depends on your assets and your income.
If you have less than $49,500 in assets or annual income then you won’t have to pay anything.
Your parents have the option of paying their accommodation payment or contribution as:•
A fully refundable lump sum referred to as a refundable accommodation deposit (RAD) or refundable accommodation contribution (RAC);
• Periodic payments referred to as a daily accommodation payment (DAP) or daily accommodation contribution (DAC);
or• A combination of both.
Note in general this RAD is less than 500,000 & the average RAD is 359,000 in Australia.
Note & here is where the challenges happen
The RAD is assessable when calculating your aged care fees, but it is not included in your means test assessment when determining your eligibility for a means-tested pension from Centrelink or Veterans' Affairs.
It is exempt under both the assets and income tests which is why the government put a limit on the size of the RAD.
4. Extra and additional services fees
Extra and additional services fees may apply if a parent chooses a higher standard of accommodation, meals or other services, for example Foxtel, Wi-Fi or newspapers.
Extra services fees apply if a parent occupies a place in a facility with extra service status. These fees should be advertised by the facility and outlined in your parents agreement.
So for every family & especially around Christmas when the not easy decisions are made there are many variables.
These could be the wish to keep the family home.
What is the life expectancy which is also a realistic but emotional variable.
When the decision is made which residential facility & how long do we have to wait?
Will selling the home be the best decision or are there other options?
If you do sell the home & have a balance left over after the Above Redeemable Accommodation Deposit then the surplus funds may reduce your parents aged pension.
I have seen the single pension reduced by 2000 p.a which is multiplied over time.
In fact too many variables & although facts & figures are necessary there is more to this decision.
So just as the family is doing serious maths with differentiation & integration optimising problems then
I help you to improve the Money you deserve when you retire by modelling your situation on what can be best achieved on the calculators available.
PM Now or contact This email address is being protected from spambots. You need JavaScript enabled to view it.
PS yes very General Advice & certainly NOT personal advice as you see plenty of jargon but a small step towards a big emotional decision.
